Review (Guest): Adam Smith in Beijing–Lineages of the Twenty-First Century

4 Star, Capitalism (Good & Bad), Complexity & Resilience, Country/Regional, Economics, Future, History, Threats (Emerging & Perennial), Water, Energy, Oil, Scarcity
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REVIEW (Guest) by By Malvin

Historical perspective on China’s ascent,
December 19, 2007

Giovanni Arrighi

“Adam Smith in Beijing” by Giovanni Arrighi delivers a sophisticated history and analysis of the rise of the Asian economy. Displaying a deep knowledge of world history including novel insights into the works of Adam Smith and Karl Marx, Mr. Arrighi helps us understand why China’s ascent has arrived at the moment when the dream of a single world capitalist state as conceived and championed by the U.S. has failed. Impeccably researched and cogently written, this accessible book succeeds in providing historical perspective on how China has come to be a key player on the world stage.
Mr. Arrighi discusses how China’s mixed economy of today conforms to Adam Smith’s vision of a large market economy managed by an active government that ensures improved living standards for all; in fact, Smith reasoned that Asia might one day grow to assume parity with Europe. We learn that China’s Industrious Revolution leveraged its large internal market and abundant labor supply to develop a diverse economy where wealth was widely dispersed among the population. In contrast, the West’s Industrial Revolution conformed more or less to Karl Marx’s analysis inasmuch as it allowed a relatively small class to own the means of production, secure power and finance a succession of military/industrial states whose imperialistic adventures were intended to guarantee an endless expansion of the capitalist system.

Mr. Arrighi tracks the global turbulences that have been wrought as a consequence of the Western development path; the process of creative destruction inherent in the capitalist model has grown ever larger beginning with the small Italian city-states to the Dutch, British and, finally, the American empire. The author shows how each successive wave of accumulation collapsed as a consequence of escalating administrative costs including the funding of ever larger armed forces; of course, the strategy did succeed during much of the 19th and 20th centuries as China fell under domination as a consequence of the West’s advantages in military technology. However, the book describes how the failures of the George W. Bush administration’s economic and foreign policies are but the culmination of an ill-conceived, decades-long neoliberal project of world domination that bears striking similarity to previous fallen empires. Ironically, as U.S. hegemony has unraveled in the wake of the Iraq War, the author contends that widespread economic prosperity has allowed the Asian nations to emerge as the true victors of the U.S. War on Terror.

Against this backdrop, Mr. Arrighi contemplates three different foreign policy approaches that the U.S. might consider as the Asian Age unfolds. The interconnectedness of the U.S. and Asian economies suggests to us why the differing proposals made by Robert Kaplan, Henry Kissinger and James Pinkerton have all been pursued to varying degrees simultaneously, amounting to a confused and conflicted U.S. Asian policy. Interestingly, Mr. Arrighi posits that China simply does not need to pursue a militaristic path to attain preeminence as long as the U.S. seems bent on self-destruction through its strident diplomacy and economic indebtedness; indeed, the U.S. is rapidly becoming irrelevant as more and more investment decisions are being made in Asia with less and less input and participation from U.S. business partners.

Unfortunately, for a book that is subtitled “Lineages of the Twenty-First Century” the author provides scant attention addressing three major challenges that lay ahead for China: environmental deterioration, the lack of democracy and growing income inequality. Readers interested in these issues might refer to Elizabeth C. Economy’s The River Runs Black: The Environmental Challenge To China’s Future (Council on Foreign Relations Book), which argues that continued neglect of China’s burgeoning environmental crisis will seriously curtail and constrain its future economic growth; and James Mann’s The China Fantasy: How Our Leaders Explain Away Chinese Repression, which advances some of the reasons why democracy remains unlikely in China for many years to come. Whereas Mr. Arrighi is practically silent on these issues, both of these books suggest that serious internal conflict between a repressed Chinese working class and a privileged political class will become all but inevitable. In my view, Ms. Economy’s and Mr. Mann’s books serve as necessarily sobering counterweights to Mr. Arrighi’s decidedly more ebullient narrative.

The above minor reservations notwithstanding, I highly recommend this brilliant, timely and informative book to everyone.

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