America learning from China

THE events of the few days in the West are astounding. The Western capitalist system as espoused by the Washington Consensus is crumbling or has already crumbled.

The West faces a moral hazard as it defies its own economic logic. The Western State, after years of criticising developing and semi-developed economies for stepping in at crucial junctures to protect a meltdown in their economies, has also started stepping in to pick up the tab for under-performing institutions.

This move was never underwritten in the Western capitalist economic model.

The West is now adopting the Chinese approach to capitalism – an approach they criticised and despised barely ten years ago when China was going through accession at the World Trade Organisation (WTO).

Learning from China now seems like a possibility, although the West would never publicly admit doing so.

America’s ‘Look East Policy’ pre-dated that of Zimbabwe or Africa. Many Western companies had already relocated to China, India, Malaysia, Singapore, etc. when Zimbabwe adopted the Look East Policy.

The West is urgently looking for new models to explain the current crisis north of the Atlantic. The situation threatens to crumble these once magnanimous economies.

China’s growth has been consistent, and has altered the international balance of power. American unilateralism is perpetually challenged by China, and its economy is likely to be superseded in the three decades – not a long time in economic terms.

According to Earth Policy: “During the 26 years since the far-reaching economic reforms of 1978, China’s economy has been growing at a breakneck pace of 9.5 percent a year. If it were now to grow at 8 percent per year, doubling every nine years, income per person in 2031 for China’s projected population of 1.45 billion would reach $38,000. (At a more conservative 6 percent annual growth rate, the economy would double every 12 years, overtaking the current U.S. income per person in 2040.)”

Existing Western economic models cannot sustain the ‘economic progress’ in these countries and the sooner these countries realize this, the better it will be for the entire world.

Current consumption levels are unsustainable and these countries are fast looking to countries like Zimbabwe and other sub-Saharan countries for mineral resources on which their modern industrial economy depends.

They are also consuming beyond the sustainable yield of the earth’s natural systems, and the sooner the developing world realizes this impending threat the better. As we are encouraged to “overcut, overplow, overpump, overgraze, and overfish” to satisfy Western consumption habits, “we are consuming not only the interest from our natural endowment, we are devouring the endowment itself.” In ecology, as in economics, this leads to bankruptcy.

Africa still has a large endowment, the developing world still has. These countries making up these regions need to learn, and learn fast that they should not be exploited.

Let America, and the rest of the West learn from the Chinese model and for once let’s look after our own natural endowment.

[Sam Garande writes from Cambridge, UK. He can be contacted at samgarande@live.co.uk ]