China seeks third way

There have been several recent articles this past week (October 15, 2006) about developments in China which bear investigating. One on the front page of the New York Times discusses the move by the Chinese authorities to strengthen the power of trade unions in negotiating with the multinational or global corporations that have established branch plants in China to take advantage of the cheap wages there.The Chinese government after extensive consultations and hearings with concerned parties including workers, union representatives, ordinary citizens and company executives has decided to strengthen trade union rights including the right to negotiate a collective agreement and mandatory minimum wages and working conditions for workers. This is very good news for it should lead to a rise in wages and greater social equality in China ensuring that inward investment benefits Chinese citizens more than in the past and promotes more rapid and balanced development. It will also eventually somewhat reduce the incentive of these companies to outsource their western plants because of relatively higher wages and benefits. Some of the global corporations in China have protested the extension of union rights belying their claim that globalization without regulation is good for workers. Clearly they have been hypocritical about this. This move may mark the beginning of the search for a third way in China that allows China to develop a more democratic variant of an advanced economy that is neither unbridled Hayekian market capitalism nor Stalinist command economy communism.

The University of California at Irvine scholar Dorothy J. Solinger has written extensively about the impact of marketization and entering the WTO upon China and the problems these economic reforms have created for Chinese workers including a growth in poverty and the emergence of an urban formerly employed but now unemployed underclass. Along side the massive poverty in the rural hinterlands this has threatened the stability of China. Solinger's work is accessible through Google. A recent paper(http://www.monash.edu.au/units/aberu/papers/0905SolingerWTO.pdf) that she presented at Monash University in Australia in 2005 The WTO and China's Workers is quite useful.

These very recent moves by the Chinese government seem at least in part to be motivated by a desire to avoid or at least repair some of the worst consequences of Hayekian laissez-faire.

As part of these recent developments   one can also hope for greater recognition of freedom of speech, pluralism and other civil society democratic rights that we consider important in the west.

In a related development the New York Times Sunday magazine has a very interesting article on several Chinese professors and intellectuals who have begun to articulate this third way forward. This is an opportune time for these thinkers to explore Keynesian and post Keynesian writings for a guide to sensible regulation of the market economy in the interests of lower unemployment and greater social justice. We shall see where these winds of pragmatic progressive change lead.

As the rural countryside begins to develop and benefit more from recent economic growth in the big cities where the boom has been concentrated a number of dynamic trends may well release enormous energies for the future.Close to 800 million people in the countryside are poised to participate in the Chinese economic growth spurt if the people and the authorities can handle the transition to a more modern economy and avoid the trap of dualism