China

Hopefully, all of you believe, as I do, that a prosperous China, integrated with the world economy is the best hope for peace and economic growth. However, I've been reading an article in the latest Foreign Affairs Journal about China's environmental problems; and they are manifest. As the author went on about the various horrors, she concluded that the real solutions won't be forthcoming until China reforms some relevant portions of its government. Point taken.

But, I will take it further. I'll say this is a worrisome confirmation of a point that Milton Friedman made. He argued that capitalism and freedom went hand in hand. That capitalism maintained the means of freedom outside of governmental control. For instance, he pointed out that it was very difficult to exercise free speech if the government controls all the radios, televisions, and printing presses.

Recently, it has become a fashionable thing to write that this is a one way street. Freedom may lead to capitalism, but the opposite is not necessarily true. Russia and China are used as the two greatest examples of a society that seems to be embracing an authoritarian, as opposed to democratic, capitalism. And, it has seemed that these two countries have experienced rapid economic growth and improvements in the average person's material standard of living while personal political freedoms remain, or are even further, curtailed.

But, this article on Chinese environmental matters points to what I think is a hidden truth. A capitalist, free market economy is one of the most powerful, dynamic, and unpredictable forces on the earth. And where people have argued that technology developed by such a system just makes it easier to monitor people and restrict their freedoms, I argue that the opposite is the case as well.

A legal system, or a bureaucracy, is a complex and rigid thing, and is even more so when it is not routinely held accountable in elections that vent popular unrest. It may be strong, but it is also brittle. China's environmental problems, as an example, would never have occurred under the former communist economic model, simply because that model was not capable of unleashing the current amount of activity. In this area, and many others, we are now finding that a government of repression is not well suited to adapt to the dynamic needs of a free market. And, further, as the free market enriches the citizens, and technology expands the capabilities of a single individual, the means to seize and exercise political freedom are more and more available.

Here lies the worry: can China survive a revolution? Would it be a velvet one? Or would the government destroy all that has been accomplished to preserve its power? And, if China were derailed, what would happen to a world economic system that has become deeply tied to it?

It's ironic to be worried about democracy, no?