Taking China Seriously
Paolo Gurisatti and David Lane
Abstract
The crisis induced by Coronavirus infection is posing a serious challenge to the West’s health and economic systems. During the first critical weeks, Western countries, with Italy at the forefront, underestimated the scope of the changes they would need to initiate to face the emergency. They recognized too late the importance of social distancing as the fundamental weapon against the virus, the need for draconian measures to impose and enforce social distancing, and the economic and financial disruptions that these measures would entail.
On the contrary China, “vaccinated” through its prior experiences with avian virus and SARS, after an initial period of political error at the regional level, responded quickly and effectively to halt the epidemic’s exponential increase and limit its worst effects to a few, delimited geographical areas.
In this note, we provide a narrative sketch of the Chinese experience, in the hope that it might inspire the development of new health, political and economic paradigms that Western societies might reflect upon, adopt and adapt to their own particular contexts. These paradigmatic transformations could have deep, long-lasting and beneficial consequences for our society, going far beyond just an effective response to the coronavirus epidemic. Indeed, Taking China Seriously might lead the West to reflect upon, and ultimately reject, key elements of our decades-long enthusiastic embrace of globalized “free trade”, the hegemony of economics over politics and society, and the innovation of new market-vindicated products as the universal panacea for all our social ills.
Disclaimer
As will be obvious to the reader, this is not intended as an academic discussion — we acknowledge missing details, unsupported suppositions, no references etc. We regard this a war bulletin, — our purpose is to contribute, in whatever way we can, to mobilize the community of citizens into an active collective to fight against this crisis and, beyond that, to rethink the premises and practices of the society that has emerged over the past 40 years and that has brought in its wake a host of unanticipated (at least by most of us) negative externalities that are threatening the very possibility of a sustainable future provided fulfilling lives from most of the earth’s inhabitants. We still have hope that with sufficient ideas, discussions, feedbacks, and more discussion our civil society may generate the emergence of promising new pathways for structuring and supporting a just, truly democratic way of collective being. We need new narratives that tell the story of how we can and are doing this, and why, and in particular how we can leave the present social, biological and environmental crises behind us.
The New Global Crisis
In the last few weeks many observers, policy makers and business people have noted the apparently irremediable contradiction in the global governance of the Corona Virus war between health goals and economic goals. Some of them claim that the priority given to health goals is introducing such negative consequences in the economic arena that the short-term benefits gained from slowing down the spread of the new disease will soon be overtaken in social importance by the consequent economic downturn.
In order to confront this emerging dilemma, we seem to have two choices: on the one hand, to seek to use the opportunities offered by the isolation measures and their consequences to create a new economic paradigm; on the other, to try to minimize losses by compromising between the conflicting goals. However, if – as many analysts now believe, and the Chinese experience seems to be bearing out – the exit curve will have an “L” shape instead of a “V”, only the first option has a chance to be successful. It is simply a waste of time to play one goal off against the other, appealing to ethical principles or to “business as usual,” since the global environment is changing just too rapidly in this leap year of human history.
For a couple of weeks, many western leaders have acted as though they believe that the virus invasion could be stopped by the “Maginot Line” of the health systems and high tech medical standards, without the need to institute measures that might compromise the foundations of their presumably “advanced” economies. After all, it is a matter of fact that their countries could afford to invest a significant part of their GDP in additional health infrastructures and sustainable development practices, if they chose to do so.
So, for example, Italian business associations plead with public authorities not to proceed with restrictions on movement, because they fear that these restrictions might lead to economic attacks from their European competitors, who would thus try to exploit the current Italian epidemic against Italian industries. The rapid spread of Corona Virus all over the world, as well as the ongoing shut-down of national borders, renders these fears ridiculous, but at the same time it calls into question the whole idea that the West’s medical technology-based Maginot line provides an adequate defensive strategy against the virus at the local, national or international level. Investors in the financial markets are nowadays nervously holding their breath, trying to imagine how the global system, and chiefly North America, will react to the virus invasion. The uncertainty is magnified by the fundamental difference between the American health care and welfare systems and the European, which, according to Michel Albert, author of Capitalism against Capitalism, is the fundamental difference between European and American capitalism tout court. In Europe, health care is based on mutuality and state regulation and intervention. In the US, health care is entrusted to the “foresight” – and insurance policies – of individual citizens.
At first glance, the American production system would be less affected than the European by personal freedom restrictions, like those now being adopted in an increasing number of countries to fight the new virus, since a substantial part of the American economy is based on services and virtual markets (ICT, Culture, Movies and TV products, Social Media, Education, Finance). All these activities can be managed by smart-working organizations. Nevertheless America, more than Europe, is highly exposed to the virus invasion, since its national health and welfare systems cannot protect the health of citizens who lack a good insurance plan nor provide assistance to the weakest part of the population exposed to the social and economic risks associated with the epidemic (just as happened with sub-prime assets during the 2008 financial crisis).
Soon we shall see the denouement of this story, but many thoughtful observers are converging to a striking conclusion: the present global crisis, initiated by an external enemy (the virus as Black Swan), cannot be fought with the standard arsenal derived from main stream (or Keynesian-augmented) economic manuals or current governmental practice. The current welfare and health care systems on both sides of the Atlantic are going to have to be re-designed.
Perhaps the Chinese authorities are already blazing new policy trails of which the Western countries might take note, as they experiment with a new health care system that will be resilient to unforeseen biological or environmental “invasions”. After all, they had a head start with respect to the West facing such invasions, due to the collective “social vaccine” they experienced as a result of the SARS crisis.
How can we in the West deal with the social, political and economic problems we will face after the inevitable coming recession? What kind of new policies should we initiate – in the short term during the “curfew” phase of the “war economy”, and then afterwards, during the medium-long term of the “post-war” reconstruction and economic recovery?
In order to answer these critical questions, we will have to change the paradigms within which we formulate and enact social, scientific, and political policy and practice. This is mandatory, if we believe that the standard pattern of pause-recession-recovery and a quick return to normality, described by the traditional “V” curve, is no longer within the realm of possibility.
Let’s consider first our “innovation agenda”. Which activities should we target to assimilate the emergent health protocols (in particular, isolating individuals to protect them and the health system from the risks of contagion, in work places as well as in consumption venues) to the economic requirements of production and productivity? How can the future industries in which our societies invest produce value elsewhere than in and through the traditional sites and institutions that are not robust to the new protocols (like factories, offices, conferences and fairs)? And just what kind of goods and services might future industries produce that will reduce the probability of global biological and environmental catastrophes?
It is obviously difficult to find reassuring answers to these questions, but we must try to do so. We have to imagine solutions that are in line with new kinds of personal and social restrictions and regulations. Here are two examples.
School and cultural services. ICT platforms are already available that allow students and teachers to interact effectively during the crisis. We can imagine further advances in e-learning systems and interaction platforms among cultural communities, avoiding biological risks as well as generating savings in educational costs. In Italy, for example, we are already anticipating effective solutions by the transfer of private learning platforms (like FCA Learning City) into the public system, with a cascade of positive consequences on labor market infrastructures. How can we foster new specific policies in this field?
Machinery and equipment production. The first step could be to develop new logistic processes for moving freight and people during the present crisis, while manufacturing continues more or less as before. Except of course that in all sectors of production, workers will have to be trained to avoid biological risks as they proceed with their operative tasks, re-designed in order to minimize contagion. Will it be costly? Is it practically and normatively even possible? Nobody knows, but it certainly seems incumbent upon us to experiment solutions in this direction. Some companies are already exploring this path, by inserting 4.0 devices into their production processes and investing in robots and AI, by definition resilient to biological viruses. Is it possible to enhance policies in this direction? What role will human workers play in the production systems that continue down this path? That role will necessarily be diminished, with the result that more people will depend on handouts and other ways to distribute wealth, and lose a principal source of self-esteem: participating in the production economy.
One key piece of received wisdom about innovation processes that we shall surely have to abandon is the idea that “first movers” should be able to reap competitive advantage as a reward for their innovations. If we want to create crisis-robust production and socialization systems, this will not and should not continue to be taken for granted as a social good, particularly if biological and environmental threats, like pandemics and climate change and who knows what else, become permanent, prominent features of our globalized social and economic worlds. Both the European aid to China in January and the recent Chinese aid to Italy, after the provisional closure of Wuhan’s outbreak, is a good example of what will have to happen much more generally. The Trump administration’s recent attempt to take over a German firm that is supposedly developing a coronavirus vaccine, in order to have first “user’s right” to the vaccine and then eventually cream off monopoly profits selling the vaccine on the international market is a perfect example of what cannot happen in the new world we need to build.
The critical issue is to understand whether it is feasible or even desirable to try to “return” to normality, after a “pause” (economic crisis, war, sanitary emergency, natural catastrophe, epidemic spread). At the moment, mainstream thinking still seems to take this position: facing towards the past, instead of trying to figure out how to re-envision the future. We strongly disagree with any such approach to the “postwar reconstruction” or even to the emergency issues we face at this moment. We have to begin by redesigning the process through which our society typically confronts the future: “experts” and political leaders cannot be the only players in the process; civil society must be mobilized to participate in determining the direction of future social, economic and even technological change. And the organizations to achieve this mobilization will emerge from civil society itself, with infrastructural support provided, as requested and required by these emergent organizations, from experts and politicians. In such a process, ordinary people must assume their responsibilities as citizens – not just as consumers, the role to which today’s “innovation processes” relegate them. In all these changes, science and the scientific community will have an important role to play – but citizens and civil society cannot relegate their responsibility to guide, and enact, the processes of change to Science, any more than to Politics or (worst yet) the Market.
The present crisis is our first global emergency, affecting our species beyond regional and national borders; either we quickly develop a new cooperation pattern, beyond the national state and traditional cooperative inter-national institutions, or we shall not be able to successfully face the biological interaction between our species and others, the physical interaction between our industrial development and the Planet, and the social and cultural interaction among different sections of the same human community.
Taking China Seriously
The debate about what the coronavirus epidemic means for the future of the Western economy is becoming ever more urgent, but at the same time ever more confused. The deep ideological commitment of almost all the participants in this debate to the principles of globalization, neo-liberalism (perhaps with an admixture of Keynesianism), and the mantra of innovation as the deus ex machina that will save us regardless of how dire the situation in which we find ourselves, seems to us to make it nearly impossible to find our way out of the maze of intellectual confusion and institutional chaos. Perhaps it is time to put aside our Western sense of superiority and take a careful look at the Chinese experience as an inspiration for an alternative model.
After all, at least by first appearances, it seems that China has managed to confront the viral invasion head-on with some success and is already on the way to launching a program of recovery. Perhaps we should try to profit from their experience, extracting from it traces of a new narrative structure, which might allow Western nations to confront effectively the double challenge we have before us: to win the war against the coronavirus and to transform the recession (or better, the creeping paralysis of our economic system) into a restructuration?
Let’s begin by rehearsing the key elements of the Chinese experience, as a sequence of four Acts in a process of collective action.
Act I: The Outbreak. The Authority of Hubei Province discovers the beginning of an epidemic. Its first reaction is to hide it, because it is locked into an internal competition with other provinces and fears being penalized should its epidemic become known. Note that this competition between provinces has been activated by the Central Authorities for the next five-year plan, dedicated to innovation in public policy – and provides stiff sanctions against provincial administrators who commit “errors.”
But the citizens of Hubei have become accustomed to assume an active role in their polity and, when necessary, to struggle energetically against the provincial establishment. An active and responsible doctor recognizes the unusual nature of the coronavirus and alerts his colleagues and superiors in the health system. But the semi-democratic regime in which he lives and works retaliates with repression against him. Fortunately, his warning does find fertile ground among the active citizenry, who manage to bypass the repression by alerting other provinces and the Central Authorities. Note that this is possible in China, whose system is based upon a kind of federalism coordinated by the center, an institutional structure with no close parallels in Europe or the US. This structure provides support for multilevel generative processes through a “middle-up-down” scheme, similar to the proposal of Nonaka and Takeuchi for their model of business innovation in Japan, embodied in the so-called keiretsu form of organization. In China, this reciprocally interacting trilevel system is the key to understanding the rapid economic and social transformation of China following the reforms of Deng Xiao Ping.
Despite our society’s deep and uncritical ideological commitments, forged in the Cold War and solidified in the “historic compromise” between right and left in the 1980’s (Reagan and Thatcher to Blair and Clinton), in these perilous times, it really should not interest us, as it did not the Chinese, whether the cat is white or black, so long as it knows how to catch mice.
Act II: Social distancing. The Central Authorities, already “vaccinated” by their experience with avian flu and SARS, immediately recognizes the gravity of the coronavirus invasion and the need to mobilize for war against it. They close down Hubei, the epidemic’s epicenter. They fire the directors of the Provincial Authority who tried to sweep the epidemic under the rug, and they begin to implement a comprehensive, no-holds-barred counterattack strategy. They begin immediately to enhance the logistical infrastructure in the rear, constructing new hospitals for the victims, including the Wuhan 1000 bed structure completed in 10 days. This is a strange war, in that most of the “troops” must disconnect from direct contact with the enemy rather than confront it, and the Chinese authorities restrict citizen’s “personal liberty” to move where and when they want. They can do this NOT because theirs is an “authoritarian system”, but because they have learned painfully that it is the only way to retard and eventually close down an epidemic, before it embarks on a path of exponential increase. (Western governments, by the way, who pride themselves on their respect for individual freedoms are belatedly taking exactly the same “repressive” measures. Just as they did when they instituted drafts in wartime. Only in the present case the “repressive measures” are intended to reduce risk of disease and death for citizens, not increase them as happens in wartime drafts!) Chinese citizens, whose ideological training emphasizes the need to subordinate individual freedom for the collective good, respond readily to the directive to stay in their houses – not because they are subjects of a despotic government, but because they are culturally aligned with the response strategy: first social distance, then (when necessary) interventions for cure. The authorities help citizens isolate themselves, by mobilizing “front-line” warriors – the army – to transport food to citizens’ homes. And the soldiers are armed with masks, gloves and body suits to protect themselves and the people they come into contact with.
Of course, there is another front line, in the hospitals, where the medical personnel fight to cure the people who have been infected by the virus. But unlike the West, the Chinese public health system is much more broadly conceived, and the idea that medical science, expensive technology and highly trained and competent doctors and nurses alone comprise a Maginot Line that renders the population secure against any and all diseases is not the centerpiece of China’s anti-epidemic strategy. The battle against the epidemic is fought house by house, city by city, following extraordinary and counter-intuitive social rules projected and communicated before the enemy ever appears.
Note also that according to the ethic of the collective good, Chinese citizens have already learned to wear masks whenever they have colds or contagious diseases, as an instrument of respect for others — even in family quarantine, to protect parents, children, grandparents, grandchildren. In contrast, after several weeks of incessant government and civil society propaganda, the proportion of Italians who wear masks when they venture out to do their shopping or go to work or walk their dogs or whatever other reasons induce them to risk taking or receiving virus from passers-by – is disappointingly minimal.
Act III: Cooperative logistics. Along with the limitations on personal liberty in areas infested with the virus, China activated a gigantic system of assistance and solidarity, involving provincial authorities as well as national and local production systems. The intermingling between market and state systems has enabled not only a tight integration between private entrepreneurs and firms (Jack Ma, Huawei) and the public administration (universities, hospitals, the army), but also the possibility of making and enforcing tough decisions about which productive activities and supply chains to maintain in activity and which to close (because they pose too high infection risks, like industrial districts – which have contributed substantially to the spread of the epidemic in Lombardy and the Veneto).
Moreover, the central authorities have responded to the crisis by putting in place an inter-provincial economic system diametrically opposed to the pre-existing system based on competition. Wuhan and the Province of Hubei have received a flux of provisions from other provinces, ranging from medical supplies to potatoes. As such, the afflicted areas need not engage in intensive, disease-spreading agriculture for the duration of the epidemic, but will not need to ration their food supply or suffer debilitating and discouraging increases in prices. Nor have the doctors of Wuhan been left to fight the epidemic on their own, receiving reinforcements in personnel and equipment from other provinces.
Act IV: Recovery. China is not adopting a Marshall Plan for Wuhan. Its policy is simply to reactivate production, cautiously and with many limits to avoid importing a new outburst of infection. The main goal is to rebuild confidence among the citizens in their capacity to contribute as productive agents. How to do this, and what success it can achieve, have yet to be determined. There are no expectations, though, as there seem still to be among many politicians and industrials in the West, that recovery will arrive in the form of a V – back to pre-crisis levels of production, with no basic change in industrial and political organization. Many thoughtful observers, here and there, consider such an idea to exist only in the realm of magical thinking.
What is Europe taking away from the Chinese experience? At this point, the answer is: sadly, very little. Unlike the enthusiastic adoption of Japanese management techniques in the 1980’s (before, of course, the levelling off of the Japanese economic growth…), the Chinese experience is generally regarded by Western political and economic leaders (the Davos crowd) as uninteresting and not transferable to the West. The reason for this attitude is not hard to find: it is due to the persistence of superficial, ideologically inflected judgements about the governance model of China (the relation between national government and provinces) and the model of integration between state and market. In addition, the priority given by Chinese authorities to social and collective ends (such as in the limitation of personal liberty in the response to coronavirus) is generally just confused with (and misidentified as) authoritarianism. Instead, it is arguable that in general the Chinese authorities have acted with the consent of the people, because Chinese society (as it has transitioned from a despotic to a more “liberal” regime) has already been “vaccinated” to the social restrictions of war against epidemics, before the arrival of the coronavirus. From SARS, the citizenry has learned that the principal battle is social distancing, without which the Maginot Line of a technology-based medical system cannot maintain itself for long. In contrast, the West, thanks to vaccinations against the principal existing infectious diseases and to generally excellent systems of curative health care, both public and private, has lowered its guard against the possibilities of devastating new epidemics – even after the debacle of AIDS (which eventually did have, on the West, a more or less happy, if incredibly expensive, pharmaceutical fix). But worrisome changes have been underway for a while. Cuts in public health care funding march side-by-side with increasing costs of expensive technology-based diagnostic and treatment regimes. The know-nothing No-Vax movement is growing, representing a kind of populist attack against a system that that keeps its technology cards too close to its chest, and regards patients only as customers who don’t need to know any more about what is happening to them in the doctor’s office or the hospital than their cars do when they go to the garage for repairs. And in particular as the Western population ages, hospitals are increasingly transformed into places to treat chronic maladies (cardio-vascular disease, tumors) and practice in-and-out surgery. Infectious disease wards are eliminated or reduced in size and functionality. And public investment in extra-hospital public health and welfare are diminishing rapidly, substituted in principle by privatized, for-profit systems. In this context, the West hasn’t succeeded in interpreting and understanding the Chinese strategy:
- The Chinese epidemic was just a Third World problem (remember Zaia’s comment about the Chinese who eat raw mice? What can you expect from such people?) – couldn’t happen here
- Social contact restriction is the policy of a dictatorial government, impossible to import to “free” countries like Europe or the US
- Anyway, the superiority of Western health care, behind its Maginot Line of high-tech, professional staffed hospitals is up to whatever challenge biology or environment might throw its way.
So Europeans and Americans refused to learn from China. We just couldn’t see that China had developed a narrative structure adapted to fight the virus and win – as well as coordinate a country in a phase of economic emergency. Our political and economic leaders have neglected, even ridiculed, the Chinese model. They had blind faith that markets (financial as well as for material and informational goods), private initiative, and their grand political (UE and USA) and financial (BCE, World Bank, IMF) international institutions were adequate to meet any challenge – health, welfare, political, social, economic. But with the coronavirus epidemic, the closure of frontiers and the sundering of supply chains is today provoking a general collapse of economic activity in the West. This doesn’t seem to be happening in China, at least with respect to the part of the economy mobilized to fight the epidemic. Its system of provinces coordinated from the center, its markets working in the context of a state economy, are intervening with solidarity to produce masks and other essential equipment, producing necessary infrastructure (including hospitals), and so on. In Europe and the US this model is simple unimaginable, after the fall of the Berlin wall and the triumph of the Washington Consensus. Perhaps only in Germany, with its “ordo-capitalismus”, which still supports public-private interactions that could in principle produce positive results in the crisis. But the conflict between Merkel the ordo-capitalist and the neo-liberal directors of the Bundesbank blocks innovative thinking that could serve the (Western) world. Unfortunately the fact that the European downslide started in Italy, an easy and popular scapegoat among European and American political pundits, has blinded the Western experts in economy and finance to the federal governance of Chinese production chains and market systems, which has nothing to do with the federal systems of the US and UE. The international authorities still think that the Italian difficulties derive from the economic and financial weakness of our country (free-spending politicians and unproductive small businesses) – and can be avoided by the more “virtuous” governments of other European countries and the US colossus.
A serious study of the Chinese crisis narrative would be very useful. But it would first have to overcome years and years of ingrained ideological opposition to state production. And an equally deeply rooted false pride that implies that there is nothing to be learned about democracy and federalism from “Communist” China. Of course, panic is the midwife of invention, and strange things are happening – the 750 billions of Euro thrown at the crisis by the BCE (to do exactly what is less clear than the sum to be used), not to mention the multi-trillion dollars backed by Trump and his Senate henchmen. But will these acts of panic help lead to positive systemic change (or even victory in the war with the coronavirus)? Western leaders seem far away from envisioning system-altering projects in response to new challenges, as their predecessors did with Bretton Woods, G7, or the Marshall Plan. They just seem to be recycling monetary and international recipes inherited from 2008 – in the face of a crisis that almost everyone can see is very different, and much more serious, than that one. Can our neo-liberal Western regimes, perhaps turning a newly focused gaze towards China, introduce principles of solidarity to supplement and even fortify those of competition? New models of administration for the linkages between state and market? Models of governance of the common good, like those recommended by Elinor Ostrom? We can only hope…
Venice, March 22th, 2020
