The Demise of Capitalism?

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The Rise of China and the Demise of the Capitalist World Economy

Friday 01 May 2009

by: Seth Sandronsky, t r u t h o u t | Book Review

In Beijing, a paramilitary policeman raises the Chinese flag in front of the portrait of Mao Zedong. Minqi Li's new book details China's rise. (Photo: Reuters)

"The Rise of China and the Demise of the Capitalist World Economy"
by Minqi Li
240 pages, Monthly Review Press, (January 2009)

A bit like Malcom X, author Minqi Li used prison time to read widely. The latter studied radical political economy for two years when Chinese leaders locked him up for a critical public speech after the Tiananmen upsurge in 1989. That was then. He is an author and assistant professor of economics at the University of Utah now. Li's "The Rise of China and the Demise of the Capitalist World Economy" is a must-read for all concerned with the future of the earth and its people.

Throughout the book, Li employs a term from world-system theorist Immanuel Wallerstein, the "endless accumulation of capital." That process has spread outward from Western Europe over the past four-plus centuries. Formed by distinct historical conditions, this social system encompasses the entire globe now with the entry of China and India, the two most populous nations on earth. Together, they function as "strategic reserves" of land, labor and resources, Li argues. Crucially, this phase of growth places potentially fatal strains on "the requirements of ecological sustainability." That is the case due to the links between industrial production and environmental degradation. To drill down on these points, Li devotes no small effort to an accounting of the "hard facts" around modern industry and ecology.

To improve our understanding of the present conjuncture, Li details China's rise in the modern era. For US readers especially, the sections on the Chinese revolution are quite useful. To this end, he lays out how and why that revolution under Mao and the Chinese Communist Party paved the path for the transition to capitalist industrialization. His is not the conventional wisdom. In this way, the book in part helps to deconstruct the anti-Chinese ideology that has shaped the US's political culture from the post-Civil War era through the cold war and to the present.

Global capitalism, as its backers and detractors maintain, must expand to continue. Within this context, Li holds that the rapid growth of the Chinese economy has stabilized a world system sunk into slow growth since the US-led post-World War II period of prosperity and stability ended in the early 1970s. The rub is that China's development provides a short-term solution only. There is a looming possibility of reversal to world instability, ecologically and economically. An example of the latter is the fragility of US borrowing from China. Its currency surplus helps to fund US deficits. The American penchant for borrowing could well spark a fall in the value of the dollar, the leading reserve currency in the world. Li marshals figures and tables from China, the OECD, US and the World Bank on exchange rates, growth, income, prices, profits and wages to make clear the constraints of each nation in world capitalism for the short and long term.

Li argues that the rise of China heralds the "autumn" of the current global system. He draws on Wallerstein's framework of core, semi-peripheral and peripheral nations locked in competition. The stabilizing role of a core, imperial power such as the US since the end of World War II and Great Britain before it, is to maintain that competitive forward motion. This trend requires nations of the core, periphery and semi-periphery to strike a delicate balance to continue the accumulation of capital for investors. That balancing act is due to the built-in creation and destruction of market relations among and between nations, whose internal class structures are thus in constant flux. By definition, this clash and conflict paves the way for instability. Look no further than the US wage stagnation for the past 35 years. That process propelled the widening gap in income between Main Street and Wall Street and set off repeated asset bubbles, harming working people with job losses state side and abroad.

Li's critique of "sustainable capitalism" is devastating in its breadth and depth. He argues, persuasively, against that notion with proof that requires no more than high school math. His clear prose lays out the costs and benefits for the planet and people under the current social system with respect to nonrenewable and renewable energy, minerals, water, food and climate change. Li reveals, layer by layer, the "laws of motion" of an extractive system of producing and exchanging commodities that is fast careening towards an unsafe future.

To be clear, this book is much more than a compendium of dire analysis, data and statistics. Li analyzes the current crises as the outcomes of history that women and men make under conditions they do not choose. Thus, he offers no hard and fast blueprint for a post-capitalist tomorrow. Li does favor labor internationalism and a shorter working day. Both developments, in his view, are basic to a more rational way of organizing people to sustain themselves and the natural world.

A brief look at Malthusian economics that blames the victims of the system for their poverty would have strengthened the book. That quibble aside, I recommend "The Rise of China and the Demise of the Capitalist World Economy" as a vital work of radical political economy. Li furthers our understanding of the vast challenges before us in these troubled and troubling times. Be aware.

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Seth Sandronsky lives and writes in Sacramento. Contact him at ssandronsky@yahoo.com.

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