Chinese philosopher Lao Tzu, a contemporary of Confucius (551-479 BC), warned against excessive government, "with its laws and regulations more numerous than the hairs of an ox." Government was more to be feared, he said, than "fierce tigers." Two centuries later, Chinese anarchist Chuang Tzu, a disciple of Lao Tzu, turned down the dynastic king who apparently offered him a thousand ounces of gold to serve as his chief minister, saying he would rather "idle about in a muddy ditch." He would never, he vowed, take a government job.
In the fourth century AD, Chinese philosopher Pao Ching-yen, in his commentary on Chuang Tzu, held that the history of government was the history of violence. Government, he said, merely intensifies the "petty disorders of daily life," turning them ultimately into excuses for tyranny and war.
But it was left to Chinese historian Ssu-ma Ch'ien (135-90 BC), a strong advocate of what came to be known as laissez-faire, to articulate for the first time the fundamental economic principles that - in another time and place - Scottish philosopher Adam Smith would independently reveal 1,800 years later in The Wealth of Nations. In passing, Ssu-ma Ch'ien explicitly anticipated Smith's famous "invisible hand."
"Each man has only to be left to utilize his own abilities and exert his own strength to obtain what he wishes," Ssu-ma Ch'ien wrote. "When each person works away at his own occupation, and delights in his own business, then - like water flowing downward - goods will naturally flow ceaselessly day and night without being summoned, and the people will produce commodities without being asked."
Since a free market is self-regulating, he asked, what need is there for government directives? As answered by Murray Rothbard, the American anarchist (1926-95), in his two-volume Economic Thought Before Adam Smith (from which these historical references are taken), what need indeed?
So far, so good: In antiquity, some of China's greatest philosophers treasured limited government and, long before its modern expression, laissez-faire economics. More to the moment, Ssu-ma Ch'ien developed a comprehensive monetary theory - arguing that all governments share an inherent motivation (1) to debase the money supply and (2) to protect themselves from competition. With a currency arbitrarily debased by 30 per cent or more, modern China emerges as the most flagrantly aggressive price fixer in the world. The consequences are sobering. The U.S. has lost millions of jobs; other countries (such as Peru) have lost proportionately more.
In good economic times, the wealthier countries essentially ignored China's protectionist policies, perhaps wisely. Even unfair competition serves to make domestic industries more efficient. By some measures, U.S. manufacturers are now the most productive in the world. This confirms the thesis that what doesn't kill you makes you stronger - and explains why the smartest trade policy is unilateral free trade: Bring it on. In bad economic times, though, it is politically impossible to shrug off egregious Chinese protectionism.
The United States took China to court last year and won. In December, the World Trade Organization appeal court ruled that China illegally restricts U.S. exports of copyright-sensitive products - books, films, music, DVDs, software of all kinds. China has one year to end these restrictions. (Also in December, the United States and the 27 countries of the European Union filed a WTO challenge to China's export restrictions on raw materials used in the manufacture of steel and aluminum, a challenge joined by Canada earlier this week.)
The WTO's "copyright products" decision is an important trade victory with geopolitical implications. Walt Disney Co., for example, stands to gain the right to market Mickey Mouse directly to 300 million Chinese children. In anticipation of freer access to Chinese consumers of American mythology, Disney has already adapted Snow White: Seven fighting monks, instead of seven dwarves, will protect her from harm.
The WTO ruling will test China's capacity to live by the rules of the game. Unless China opens its doors, it puts itself at risk of comprehensive trade sanctions, in which case, China will have to choose anew between less trade and more trade, between autocracy and democratic reform, between Mao and Lao.
The fact is that Mickey Mouse, like the Chinese wise men of old, is a profoundly subversive force. Around the world, Mickey is the No. 1 choice for voters who can't bring themselves to vote for authorized candidates, who deliberately spoil their ballots instead. This is a global phenomenon. Mickey purportedly got as many as 20,000 votes in the last U.S. presidential year contests; he routinely gets much of the protest votes in European elections, too. Defiantly, Mickey repudiates politics; he remains apolitically preoccupied, as Pao Ching-yen put it, with "the petty disorders of daily life."
Its achievements of the past few years notwithstanding, China's legendary economic philosophers would all be rotting in dungeons for whispering today the same messages they were able to proclaim 2,000 years ago. China needs now to heed the wisdom of its fabled past and recognize the limit of its power. It can't protect itself forever from Mickey Mouse.