Lecture 18 Feb 12 08 China and Japan
Lecture #18 China and Japan feb 12, 08
SLIDE #1: Models of Political Economy
- Anglo-American (capital accumulation by way of market)
- Continental (capital accumulation by way of ¯universal° banks)
- Late developers (capital accumulation by state)
- ¯The Great Leap Forward° forcing peasants to make steels.
- Proletarian Revolution in 1977.
- Now China has been growing for the last 20 years for 10-20%.
- Giant Changes: 200 million ppl have been lifted out of poverty.
- 80-85% of ppl still lived in rural areas.
- small middle-class
- ruled by the Chinese communist party, in favour of socialism; no official break of communist past,
execute ppl from political crimes
- still a one party political dictatorship
- june 1989, tianamen square a democracy movement surrounded by the students, Chinese army
killed students and arrested them.
Slide @: Anglo-American VS Continental
- Pluralist VS corporalist. One based on competition, the other based on negotiations of peak
- Pluralist: economic and social policies driven by interest groups
SLIDE #3: Pluralism
- In the pluralist model: policies are hashed out on the parliamentary floor by parties that
compete for votes: based on conflict and competition
- USA, UK, Canada
SLIDE #4: Corporatism
- Societies are organized in to peak associataions (unions, employer, association) These
groups sit down and geotiation all the major parameters of economic social policy
- Fights are suppose to be kept off th eeparliametary floor: legacy of the depression, radicalism,
- In fact, parliament doesn¬t matter that much
SLIDE #5: Japan
- Powerful ministries that guide investment (MITI and MoF).
- Large vertically and horizontally integrated firms that often have their own bank
- Small unemployment, small welfare state
- Different career path: Bureaucracy VS private sector (¯descending from heaven°)
- Parliament does not rule: it reigns
- Late developers, same path as Germany, large ambition for military challenge, industrialization for
creating superior military and empire in Asia similar to Fascism.
- After WW2, economy and politics were completely destroyed.
- Accepted defeat in WW2, became a great economic
- Ministry of finance choose industries for long-term investments (electronics), target and compete
foreign markets, whether they make money in short-term is not important
- has very low unemployment, firms are the welfare state
SLIDE #6: Japanese Balance Sheet
- Huge success and model since WW2. How to take a poor country and make it into a rich one.
- Demonstration effect: other countries in East Asia with similar models: Korea, Thailand, Indonesia,
- But how does it work? Defies normal ¯laws° economies
- Culture? Tricky
- US subsidy in cold war? Yes, but not enough
- Institutions? Normally we think of bureaucratic control over in economy as recipe for disaster.
- Answer: there is obviously huge amounts of corruption in Japan but not so much that it prevents the
country from producing huge amounts of wealth that are fairly evenly distributed. Japanese don¬t want
to be ¯Americans°
- Share of common religion (Buddhism)
- Americans were afraid of Asia for being Communism
- Foreign aid was not necessarily a key to economic development
- Most states are predatory
SLIDE #7: China¬s Strategy
- China and Russia compared: exit from Communism?
- Russia democracy first capitalism second
- For china, capitalism first and no democracy
- In Russia, it is an urban country trying to get into cities, mostly old ppl and young ppl in rural areas
- In China, it is completely reverse, mostly in rural areas and farms
- Chinese development today is township
SLIDE #8: Open economy to foreign investment
- Export led development. Seems to follow a general Asian model of state-led capitalism, even though
it is all under auspicies of a communist party
- But can the communist party remain in control over a capitalist economy? China¬s growing middle
class and dynastic society.
- Chinese regimes had used several factors in short-term: nationalism, made peace with nationalism
- Russians were similar to European or American model
- Cultural value important in Asia