This is Richard Wolff, from Democracy at Work, responding to another “Ask Prof Wolff” question
sent in from our Patreon community. And this one comes from Nicola Kerton,
and I want to thank Nicola for the question she poses. It's an important one about China.
And, as I read her question, it has two parts. One asks about China in relationship
to two propositions that are in the press a great deal these days. That, one, China is surpassing
the United States as a global economy. And, number two, that the US dollar is no longer the
number one global reserve currency, etc., etc. And her other question, or part of her question,
has to do with what we might call the Chinese “model,” in which a very powerful
government apparatus controls an economy, regulates it, manages it,
an economy composed, in part, of state-owned and operated enterprises,
but in part, and in a growing part, and a very big part, of private capitalist enterprises,
both domestic, that is Chinese-owned and operated, and foreign, and indeed, a good number that are
partnerships between those two, but are private, capitalist enterprises. So let me respond to both
parts of Nicola's question. First,
I think I would disagree a bit with the part of your question that reads as though you think
that the Chinese economy already has become, in some sense, the number one economy in the world.
I think the general consensus is that it will do that later in this decade,
in other words, sometime before the year 2030. But we're not there yet.
At this point, the Chinese economy is by far the world's fastest growing economy.
For many years it has grown much faster than the United States, three times faster, on average.
Not this year, the pandemic has changed all that. But that will likely revert to pattern
within the next year or two. So, it's growing faster. It's definitely catching up,
and that's why there are confident predictions that it will surpass the US in terms of its
global economic footprint in a few years. The second area where I would also disagree a bit
is with the remark about the US dollar. The US dollar is still the most globally used currency,
and I don't see that changing in the immediate future. The Chinese yuan
is becoming more and more important. It is now used in transactions around the world,
far more than it was over the last half-century, etc., but it is still catching up.
The per capita income in China is significantly lower than that in the United States,
and while that's partly because they have a very large population, it's also the case
that they have still a good bit of catching up to do. They're gaining. They'll get there.
They'll get there pretty soon. And it is clearly troubling, if not terrifying, to the American
government. But we're not quite there yet. On the other part of Nicola's question,
I think she's spot on. She has recognized, and rightly so, that what the Chinese represent is a
successful model of economic development. Like so many of the countries of the world, 50 years ago,
China was desperately eager to no longer be poor, and to become rich. It is the goal that has driven
many, if not all, of the economies of the world, including the United States, Europe, and so on.
And the world had, in the 19th, and for much of the 20th century, become pretty horribly
divided between a small number of very rich countries, Western Europe, North America, Japan,
and a vast array of poor countries, most of whom were called the “Third World.” China has broken
that pattern. China is the outstanding example of breaking that pattern. China is no longer a poor
country. China is now a [so-called] middle income country, but one that is gaining very quickly as
Nikola recognizes, and as we have just discussed. And the model they use, the model that has worked
so well for them, has allowed them to raise standards of living, over the last 30 to 40
years, much more dramatically than anything achieved in Western Europe, North America,
or Japan. They still have a way to go, because they were very poor, but their rate of growth
is number one, both in GDP output, and in average real wages of their working class.
And that model, therefore, is powerful. And it's the model of a very strong
governmental intervention, governmental regulation, and governmental control.
The more laissez-faire, minimum government, government hands-off, government limited,
all of that mentality associated with the United Kingdom and the United States,
celebrated in a more fantastical form by libertarian ideology, that doesn't look
so good in comparison with what the Chinese, with their powerful government, have achieved.
And my suspicion is, and I think Nicola, you’re right to see it also,
is that that model is going to impress itself more and more on the rest of the world. Just as the
free trade, libertarian, liberal idea was spread around the world by the success it seemed to enjoy
in the United Kingdom, the British Empire, and then the United States, the American Empire.
As those two countries enter periods of decline, which the United Kingdom
has been in for a century, and the United States is now in for a while,
then you're going to see the Chinese model become more and more important
alongside the actuality of the Chinese economy. This is Richard Wolff, for Democracy at Work.