Recently our CSO was alerted by a Scandinavia-based perma-colleague to a piece published, ironically enough, in the London magazine The Spectator which enumerated several reasons (some interesting, others slightly fantastical) Why 2012 was the best year ever. But it wasn’t the main premise of the article that caught our eye, but rather one of the assumptions buried deep in its body: namely, the idea that the flow of dollars to China in exchange for goods – typified by ‘cheap plastic toys’ – to America can be characterised as capitalist in the liberal sense of the word and, ipso facto, as a validation of free markets.
China’s industrial base – as in much of East Asia – is characterised by significant state intervention, with around 114,000 state-owned enterprises (‘SOEs’) in existence as of 2010. These SOEs – on which cheap credit and tax breaks are routinely lavished – have such a strong imprint on the Chinese economy, particular in sectors deemed strategically important, that it is difficult to view China (which is ruled, lest we forget, by the omnipresent Communist Party of China or CCP) as anything other than a predominantly statist economy.
Analogously, those who would point to the United States as a capitalist paradigm will doubtless be disappointed by the dry facts of the American economy, which has for some time now been propped up by credit, not capital: according to the Bureau of Economic Analysis, savings ratios in the US plummeted from over 10% in 1984 to negative in the mid-2000s, only stuttering back into the black – just – in the latter part of the last decade.
While there has most definitely been some seriously intense trade during the last quarter-century between the two countries which presently comprise the so-called ‘G2’ – and this may, as The Spectator article claims, have been to somebody’s benefit – whether this has much to do with liberal capitalism, let alone free markets, is something of a moot point. What this example may illustrate, however, is how inadequate – linguistically, conceptually and practically – many of our existing models really are in terms of describing the world around us; too much of the time, we are reduced – perhaps with the very best of intentions – to writing what we would like to think is happening.