Category Archives: economics

Stakhanovites as the New (Leisure) Class

From: Sacred Causes: The Clash of Religion and Politics, From the Great War to the War on Terror, by Michael Burleigh (HarperCollins, 2007), pp. 89-91 (reviewed here and here):

The Soviet Union was not immune to what was emerging as a global cult of celebrity, or notoriety, focused on athletes, aviators, boxers, film-stars, gangsters, mountaineers and, as we have seen, dictators. Already, the commissar for heavy industry, Sergo Ordzhonikidze, had launched the search for ‘new people’, saying, ‘In capitalist countries, nothing can compare with the popularity of gangsters like Al Capone. In our country, under socialism, heroes of labour, our Izotovites, must become the most famous,’ a reference to Nikita Izotov, a miner whom colleagues described rather sourly as ‘the human cutting machine’. But Izotov was destined to be eclipsed, along with the new hybrid Marx, Aristotle and Goethe.

In 1931 Pravda ran features under the slogan ‘The Country Needs to Know its Heroes’, consisting of photographs of aviators, collective farmers, shock-workers and the like. The concept of the exemplary elite was primarily associated with Aleksei Stakhanov, a thirty-year-old Donbass coalminer, who in August 1935 managed to cut 102 tons of coal (or fourteen times his norm) in a single shift—moreover, with the aid of a trusty Soviet-produced pneumatic pick. Stakhanov had migrated from a village in Orel, working his way up from pony-brakeman to manual pick operative, before getting his hands on the air-powered pick that brought him fame and fortune. Of course the work was done at night, enabling Stakhanov to maximise his labours as compressed air went to his pick alone, and his six-hour continuous stint was facilitated by a lengthy logistical chain beginning with the men installing timber props behind him. Nonetheless, the anonymous battalions of shock-workers were thenceforth superseded by a Soviet Hercules with a human face. ‘Recordmania’ spread like a feverish sickness, with managers and foremen sweating too lest they be denounced as ‘bigwigs’, ‘windbags’, ‘routiners’, ‘wreckers’, or ‘saboteurs’ for failing to make these ‘Stakhanovite’ feats feasible, rendering them liable to what the Kremlin’s own Al Capone sinisterly called ‘straightening out’ or ‘a tap on the jaw’. It mattered not that these epic episodes tended to deplete machinery and leave ‘Stakhanovites’ spent, or that some workers resented the diversion of resources, the subsequent lifting of their own norms, or the rich rewards such Promethean heroics brought. Schadenfreude best describes those who said of a young female Stakhanovite, who had been rewarded (one hopes she was grateful) with the selected works of Lenin: ‘That’s what the whore deserves!’ Resentment towards Stakhanovites bestriding the factory floors ‘like gods’ was compounded when they became fixtures of the factory ‘production courts’.

Much of the time of stellar Stakhanovites was increasingly spent on tour, whether visiting the Kremlin, addressing other workers or venturing confidently into places—such as the opera or theatre—where workers already did not comfortably go. Even society pages in the newspapers included such gems as ‘The brigadier-welder Vl. Baranov (28), the best Stakhanovite at Elektrozavod, glided across the floor in a slow tango with Shura Ovchinnovka (20), the best Stakhanovite at TsAGI. He was dressed in a black Boston suit that fully accentuated his solidly built figure; she was in a crepe de chine dress and black shoes with white trimming.’

In other words, although they talked incessantly about work, Stakhanovites did less and less of it, recalling it, like millionaire footballers or pop stars from humble origins, as something that took on roseate hues in memory of things past. Of course, Stakhanovites had a role to play within a wider myth-in-the-making. As an explicitly hierarchical society replaced one allegedly based on fraternity, they had to acknowledge the crucial guiding role of the nation’s father-figure, whose speeches had allegedly originally inspired them to break through artificial barriers while using technology almost as an extension of their own brain. Stakhanovites, who were often not members of the Party, were also model citizens in respects other than dutiful sons and daughters of the ultimate patriarch. Their lifestyle was supposed to exemplify the theme that ‘life is joyous, comrades’, and since they were showered with official munificence while simultaneously enjoying very high wages, the joyous life seemed like an idyllic shopping spree, for clothes, clocks, furniture, motorbikes, perfume, phonographs and so forth. Thus adorned and kitted out, Stakhanovites appeared having their leisurely breakfasts, reading the papers, lunching with friends, playing a little volleyball, tea and a game of checkers, while their wives undertook charitable work as ‘housewife-activists’ and their children were exhorted to their own heroics at school.

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Kissinger on Asia as the Next Europe

Henry Kissinger outlines Three Revolutions that present new challenges to the old model of state-based power politics.

These transformations take place against the backdrop of a third trend, a shift in the center of gravity of international affairs from the Atlantic to the Pacific and Indian Oceans. Paradoxically, this redistribution of power is to a part of the world where nations still possess the characteristics of traditional European states. The major states of Asia — China, Japan, India and, in time, possibly Indonesia — view each other the way participants in the European balance of power did, as inherent competitors even when they occasionally participate in cooperative ventures.

In the past, such shifts in the structure of power generally led to war, as happened with the emergence of Germany in the late 19th century. Today the rise of China is assigned such a role in much alarmist commentary. True, the Sino-American relationship will inevitably contain classical geopolitical and competitive elements. These must not be neglected. But there are countervailing elements. Economic and financial globalization, environmental and energy imperatives, and the destructive power of modern weapons all impose a major effort at global cooperation, especially between the United States and China. An adversarial relationship would leave both countries in the position of Europe after the two world wars, when other societies achieved the preeminence the nations of Europe sought through self-destructive conflict with each other.

No previous generation has had to deal with different revolutions occurring simultaneously in separate parts of the world. The quest for a single, all-inclusive remedy is chimerical. In a world in which the sole superpower is a proponent of the prerogatives of the traditional nation-state, where Europe is stuck in halfway status, where the Middle East does not fit the nation-state model and faces a religiously motivated revolution, and where the nations of South and East Asia still practice the balance of power, what is the nature of the international order that can accommodate these different perspectives?

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Fallows on China the Fragile Superpower

In a blogpost about the disconnect between China’s internal poverty and external superpower status, James Fallows ends up quoting from his own piece on American values in the November 2007 issue of The Atlantic Monthly.

When living in Japan, I heard accounts from many Japanese who had gone to the U.S. for business or study in the 1950s, after the Allied occupation ended. They looked at the factories and the farms and the vastness of America and asked themselves: What were we thinking?

How could tiny Japan have imagined challenging the United States? After the Soviet Union fell and the hollowness of its system was exposed, many Americans asked: What were we thinking about “two superpower” competition with the U.S.S.R.? Its missiles were lethal and its ideology was brutal and dangerous. But a rival to America as an overall model? John F. Kennedy was only one of many to suggest as much, in his 1960 campaign references to the prestige gap as well as missile gap that had opened. Eventually, we all learned there was no comparison at all.

I think if more Americans came to China right now and saw how hard so many of its people are struggling just to survive, they too might ask: What are we thinking, in considering China an overall threat? Yes, its factories are formidable, and its weight in the world is huge. But this is still a big, poor, developing nation trying to solve the emergency of the moment. Susan Shirk, of the University of California at San Diego, recently published a very insightful book that calls China a “fragile superpower.” “When I discuss it in America,” she told me, “people always ask, ‘What do you mean, fragile?’” When she discusses it here in China, “they always ask, ‘What do you mean, superpower?’”

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Highly Stratified Classlessness

From The Whisperers: Private Lives in Stalin’s Russia, by Orlando Figes (Metropolitan, 2007), pp. 171-172:

There was a direct correlation between the allocation of material goods and power or position in the socio-political hierarchy. Below the Soviet elite nobody had many possessions – most people lived in a single pair of clothes – and there was barely enough food for everyone. But in the distribution of even these few goods there was a strict ranking system with infinite gradations between the various categories of employee based on status in the workplace, skill level and experience, and to some extent on geographical location, for rates of pay were better in Moscow and other major cities than they were in the provincial towns and rural areas. Despite its egalitarian image and ideals, this was in fact a highly stratified society. There was a rigid hierarchy of poverty.

Private trade partly compensated for the frequent shortages of the planned economy. People sold and exchanged their household goods at flea markets. If they could afford it, they could buy the produce grown by kolkhoz peasants on their garden allotments and sold at the few remaining urban markets tolerated by the government. People were allowed to sell their furniture and other precious items at the state commission stores, or exchange their jewellery and foreign currency for luxury foodstuffs and consumer goods at the Torgsin shops developed by the regime in the early 1930s to draw out the savings of the population and raise capital for the Five Year Plan. The black market flourished on the margins of the planned economy. Goods unavailable in the state stores were sold at higher prices under the counter, or siphoned off to private traders (bribe-paying friends of the manager) for resale on the black market. To cope with the problems of supply an ‘economy of favours’ came into operation through small informal networks of patrons and clients (a system known as ‘blat’). In many ways the Soviet economy could not have functioned without these private connections. To get anything (a rented room, household goods, a railway ticket, a passport or official papers) required personal contacts – family and kin, colleagues, friends, or friends of friends. The same blackmarket principles were known to operate in Soviet factories and institutions, where many goods and services were supplied and exchanged on the basis of personal contacts and favours. Soviet propaganda portrayed blat as a form of corruption (the aim of rooting out these private networks of patron-client relations assumed an important role in the purges), and this view was shared by many workers, in particular. But most people were ambivalent in their attitude to blat: they recognized that it was not right morally, and certainly not legal, but relied on it, as everybody did, to fulfill their needs and get around a system they knew to be unfair. Without blat it was impossible to live with any comfort in the Soviet Union. As the proverb said: ‘One must have, not a hundred roubles, but a hundred friends.’

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Cuyahoga River Fires of 1868, 1912, 1936, 1952, 1969

From: Break Through: From the Death of Environmentalism to the Politics of Possibility, by Ted Nordhaus & Michael Shellenberger (Houghton Mifflin, 2007), pp. 22-24:

On June 22, 1969, oil and debris on the surface of the Cuyahoga River in Cleveland, Ohio, burst into flames and burned for twenty-five minutes. The burning river quickly became national news. Time magazine published an article headlined “The Price of Optimism,” complete with a spectacular photo of the river aflame. Randy Newman wrote a song about the famous fire. And decades later, environmental leaders remembered the fire as an emblematic cause of the burgeoning environmental movement. “I will never forget a photograph of flames, fire, shooting right out of the water in downtown Cleveland,” President Clinton’s EPA administrator Carol Browner said years later. “It was the summer of 1969 and the Cuyahoga River was burning.”

But the famous photograph that appeared in Time was not of the Cuyahoga River fire of 1969. It was of a far more serious fire in 1952 that burned for three days and caused $1.5 million in damage. In fact, the Cuyahoga had caught fire on at least a dozen occasions since 1868. Most of those earlier fires were much more devastating than the 1969 blaze: A fire on the Cuyahoga in 1912 killed five people. A fire in 1936 burned for five days. The 1969 fire, by contrast, lasted just under thirty minutes, caused only $50,000 in damage, and injured no one. The reason Time had to use the photograph of the 1952 fire is that the 1969 fire was out before anyone could snap a picture of it.

For at least a hundred years before 1969, industrial river fires were a normal part of American life. In his scrupulous reconstruction of the era, the environmental law professor Jonathan Adler writes,

The first reported Cuyahoga River fires were well over a century ago. Indeed, it appears that burning oil and debris in rivers was somewhat common. Due to the volume of oil in the river, the Cuyahoga was “so flammable that if steamboat captains shoveled glowing coals overboard, the water erupted in flames” … The Cuyahoga was also not the only site of river fires. A river leading into the Baltimore harbor caught flame on June 8, 1926 … The Rouge River in Dearborn, Michigan, “repeatedly caught fire” like the Cuyahoga, and a tugboat on the Schuylkill burned when oil on the river’s surface was lit.

It wasn’t that nobody had noticed that the river had become a disaster. In 1881, the mayor of Cleveland called the Cuyahoga “an open sewer.” The problem was that there wasn’t the political will to do much about it. After the Civil War, the city was understandably more concerned with building a new sewer system to prevent more cholera outbreaks than with addressing the occasional river fire.

Like the sad and largely unacknowledged history of the Cuyahoga, smog in Los Angeles and other cities was bad in 1970 but hardly worse than the foul air Americans breathed in earlier eras. All of which begs the question: if modern environmentalism was born in response to the dramatic visual evidence of industrial pollution, why wasn’t it born in 1868, 1912, or 1952?

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Osaka Grand Sumo Finale and Freakonomics

Going into the final day of this year’s Osaka Grand Sumo Tournament, the two Mongolian yokozunas, Asashoryu and Hakuho, are tied for the lead with 2 losses each and will meet each other for the deciding match. Right behind them are two mid-level maegashira, the Georgian Kokkai and Estonian Baruto, with 3 losses each.

Seven rikishi are going into their final day with records of 7 wins and 7 losses, and therefore must win to retain their rank. It will be interesting to see how many of them win. (According to stats compiled in Freakonomics, about 5 out of 7 them will win.) All but one are facing opponents who have already secured a winning record, and the sole exception (Asasekiryu) faces an opponent who has no chance at securing one.

  • Goeido (M8, 7-7) vs. Kakizoe (M14, 8-6)
  • Wakanoho (M4, 7-7) vs. Tochinonada (M8, 8-6)
  • Miyabiyama (M2, 7-7) vs. Baruto (M7, 11-3)
  • Asasekiryu (M1, 7-7) vs. Aminishiki (M2, 6-8)
  • Kotoshogiku (S, 7-7) vs. Kisenosato (K, 8-6)
  • Ama (S, 7-7) vs. Kyokutenho (M4, 9-5)
  • Kotomitsuki (O, 7-7) vs. Chiyotaikai (O, 8-6)

UPDATE: Sure enough, six out of seven won their final bouts. (The winners are in boldface.) Baruto had too much to prove to go easy on Miyabiyama. He and Kokkai ended up at 12-3, tied with Hakuho, who lost his final match with fellow yokozuna Asashoryu. Baruto and Kokkai both shared the Fighting Spirit Award for the tournament.

Did the losers intentionally take a fall? Maybe not. Maybe the winners were just hungrier for that last win. Also, except for the ozeki (O) and Baruto, the winners also outranked their respective opponents, which meant they had better records in the previous tournament than today’s losers did.

UPDATE 2: Like every major sport worldwide, sumo has its ongoing scandals. Washington Post foreign reporter Blaine Harden updates us on one of them, the beating death last year of a trainee.

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Who Were the Soviet Collectivizers?

From The Whisperers: Private Lives in Stalin’s Russia, by Orlando Figes (Metropolitan, 2007), pp. 91-92:

What were the motives of the men and women who carried out this brutal war against the peasantry? Most of the collectivizers were conscripted soldiers and workers – people anxious to carry out orders from above (and in some cases, to line their pockets). Hatred of the ‘kulaks’ had been drummed into them by their commanders and by propaganda which portrayed the ‘kulak parasites’ and ‘bloodsuckers’ as dangerous ‘enemies of the people’. ‘We were trained to see the kulaks, not as human beings, but as vermin, lice, which had to be destroyed,’ recalls one young activist, the leader of a Komsomol brigade in the Kuban. ‘Without the kolkhoz,’ wrote another collectivizer in the 1980s, ‘the kulaks would have grabbed us by the throat and skinned us all alive!’

Others were carried away by their Communist enthusiasm. Inspired by the romantic revolutionary passions stirred up by the propaganda of the Five Year Plan, they believed with the Bolsheviks that any miracle could be achieved by sheer human will. As one student in those years recalls: ‘We were convinced that we were creating a Communist society, that it would be achieved by the Five Year Plans, and we were ready for any sacrifice.’ Today, it is easy to underestimate the emotional force of these messianic hopes and the fanaticism that it engendered, particularly in the younger generation, which had been brought up on the ‘cult of struggle’ and the romance of the Civil War. These young people wanted to believe that it was their calling to carry on the fight, in the words of the ‘Internationale’, for a ‘new and better life’. In the words of one of the ‘25,000ers’ – the urban army of enthusiasts sent into the countryside to help carry out the collectivization campaign: ‘Constant struggle, struggle, and more struggle! This was how we had been taught to think – that nothing was achieved without struggle, which was a norm of social life.’

According to this militant world-view, the creation of a new society would involve and indeed necessitate a bitter struggle with the forces of the old society (a logic reinforced by the propaganda of the Five Year Plan, with its constant talk of ‘campaigns’, ‘battles’ and ‘offensives’ on the social, economic, international and internal ‘fronts’). In this way the Communist idealists reconciled the ‘anti-kulak’ terror with their own utopian beliefs. Some were appalled by the brutal violence. Some were even sickened by their own role in it. But they all knew what they were doing (they could not plead that they were ignorant or that they were simply ‘following orders’). And they all believed that the end justified the means.

Lev Kopelev, a young Communist who took part in some of the worst atrocities against the Ukrainian peasants, explained how he rationalized his actions. Kopelev had volunteered for a Komsomol brigade which requisitioned grain from the ‘kulaks’ in 1932. They took everything, down to the last loaf of bread. Looking back on the experience in the 1970s, Kopelev recalled the children’s screams and the appearance of the peasant men – ‘frightened, pleading, hateful, dully impassive, extinguished with despair or flaring up with half-mad daring ferocity’:

It was excruciating to see and hear all this. And even worse to take part in it … And I persuaded myself, explained to myself. I mustn’t give in to debilitating pity. We were realizing historical necessity. We were performing our revolutionary duty. We were obtaining grain for the socialist fatherland. For the Five Year Plan!

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Overcompensating Kids of ‘Kulaks’

From The Whisperers: Private Lives in Stalin’s Russia, by Orlando Figes (Metropolitan, 2007), pp. 143-145:

Many ‘kulak’ children ended up as ardent Stalinists (and even made careers for themselves by joining the repressive organs of the state). For some the transformation involved a long and conscious process of ‘working on themselves’ that was not without its psychic costs. Stepan Podlubny is an example. Born in 1914 to a peasant family in the Vinnitsa region of western Ukraine, Stepan and his mother fled to Moscow in 1929, after his father had been exiled as a ‘kulak’ to Arkhangelsk. Stepan found a job as an apprentice in the factory school of the Pravda printing plant. He joined the Komsomol, headed a brigade of shock workers, edited a wall-newspaper (a form of agitprop), became a member of the factory board, and at some point it seems he was recruited as an informer by the police. All this time he carefully concealed his ‘kulak’ origins. He kept a diary which charted his own struggle to purge the ‘sick psychology’ of his peasant ancestors and reconstruct himself as a Soviet citizen. He tried to read the correct books, to adopt all the correct attitudes, to cultivate himself by dressing neatly and learning how to dance, and to develop in himself the Soviet public virtues of activity and vigilance. He drew up a ‘balance sheet’ of his ‘cultural progress’ at the end of every year (just as the state’s own planning agencies drew up annual balances of economic progress in the Five Year Plan). His ‘kulak’ background was a constant source of self-loathing and self-doubt. He saw it as an explanation for his own shortcomings, and wondered whether he was capable of ever really becoming a fully equal member of society:

13.9.1932: Several times already I have thought about my production work. Why can’t I cope with it painlessly? And in general, why is it so hard for me? … A thought that I can never seem to shake off, that saps my blood from me like sap from a birch tree – is the question of my psychology. Can it really be that I will be different from the others? This question makes my hair stand on end, and I break out in shivers. Right now, I am a person in the middle, not belonging to one side nor to the other, but who could easily slide to either.

Podlubny was constantly afraid that his origins would be exposed, that he would be denounced at work (a ‘snake pit’ filled with ‘enemies’), leading to his sacking and possible arrest. Eventually his ‘kulak’ origins were indeed discovered by OGPU, which told him it would not take action, provided he ‘continued to do good work for them’. It seems likely that Podlubny began to inform on his work colleagues. In his diary he confessed to feeling trapped – he was repulsed by his public persona and he clearly longed to ‘be himself’.

8.12.1932: My daily secretiveness, the secret of my inside – they don’t allow me to become a person with an independent character. I can’t come out openly or sharply, with any free thoughts. Instead I have to say only what everyone [else] says. I have to walk on an uneven surface, along the path of least resistance. This is very bad. Unwittingly I’m acquiring the character of a lickspittle, of a cunning dog: soft, cowardly, and always giving in.

The news that a fellow student had not been punished after he had been exposed as the son of a ‘kulak’ was greeted by Podlubny as a ‘historical moment’, suggesting as it did that he no longer needed to feel so stigmatized by his social origins. He embraced this personal liberation with joy and gratitude towards the Soviet government.

2.3.1935: The thought that I too can be a citizen of the common family of the USSR obliges me to respond with love to those who have done this. I am no longer among enemies, whom I fear all the time, at every moment, wherever I am. I no longer fear my environment. I am just like everybody else, free to be interested in various things, a master interested in his lands, not a hireling kowtowing to his master.

Six months later, Podlubny was accepted as a student at Moscow’s Second Medical Institute. He had always dreamed of studying at a higher institute, but knew his ‘kulak’ origins would be a stumbling block. The fact that the Komsomol at the Pravda plant had supported his application was for him the final affirmation of his new Soviet identity.

It sure would be nice if a lot of people who are either born into ‘class enemy’ status or educated into it could work out their feelings of guilt and entitlement outside the political realm. Let them manage hedge funds, not governments.

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Trouble Filling the Quotas for ‘Kulaks’

From The Whisperers: Private Lives in Stalin’s Russia, by Orlando Figes (Metropolitan, 2007), pp. 86-87:

The destruction of the ‘kulaks‘ was an economic catastrophe for the Soviet Union. It deprived the collective farms of the work ethic and expertise of the country’s most industrious peasants, ultimately leading to the terminal decline of the Soviet agricultural sector. But Stalin’s war against the ‘kulaks’ had little to do with economic considerations – and everything to do with the removal of potential opposition to the collectivization of the village. The ‘kulaks’ were peasant individualists, the strongest leaders and supporters of the old rural way of life. They had to disappear.

The ‘liquidation of the kulaks’ followed the same pattern nationwide. In January 1930, a Politburo commission drew up quotas of 60,000 ‘malicious kulaks’ to be sent to labour camps and 150,000 other ‘kulak’ households to be exiled to the North, Siberia, the Urals and Kazakhstan. The figures were part of an overall plan for 1 million ‘kulak’ households (about 6 million people) to be stripped of all their property and sent to labour camps or ‘special settlements’. The implementation of the quotas was assigned to OGPU (which raised the target to 3 to 5 per cent of all peasant households to be liquidated as ‘kulak’) and then handed down to the local OGPU and Party organizations (which in many regions deliberately exceeded the quotas in the belief that this demonstrated the vigilance expected by their superiors). Every village had its own quota set by the district authorities. Komsomol and Party activists drew up lists of the ‘kulaks’ in each village to be arrested and exiled. They took inventories of the property to be confiscated from their homes when the ‘kulaks’ were expelled.

There was surprisingly little peasant opposition to the persecution of the ‘kulaks’ – especially in view of Russia’s strong historical traditions of village solidarity (earlier campaigns against the ‘kulaks’, in the Civil War for example, had failed to split the peasantry). Certainly there were places where the villagers resisted the quota, insisting that there were no ‘kulaks’ among them and that all the peasants were similarly poor, and places where they refused to give up their ‘kulaks’, or even tried to defend them against the activists when they came to arrest them. But the majority of the peasantry reacted to the sudden disappearance of their fellow villagers with passive resignation born of fear. In some villages the peasants chose the ‘kulaks’ from their own number. They simply held a village meeting and decided who should go as a ‘kulak’ (isolated farmers, widows and old people were particularly vulnerable). Elsewhere, the ‘kulaks’ were chosen by drawing lots.

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Spreading Chinese Reforms in Africa

The cover story of the March issue of Prospect magazine is China’s new intelligentsia by Mark Leonard. Although interesting in its own right, the part that most grabbed my attention was China’s attempts to export its economic reforms, especially to Africa.

In February 2007, Hu Jintao proudly announced the creation of a new special economic zone complete with the usual combination of export subsidies, tax breaks and investments in roads, railways and shipping. However, this special economic zone was in the heart of Africa—in the copper-mining belt of Zambia. China is transplanting its growth model into the African continent by building a series of industrial hubs linked by rail, road and shipping lanes to the rest of the world. Zambia will be home to China’s “metals hub,” providing the People’s Republic with copper, cobalt, diamonds, tin and uranium. The second zone will be in Mauritius, providing China with a “trading hub” that will give 40 Chinese businesses preferential access to the 20-member state common market of east and southern Africa stretching from Libya to Zimbabwe, as well as access to the Indian ocean and south Asian markets. The third zone—a “shipping hub”—will probably be in the Tanzanian capital, Dar es Salaam. Nigeria, Liberia and the Cape Verde islands are competing for two other slots. In the same way that eastern Europe was changed by a competition to join the EU, we could see Africa transformed by the competition to attract Chinese investment.

As it creates these zones, Beijing is embarking on a building spree, criss-crossing the African continent with new roads and railways—investing far more than the old colonial powers ever did. Moreover, China’s presence is changing the rules of economic development. The IMF and the World Bank used to drive the fear of God into government officials and elected leaders, but today they struggle to be listened to even by the poorest countries of Africa. The IMF spent years negotiating a transparency agreement with the Angolan government only to be told hours before the deal was due to be signed, in March 2004, that the authorities in Luanda were no longer interested in the money: they had secured a $2bn soft loan from China. This tale has been repeated across the continent—from Chad to Nigeria, Sudan to Algeria, Ethiopia and Uganda to Zimbabwe.

But the spread of the Chinese model goes far beyond the regions that have been targeted by Chinese investors. Research teams from middle-income and poor countries from Iran to Egypt, Angola to Zambia, Kazakhstan to Russia, India to Vietnam and Brazil to Venezuela have been crawling around the Chinese cities and countryside in search of lessons from Beijing’s experience. Intellectuals such as Zhang Weiying and Hu Angang have been asked to provide training for them. Scores of countries are copying Beijing’s state-driven development using public money and foreign investment to build capital-intensive industries. A rash of copycat special economic zones have been set up all over the world—the World Bank estimates that over 3,000 projects are taking place in 120 countries. Globalisation was supposed to mean the worldwide triumph of the market economy, but China is showing that state capitalism is one of its biggest beneficiaries.

States are among the worst robber barons on earth, but if state capitalism can build wealth that improves the lives of state citizens, I’m all for it.

via Arts & Letters Daily

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