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China's brand of capitalism isn't business as usual

Writing elsewhere the other day, Conrad Black suggested that people who anticipate a transcendent China need to get a grip. Remember, he asked, the fleeting transcendence of Japan in the 1980s? Remember the phony transcendence of the USSR in the 1960s? Remember the brutal transcendence of Nazi Germany in the 1940s? Of these three challengers for global leadership, Lord Black noted, Nazi Germany came the closest to success: "[It] required," he said, "the entire combat strength of the British Commonwealth, the U.S. and the USSR to defeat it."

In a summer essay in Foreign Affairs magazine, Israeli historian Azar Gat makes a similar point. In the Second World War, he said, Germany and Japan had to be "pulverized" before they could be compelled to accept democracy and the liberal political, economic and social order it represents.

The important point here is the recollection, now often absent, that authoritarian regimes do not voluntarily embrace democracy - and that they have come very close to dispatching it to the dustbin of history.

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"Contrary to the comforting notion that the democratic system eventually proved superior, the reasons for Germany's and Japan's defeats lie in the fact that the two countries were simply smaller than their adversaries," Mr. Gat said, "[Germany]came remarkably close to achieving [its]goal in both world wars." Democracy survived, in other words, by the skin of its teeth.

"Without the United States as their ally," he said, "France and the United Kingdom would probably have lost to Germany in both world wars. The remainder of the 20th century would have been very different and political scientists would have had a far less rosy story to tell about democracy. The grand narrative of the century would have emphasized the superior cohesiveness of authoritarian regimes, not the triumph of freedom."

Lord Black and Mr. Gat make intersecting but distinctive points. Lord Black argues that China's structural deficiencies are so deep that it cannot possibly challenge the U.S. for global leadership. (In passing, he mocks a Maclean's magazine cover-page headline: "When China Rules the World.")

Mr. Gat concedes China's structural deficiencies - but argues that the global success of Western capitalism doesn't in any way ensure the global success of Western democracy. As a capitalist state, an authoritarian China could emerge as a much greater threat than it could ever have become as a communist state.

Mr. Gat notes that authoritarian regimes, by and large, ruled the world right up to the 20th century - in part because of the large number of people who have preferred collectivist society. Many people still prefer it. From this perspective, it is precisely China's repudiation of democracy that makes it a competitive model globally: "Non-democratic capitalist China offers not only a policy of non-interference but also support for state sovereignty, group values and ideological pluralism, [which are]attractive to people as an alternative to U.S. dominance."

Mr. Gat notes, ironically, that China's phenomenal economic growth has been made possible only by China's free access to the global economy - delivered to it by the liberal democracies. On the one hand, this growth has helped supply the West with cheap manufactured goods. On the other hand, it has made China a potential rival to the U.S.

The U.S. is now in the same relative position, Mr. Gat says, as free-trading Britain was late in the 19th century - with one vital difference. Britain was able to "hand off" to the U.S. - another liberal democracy. The free-trading U.S. is "handing off" to an authoritarian regime.

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Will this enormous economic gift make China more receptive to democracy or more resistant?

Lord Black argues that China cannot threaten the U.S., or the Western democratic alliance, in the short term - however the period may be defined. "China has no credible legal system and is rife with corruption," Lord Black says.

Further, China's economy is still centrally directed, with all the negative consequences that central direction implies. (In its most recent "global competitive index," co-incidentally, the World Economic Forum puts nine Western democracies in the top 10, China in 29th and Russia in 63rd.) But Mr. Gat could be right in arguing that China could well emerge in the long run as the world's pre-eminent collectivist model nation - with the implicit support of half of the world's countries. At the United Nations, he notes, "more countries now vote with China than with the United States and Europe on human rights issues."

Perplexing questions arise. At what precise point must the liberal democracies stop doing business as usual with an authoritarian China? At what precise point must they stop acting as though state capitalism is synonymous with market capitalism? At what precise point must they stop compromising on the principles that they cherish? Progressive appeasement, after all, only works in the short run - as Britain suddenly recollected one sad September day 70 years ago.

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