Michael Hudson Asks Our Readers: If Democracy Winds Up Creating Financial Dominance, What Do We Call China? — Yves Smith

Yves here. I hope readers will take Michael Hudson’s query to heart. His work has demonstrated how the financial sector tends to gain power and increase inequality if unchecked via debt jubilees or other methods to keep it from acting as a rentier and creating debt peonage. He wonders what would be the most fitting label for countries that like China have adopted substantial elements of a modern market economy but are taking steps to restrict the influence of financiers.

"Monopoly capitalism." The ironic thing is the the currency sovereign holds a monopoly over the currency and the only way that the financial sector can run monopolies is through government capture. Same with industrial capital, which is dependent on state regulation. Again, monopoly can only occur if the government allows. 

Also ironically, monopoly capitalism is an oxymoron since capitalism is based on competition in symmetrical markets. However, capitalism tends toward monopoly and monopsony owing to economies of scale, for example, even without predatory behavior.

China is now stepping and bridling "cowboy capitalism" before it gets out of hand. The West views this as repressive and economically stupid, while the social fabric in the West frays. Meanwhile, the Chinese government polls at above 90% approval with its people — you know, "the CCP."

This is not to say that the Chinese system is "better." Even the Chinese say that it is better only for Chinese, which is a unique civilizational state, so its system cannot be exported directly, although some principles are likely universal and can be applied to other developing countries. India would do well to take heed as it heads toward the cliff after adopting neoliberalism. Of course, India is also a civilizational country and needs to develop a system suitable for that instead of trying to impose the Western system.

Naked Capitalism
Michael Hudson Asks Our Readers: If Democracy Winds Up Creating Financial Dominance, What Do We Call China?
Yves Smith

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The penalty is the biggest move to date in China’s campaign to tighten supervision of its internet Goliaths.…

“Monopoly is the great enemy of the market economy,” the commentary read. “There is no contradiction between regulating under the law and supporting development. Rather, they complement each other and are mutually reinforcing.” …

And they would be right about this. The so-called capitalist world should listen up.

The criticism of China actions in regulating big business center around the assumption that the motivation is to prevent competitors arising that would weaken state power and could eventually threaten the present system of government. 

Be that as it may, the West has the opposite problem, namely state capture by big business that threatens the bedrock of democracy, that is, republican government, replacing it with corporate neo-feudalism.

The result in the West is obscene levels of accumulation at the top and inequality that threatens to tear apart the social fabric.

China is heading that off at the pass before it gets out of hand.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
China Fines Alibaba $2.8 Billion in Landmark Antitrust Case

See also

ECSN
Xi: Step up crackdown on telecom, online fraud