Economy and social affairs

A proud people reaches for world power

(Published in GralsWelt 65/2011)

In view of the developments in China, the question arises whether the “free market economy” still has a future.
Tomorrow's competition begins in schools and universities

Recently I got pensive. On my exam in the subject of "Vehicle Dynamics" at a university, a little Chinese woman wrote by far the best paper. An isolated case that statistically says nothing about my small group of students? When I told my daughter, who teaches surgery at a university and examines students in the state examination, the comment came: "Who else?"

“In the past, the West destroyed democracy in other countries - in the name of democracy. Stole freedom from other countries - in the name of freedom. Has violated the human rights of the eastern countries - in the name of human rights. "
Mo Luo, lecturer at the Chinese Academy of Arts (1, p. 78).

What is going on in our densely populated country, which does not have essential raw material stores, but whose industry has prospered in the past through reliability, hard work and skill?

Is it the recently much-cited "Confucian ethics" that helps young Asians get ahead better than our "zero-buck society" with its spoiled "affluent kids" in the "democratic amusement park"? Or do the East Asians - as they themselves think - have a higher IQ than the Europeans? Perhaps because they have had to learn a highly complicated script for centuries?

Are we in the process of connectingss to lose to the top of the world?

I noticed that learning is very important in Asia during my first visit to Korea. The traditional Confucian ethic calls for the fulfillment of duty, diligence and loyalty, and its ideal is the universally educated, well-trained gentleman (only recently this includes women). Accordingly, the willingness of the East Asians to learn is remarkable.

In the West you can hear that the children - for example in China, Japan and Korea - are far too young to cope with school. This unheard-of pressure to perform would allegedly already “burn off” them in their youth to such an extent that they would later lack the power to innovate. If this claim is not correct, then Europe and the US face difficult times.

"Confucian drill" against Western private capitalism

We live in a time when hardly any state can risk a major war. The destruction to be feared by modern weapons of mass destruction would be so catastrophic that in the end it should hardly make a difference whether one has formally won or lost this war.

Instead, there are more and more "asymmetric wars," which are more similar to terrorist actions or a popular uprising than to a classic war. As a result, the rivalries between the major states are now being fought out particularly in the field of economics. So is the "struggle for the world market" between East and West.

“In autumn 2004, local Chinese shops were looted for the first time in the EU in the Spanish city of Elche: on September 16, an angry crowd stormed Chinese shoe shops, threw the goods on the streets and set them on fire. You have to know that Elche was known for decades as the center of Spanish shoe production. In the meantime, however, the manufacturers have largely relocated them to cheap China, from where not only the cheap shoes came from, but also the most agile Chinese retailers there are: residents of the east Chinese city of Wenzhou, known throughout China as the Wenzhou people and for her business instinct notorious. So they themselves brought the products from the production that was modernized via the Elche outsourcing at home. Why should one leave this business to the Spaniards?

Do you have to imagine a world trembling because of China? Maybe. Probably even. But something else weighs more heavily: A workbench that has been set in motion by several hundred billion dollars not only consumes cheap, young, flexible, non-demanding workers, but also electricity and raw materials, especially crude oil. "
Jörg-M. Rudolph (4, pp. 145 f.).

Currently, the focus of interest is the relationship between the USA with its “Western values” and China with its “Asian drill”. As long as the divided European Union has no common political voice, no common foreign policy and no coordinated economy, it will only play a secondary role in this economic battle of strength as an appendage of the USA.

Of paramount importance in the competition between the two systems are those Motivation and the Innovative strength of people who Government Quality and the Access to the increasingly scarce raw materials. At the moment the Chinese seem to have an advantage:

The capabilities of the East Asians have already been discussed. To what extent they are also innovative is controversial.

In recent history, significant scientific discoveries and technical innovations have regularly come from countries with a liberal, bourgeois culture and free development opportunities. But there is little reason to underestimate a people who already held technological leadership up until the 15th century. Helmut Schmidt wrote in his book "Neighbor China":

“Centuries ago, compared to the Europe of that time, the Chinese brought about a tremendous productivity of scientifically based technological developments; it is conceivable that this will come again. Right now they have other concerns than taking over the leadership of the world's technological development. " (5, p. 309).

The Chinese government appears united to the outside world. Your authoritarian one-party regime knows no - often protracted and cumbersome - democratic processes. Clear decisions can be implemented in a short period of time without much consideration for popular opinion. Inner difficulties such as deficits in human rights and social systems, imbalances between the poor and the rich and between town and country, environmental damage and the dramatic destruction of nature will be covered up by skillful rulers as long as the people of China, who are known for their patience, have the feeling that things are looking up, Conditions improved and general prosperity increased.

With foreign exchange reserves of allegedly $ 2.6 trillion, the Chinese "war chest" is well filled for all eventualities, while almost all Western countries sigh under unsustainable over-indebtedness. In this way, China can support poor, but resource-rich countries - for example in Africa - and thus secure access to their raw material stores. The Chinese benefit from the fact that they do not - like the West - interfere in "internal affairs" and, for example, have to demand that human rights be observed.

Against this background, the well-intentioned appeals by Western politicians to improve the human rights situation in China can at best result in cosmetic corrections. Because communist China feels strong and is preparing to outdo the leading western power, the USA! According to current forecasts, China's economic performance is likely to overtake that of the USA between 2020 and 2030.

This would mean that the per capita income of the current 1.3 billion Chinese - measured by Western standards - would still be modest. However, the trend is decisive, especially for the well-being of the Chinese. And that currently speaks for China with its highly successful economy. The factories in China have long ceased to focus on cheap products. More and more high-tech products with great future prospects come from China, which is the market leader for televisions, DVD players and cell phones, for example. Chinese industry is particularly interested in future technologies such as electric cars, solar cells, environmental technology, wind power plants and the like.

China: A proud people on the way to world power

After the death of Mao Zedong (1893–1976), who had left the country in a disastrous state, a systematic development could take place from 1978 under Deng Xiaoping (1904–1997).

First of all, the farmers were given the opportunity to make personal profits from produced surpluses. Then came “special economic zones” in which foreign companies could set up. They had to work with Chinese partners, who thereby gained access to modern technologies.

In the meantime, almost all global corporations are active in the People's Republic and deliver the most modern know-how free of charge to their East Asian competitors. No wonder that China has been able to catch up technologically at an unprecedented pace and has become globally competitive.

China currently has a higher gross domestic product (5,745 billion US$) than Japan (5,391 billion US$) and is in second place behind the USA[i]. Nobody doubts that China is on the way to becoming the leading economic power.

In history, the economically strongest power has regularly also become the most important political and military power. Will it be different this time? Will the heavily indebted USA be able to maintain their armaments lead in the long term? In any case, it will not be easy for the leading world power that has been economically and militarily decisive since the Second World War - the United States of America - to be satisfied with second place!

After much chaos in the 19th and 20th centuries, the Chinese are a proud people again. You look back on a very old culture with 5000 years of changeable history. The Chinese have not yet forgotten the humiliations that Europeans and Japanese inflicted on them in the 19th and 20th centuries.

A Chinese who dresses in western clothes, studied in the USA, uses western technologies and economic forms in his country, is not automatically also a follower of the philosophy of the Enlightenment or a staunch democrat.

Today China is willing and probably also able to conquer the place in world society that it deserves as the largest and, for a long time, most innovative cultural people.

“The published opinion in Germany, essentially German journalism, the mass media, but also German politicians, tend to allow America to suggest that China and the upward trend in China pose a threat to us. In reality, the economic problems that we Germans and that we Europeans have are less related to China than to undesirable developments that we ourselves are responsible for. If a competitor in a field is a little better than us, that means first of all that we have missed something or done something wrong. There is little point in invoking the danger of the enemy and thus creating a confrontation that exacerbates the situation. "
Helmut Schmidt (5, p. 297).

Is the “free market economy” experiment over?

In China, a “cadre capitalism” decides on the country's economic development. Huge plans, gigantic building projects can be implemented without great resistance, even against the will of a part of the population. In doing so, dictators - as in the Soviet Union as an example - can make autocratic wrong decisions.

Democratically controlled governments, on the other hand, are constrained by party political pressures and can often only reach half-baked compromises. In western democracies, the free market economy dominates, leaving it up to each market participant to decide what and where to invest and produce. Larger projects have to face public criticism and can be very delayed or even prevented by objections of all kinds.

We are facing an interesting experiment: Is it the “free market economy” that always and everywhere finds the best, most profitable ways that serve the common good the most? Or can - at least in the case of an emerging country - smart state management drive developments forward more successfully?

The Chicago School with many Nobel Prize winners, including the popular Milton Friedman (1912-2006), for decades preached the superiority of free markets and private business over all other forms of economy. The privatization of state-owned companies was the order of the day. During the Cold War, this was the generally accepted, "politically correct" stance. In the meantime, doubts have arisen. Even politicians are beginning to realize that a state is better not to give up the essential basic supplies of water, electricity, gas, public transport, sewage and waste disposal etc.

It is regrettable that Milton Friedman - the great privatization guru - can no longer be sent on a journey through England with the privatized English railroad, and then on a Swiss journey with the Swiss state railways!

Will China do better?

“The Chinese put pressure on because they have to create jobs in their own country. This trend will intensify. That is slowly beginning to dawn on Europeans. This also applies to Poland and the Czech Republic. But because China is a big country, the competition will be correspondingly high. This question will preoccupy the EU's relationship with China in the future. On the other hand, questions about what can be sold in China, whether one should sell weapons there or how China will become a democracy will recede. It will mainly be about jobs. Our position here is not comfortable. "
Helmut Schmidt (5, p. 187).

Today, a world economy without China is no longer conceivable. No large company can do without the Chinese market and cooperation with Chinese partners. How many corporations regret that they allowed themselves to be blackmailed and paid too high a price for entering the Chinese market: the pressure to transfer technology? With which they may have initiated a de-industrialization of their home countries and in the longer term even dug their own grave! But what manager has been thinking decades ahead!

Today, more and more American, European and Japanese companies are forced to produce in China not only for the Chinese market, but also for the world market, for reasons of cost. With the result of a progressive decline in the industrial sector in the classic industrialized countries.

Democratic freedom or moderate centralism?

We in the West are convinced that our western liberal value system, which is shaped by the philosophy of the Enlightenment, best suits the wishes and needs of the people.

All other systems of rule - whether autocracy, dictatorship, fascist or communist one-party rule, monarchy, oligarchy, or theocracy - have failed or - as in the case of turbo-capitalism - are about to fail. According to a widely voiced opinion, there can be no stable state without democracy in the long term.

At the moment we are all witnessing a large-scale experiment that is being carried out on the backs of billions of people - including ourselves -: the struggle for economic world domination between eastern cadre capitalism and western democracies. Both systems of government have weaknesses: for example in the reduction of bureaucracy, corruption, human rights, sustainable management, nature conservation, organized crime, party political trench warfare, social systems, environmental protection, fair distribution, etc., which they have to correct if they want to survive in global competition. It cannot be ruled out that this economic war will be decided on the ecological, not the economic battlefield.

The “end of history” prematurely propagated by Francis Fukuyama (2) is still a long time coming. In his opinion, after the fall of the Iron Curtain, liberalism in the form of democracy and market economy should prevail worldwide. Nobody knows yet which system will be most successful and which will offer its people the best living conditions: The democracy propagated by the West - which often tears itself apart - with its "freedom", which often enough only means the freedom of the markets; or a moderate centralism with purposeful economic control in compliance with human rights - perhaps similar to enlightened absolutism[ii]as once in Europe, but supplemented by adequate, democratic control?

Perhaps a (fanatical) religious component also plays a role in this dispute.

Our future will be exciting! Hopefully not too exciting, because - as my father said in the Third Reich - "it's not good to live in exciting times".

Please also read the addendum under "China III".

(1) Der Spiegel, 1/2011, p. 72 f.
(2) Fukuyama Francis, The End of the Story, Kindler, Munich 1992.
(3) Hirn Wolfgang, Challenge China, Fischer, Frankfurt 2005.
(4) Rudolph Jörg-M., When China Comes Over the World, Hessian State Center for Political Education, Wiesbaden 2005.
(5) Schmidt Helmut, Neighbor China, Econ, Berlin 2006.
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The "Chicago School":
Environmental situation in China:
Cadre capitalism:

[i] The gross domestic product of the USA is 14,624 billion US$, that of Germany, which ranks fourth worldwide, is 3,306 billion US$ (according to "Süddeutsche Zeitung" of February 15, 2011). The corresponding populations are: China: 1,350 million, USA: 291 million, Japan: 130 million, Germany: 82 million.
[ii] The best-known representatives of enlightened absolutism were Frederick II of Prussia (King 1740–1786), Catherine the Great of Russia (Empress 1729–1796), Maria Theresa of Austria (Archduchess 1740–1780), Joseph II (Emperor of the Holy Roman Empire of the German Nation 1765–1790).