China is Wealthy, But Not Free — and There’s a Huge Difference

China’s best-known capitalist and the head of e-commerce giant Alibaba has been revealed to be a member of the Communist Party, the official Party newspaper said on Monday.

Jack Ma’s membership was revealed among the list of 100 other prominent people in China that helped achieve the country’s goal of “reform and opening up,” Reuters reported.

How can this be? How can a Communist be a capitalist?

The answer: You can’t be both.

Capitalism does not refer to making money. Capitalism includes the making of money; but that’s not its defining characteristic. The defining characteristics of capitalism are economic freedom and individual liberty, based upon individual rights. Capitalism is merely the economic implementation of the facts that you are sovereign over your life, that your life belongs to you — and, therefore, your earnings, property and profits all belong to you.

China consists of “state-run” capitalism. It’s a total contradiction in terms. It’s nothing more than the Communist Party’s attempt to make itself more profitable than the strictly followed Marxist approach of decades past.

In practice, state-run capitalism looks and feels different. The buildings are nicer and the conditions are more comfortable, at least for those with the proper connections in government. But in principle it’s no different. Jack Ma and other Chinese businessmen operate only with the consent of the government.

Under capitalism, it’s the other way around. The government serves the individual. The government serves the individual by protecting his property rights, not by seizing his property, not by attaching conditions to continued ownership of it, not by regulating or otherwise redistributing it. There’s a huge difference. It’s all the difference in the world.

China operates explicitly and consistently on the premise that businesses exist ONLY to serve the government and ONLY to please the rulers. Sure, the new and improved Communist model allows those who please the rulers to have nice cars, nice homes and nice vacations. But only so long as it pleases the rulers.

Under capitalism, it would be different. The money-earner keeps whatever willing customers are willing to pay him, for as long as people are willing to pay him for the goods and/or services he offers. There is no “too big to fail” under capitalism. If customers no longer want you, then you have to deal with it. The government has NOTHING to say about any of it, other than protecting the rights of all individuals involved to have their legally entered into (and voluntarily entered into) agreements upheld.

Some economists call what China has corporatism, or economic fascism. Call it what you wish. It’s not capitalism.

America does not have extreme and explicitly state-run corporatism like China. But America’s not fully capitalist, either. On the big business level, we’re not even mostly capitalist, not any longer. The government runs and regulates just about everything. Politics is part of every big business, and entrepreneurs like Mark Zuckerberg (say what you will, he started a successful company) or Bill Gates eventually turn into de facto politicians, at least by default, because government becomes interested in everything a successful company does.

In America, government almost totally dominates health care and education, via subsidies and regulations. Government largely controls the banking industry and currency itself, by going off the gold free market standard all those years ago. In those respects, America is not much different from China, although in other respects we are very different. The most important difference is we have a First and Second Amendment, and those rights are still mostly respected. Once those go, we are no different than China, and no different from a Communist country — no matter how much wealth we have.

It’s better to be wealthy than not. But you can’t put a price tag on your sacred freedom and liberty. In a truly free country, you’re rich in the moral/psychological sense of the term as well as materially. China has the material, but none of the moral or psychological. America has elements of both, but we’re losing them because we have given the government way, way too much power. If we don’t reverse course, we will lose our Bill of Rights — our sacred First and Second Amendment freedoms — and soon enough, we’ll be living in China. It doesn’t have to happen. But our badly divided country has to come together and fight for these things, if we’re to survive and if our survival is to mean anything to us.


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