Sunday, December 28, 2014

Dialogus de Beijing Consensus, Pessimo's Summation and Conclusion: 'Whither Beijing Consensus' -- not where you might think!

The Beijing Consensus, including its various derivatives, is not a model, it is a narrative.  Moreover, as a narrative, it is for the most part not particularly about China, nor is it particularly about development.  Rather, it is -- paradoxically -- a story that is primarily about the United States, and about America's place in human evolutionary history.  But this is not necessarily a bad thing.

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In order to understand how this is so, we have to look a bit more closely about the intellectual history of 'development'.   As is well known, the modern law and development movement first emerged in the 1950s as a product of the Cold War.  The idea of development fit quite neatly into the American way of promoting itself vis-a-vis the Soviet Union.  The story was that economic development -- i.e., the development of standards of living and capacities to project political power characteristic of the advanced industrial democracies of the North Atlantic, and particular of the United States -- was the product of a liberal-democratic constitutional order interacting with a laissez-faire capitalist economic order.  Since both liberal democratic constitutionalism and laissez-faire capitalism were distinctly American attributes, 'development' itself came to be seen by many as proof of the practical and moral superiority of American-ness.

The emotional triumph of the American linkage of development, neo-Madisonian constitutionalism, and laissez-faire capitalism was, of course, the fall of the Berlin Wall.  This was, in the famous terminology of Frances Fukayama, proof that human's had finally reached the 'end of history' -- objective proof of the fact that the 'American'[1] linkage of liberalism and laissez-faire capitalism was indeed the only real path to human thriving, and perhaps by extension, proof that the United States' status as the World's  political, economic and ideological hegemon was in fact the morally deserved.  From a developmental perspective, this linkage came to be embodied what become known as the Washington Consensus, a developmental model that -- consistent with American triumphalism -- saw laissez-faire capitalism as silver bullet for economic development.

Of course, either the United States, nor the West, have ever been completely unified behind the American vision.  There have always been significant pockets of intellectual resistance to and dissent from the othodox American economic ideology, not simply as an international agenda, but particularly with the coming of Reagen-Thatcher 'revolution' as a domestic agenda.  Prior to the 1989, such dissent -- what we might call 'economic humanism' -- relied primarily on various versions of Marxism -- generally utopian Marxism in the United States (see, e.g., the Critical Legal Studies movement); structural Marxism in the case of Europe.  But to many in the West, and especially in the United States, the fall of the Berlin Wall was interpreted as a conclusive proof that Marxism, in all its variants, was simply wrong.  With this, the conceptual / and ideological foundation of economic humanism crumbled, particularly in the United States.  Critics had to search for a different narrative on which to frame their critique.

Despite all this, post-Cold-War American triumphalism was short lived.  Most particularly for our story here was the problem of China.  Even after 1989, China appeared to remain stubbornly non-liberal, both economically and politically, but also appeared to be experiencing significant developmental success.  Through 1997, the American / Western developmental orthodoxy was able to ignore the conceptual threat of China because of evolutionary ambiguities in the Chinese political-economic system.  Sure, the Chinese remained largely non-liberal both politically and economically, but at the same time, if you squinted just right, they could nevertheless be seen as possibly moving, again both economically and politically, in a liberal direction.

The first real challenge to Washington-Consensus triumphalism came from the Asian Financial Crisis ca. 1997-2000.  Efforts by IFI's and the American government to craft / impose a Washington consensus solution to that crisis not only resulted in failure, but in many cases they appeared to exasperate the social effects of that crisis.  This gave economic humanists a new conceptual peg on which to hang their critique. The on-going American (and European) battle between laissez-faire capitalists and economic humanism -- a battle that dates back at least to the 1880s in the United States (see, e.g., the 1896 presidential campaign between William McKinley and William Jennings Bryan) -- now shifted to a new front, that of East-Southeast Asia ('ESE Asia').  And insofar as that larger front was concerned, China would quickly come to represented ground-zero.

The East Asian Financial Crisis (AFC) introduced two subtle but extremely catalytic changes in to Euro-American conceptualizations of the global economic order.  First, the fact that that crisis was largely localized to East and Southeast Asia catalyzed the identification with the countries of ESE Asia of a distinct and structurally and conceptually coherent capitalist structuring, what is often today referred to as 'Asian capitalism'.  (Such an identification can be traced back at least to the 'developmental state' literature of 1980s, but the AFC greatly popularized it.)  That 'Asian capitalism' represented a distinct form of capitalism helped explain why the Asian Economic Crisis was largely localized to ESE Asia.  That Asian capitalism represented a structurally coherent form of capitalism helped explain why that crisis impacted equally an otherwise wide diversity of politically autonomous national systems (from seemingly industrial democracies like South Korea to seemingly autocratic kleptocracies like Indonesia).

As a territory within the ESE region, China was naturally included in this new, Asian-capitalist narrative.  This, in turn, highlighted its 'otherness' -- the degree to which it now appeared to stand as contradiction of (rather than as support for) American triumphalism.  This otherness was further heightened by the fact that not only had China largely escaped the social and economic disruptions of the ARC, but it had -- along with Japan -- sought to provide an alternative form of transnational economic response to that crisis, one that deviated significantly from the Washington Consensus based response offered by the international IFIs,  but was prevented from doing so by political pressure from the United States.

All this made China a very attractive peg on which economic humanists and others could begin to re-frame their ideological objections to American triumphalism.  This was clearly why Joshua Ramo choose to name his humanist alternative to the Washington Consensus the 'Beijing Consensus', despite the fact that it had almost nothing to do with anything that China had actually done, intentionally or unintentionally, in the context of its own post-1980 economic and social evolution.  And the appeal of China-centric adjectives like 'Beijing' and 'Chinese' extended beyond the realm of economic humanism.  The American Cold-War linkage of the economic with the political with the developmental made China-centric adjectives useful in a wide diversity of Western ideological contestations -- not simply economic, but political and cultural as well.

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This helps explain why the 'Beijing Consensus' is a least in part a story about the America.  But couldn't it also at the same time still also be a story about China's actual development? and through that a model for development more generally?

Likely not.  For a number of reasons.

First, I think it highly questionable whether China actually presents us with a show-case example of 'development'.   As least some portion of China's development has been a product of an earlier economic insanity that needlessly devastated China's productive capacity for over two decades.  Much of China's subsequent growth was simply a product of China opening it markets, much like the rest of the world had already done some 200 years earlier.  In other words, China's dramatic economic growth may well be the product of China simply no longer being stupid and not of China being particularly smart.  Is simply not being stupid really that meaningful a developmental model?  Beyond this, Green GDP measures suggest that China's unprecedented environmental degradation is now actually destroyed as much wealth as China's GDP growth is producing.   In other words, China's may have effectively stopped growing altogether once one accounts for environmental degradation.  Related to this, China significantly underperforms its income class in terms of iHDI, environmental sustainability, and subjective well being -- suggesting that even if China is 'growing' economically, it may not be growing into a country in which most people would actually want to live.  All of this gives very good reason to question where China's particular pathway to economic 'growth' is really something we want to other countries replicate. 

Second, implicit in the story above is the observation that what adjectives like Chinese, Beijing and Asian are really doing is appealing to a particular quality of otherness.  They are negative rather than positive definitions -- their principal purpose is to signify what something is not -- that it is not supportive of American triumphalism -- rather than what it is.  But a model, on the other hand, is not about what something it not, it is about what something actually is.  And for this reason, a negative definition can never serve as a meaningful 'model'

We see this most clearly in the legal-developmental 'models' of experimentalism (aka New Development Economics') and the East Asian model.  Experimentalism might represent an affirmative model when we structure it as a controlled experiment, but without control, and Rodrik makes clear that 'control' is not a necessary or even feasible component of the experimentalism of New Development Economics, experimentalism becomes nothing more than simply 'muddling through'.  But 'muddling through' clearly does not describe anything that could meaningfully be called a model, rather it expressly denotes the affirmative absence of a model.    

What really prevents some vision of a Beijing Consensus from developing into an affirmative model for development is that at the end of the day, our understanding of development itself is founded upon a series of conceptual categories and distinctions that ultimately emerged to express particular moral-ideological understandings of the Cold War binary.  They simply do not translate into post-Cold War understandings of the human condition.

One the other hand, the last 70 years of human economic history has made increasingly clear that we really still have no hard evidence as to what triggers actually 'development'.  Of course, we have gained considerable knowledge about what doesn't promote or trigger development:  we now know, for example, that Soviet style command economies are often not particularly good at promoting economic development; more recently, we have also found out that implementation of greater laissez-faire capitalism, a'la the Washington Consensus, also does not promote economic development, at least by itself.  But if not socialism or laissez-faire capitalism per se, what does promote development?

To observe that China's political economic system deviates from that promoted by American triumphalism ultimately only tells us what that system is not, not what it is.  Along these lines, it tells us of what is not essential to promoting development, but is much less clear about what it is that does promote development.  Is it sequencing?  is it state capitalism?  is it Confucianism?  Is it all of these, or something different?  Or is it those emergent elements of Western-American capitalism that we saw in China's post-Mao opening but which the discourse of 'Asian capitalism' has tended to invisiblize?  How much of China's economic growth post 1980 is attributable to the fact that prior to 1980 China effectively obliterated industrial economic productivity through 25 years of disastrous economic policymaking, namely the Great Leap Forward and the Cultural Revolution?  (The World Bank, for example, has recently praised China for “lifting 500 million persons out of poverty” without acknowledging the role that China may have played in putting those people in poverty in the first place.)  We might also note even more radically along these lines that some argue, rather convincingly to my mind, that development is actually not primarily the product of institutional or capitalist design at all.  China's development can be explained simply by reference to its particular location in transnational political-economic space (its proximity to Taiwan and Japan, and by its location in the Cold War political contestation between the US and the USSR).   

Much of the problem in this regard is that the very categories we use to conceptualize our possible predicates for economic development are themselves the product of Cold-War mythologizing. The fact is that the American economy never functioned the way that what I have been calling 'the laissez-faire capitalism' model of the Cold War claimed it did.  American capitalism is actually a highly variegated economic system that includes within it a wide diversity of capitalism each serving a distinct social purpose.  And there is no evidence that the particular features that we during the Cold War chose for ideological reasons as signifying the essence of the American economy are actually what drove economic growth, or whether that growth might have been catalyzed to considerable extent by other structural elements that were invisibilized by this myth because they were less effective at politically and ideologically branding the American economic system in distinction from the Soviet economic system (such as state and local social public welfare systems, or the quasi-monopolies that Joseph Schumpeter termed 'core industries' and that tended to populate the pinnacle of the American economic order, or the state-capitalist linkages created by the linkage of private campaign finance and political lobbying).

The same is true with regards to American framing of its political order.  American liberalism -- rights, democracy, rule of law -- has always been much more conditional than our engagement with the transnational world would often lead one to believe.  Human rights are frequently qualified and the will of the demos is frequently subordinated to more sectoral, modernist, or otherwise elite perspectives.  'Rule of law' does not structure American social, political or economic ordering to the degree that that transnational 'rule of law' discourse suggests.  And at the same time, these liberal elements also enjoy at least some degree of qualified respect -- sometime highly qualified to be sure, but some degree of true respect nevertheless -- in most of the world's political orders, including that of China.  The difference is a difference in degree, not a difference in kind.

Once we recognize how much distinctiveness of both the American liberal market economy and its liberal political ordering have been exaggerated, then we see how exceedingly difficult it becomes to identify any set of features of China's political-legal-social-economic system that are really that distinctive to that system.  China's is not a liberal market economy to be sure, but at the same time it to some extent it has within it all the elements of a liberal system.  And its deviations from the ideal of market liberalism can be mapped onto deviations that are also found even in the United States.  The same is true of its political system, and of its social system.  And without being able to actually identity and meaningfully distinctive features of China's system, we can't identify what is actually distinctive about some so-called Chinese 'model'.  Clearly, it is different, but it is also to some extent the same.

Beyond this, even our understanding of what constitutes -- or what indicates -- development is highly colored by Cold-War ideological concepts that are of questionable application to the real world.  As noted above, the modern idea of development -- the idea that equates development with GDP or GNP growth -- is an invention of the Cold War:  we equated development with GDP growth because GDP growth was something that the West in general, and the United States in particular, has historically been particularly good at.  But there are a number of problems with this.  First, GDP was originally developed to measure industrial productivity in a classically Fordist economy -- that of the United States during the Second World War.  The farther one moves away from that kind of economy, the more problematic that particular measure -- or its derivatives, like GNI -- become.  Lessor developed countries are also lessor industrialized, and even beyond that not particularly Fordist, and this causes significant portions of their economy to elude GDP / GNI capture.  Sometimes, these portions represent pockets of considerable productivity, other times, they can represent pockets of considerable non-productivity.  And since they are by definition invisible, we really can't know which are which.  Further catalyzing this ambiguity is the fact that in developing countries, the economic figures used to construct GDP / GNI measures are invariably provided by governments whose legitimacy and even survival depend upon a positive GDP / GNI assessment of economic growth.

But even beyond this, the actual relationship between GDP / GNI growth and a conception of development that is actually desirable from the point of view of the national populations experiencing it is also quite contentious in the post Cold War world.  China in particular showed us that GDP development can at least in some circumstances be severed from what we regard as political development (such as political liberalization, political or economic equality, 'freedom' or 'capabilities'), and this has lead many to question whether economic growth by itself actually captures anything we would consider desirable, at least in the absence of some corresponding political development.  But of course, as we explored above, our understanding of what actually constitutes 'political development' is invariably itself highly colored by our Cold War narratives as to what constituted the structural 'essence' of the late-industrial American political-legal system.  It is by no means structurally comprehensive, and in some cases is structurally arbitrary.  For this reason, our choice as to what constitutes a meaningful political-social structure that is indicative of 'development' is as conditioned on ideology as our choice as to what constitutes a meaningful economic structure.

All in all, in discussing a possible Chinese model of development, not only are we unable to objectively identify any truly essential structural features of Chinese capitalism, we are also unable even to objectively identify whether China is actually experiencing and meaningful sense of 'development'.   At least for the present, our choice of which particular economic and political-legal structures are meaningful within the context of development continue to be borne primarily out of American efforts to locate itself in the political world created of the Cold War, and through that in human history.  For this reason, our stories about China's 'development' -- both positive and negative -- are ultimately not stories that are ultimately about China.  They remain, for the present at least, stories about what China has to tell us about being American.

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And this is not at all a bad thing.  As Baruch Spinoza so cogently identifies, knowing the world and knowing oneself are symbiotic endeavors.  The more we can learn about who we really are, as distinguished from who we like to think we are, the more we are likely to truly understand and appreciate our place in the world, and through that the world as it actually is.  Speaking now as an American, the problem with the Cold-War ideology along these lines is precisely that it represents a picture of ourselves as we wish we were, but not as we actually are.  Seen in this light, endeavors to identify (and contest) a Beijing Consensus, even though they are really about America, are indeed nevertheless very much worth the effort.  Because in telling us who we really are (as distinguished from who we wish we were), these effort ultimately help us appreciate how the world actually is (as distinguished from how we want it to be).  This we have to do first, before we can knowingly identify any meaningful paths to 'development' -- however conceived -- through law.

Wait . . . did Pessimo just end on a note of optimism?  

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