Book Review: Giovanni Arrighi’s Adam Smith In Beijing (Verso: 2008)

Giovanni Arrighi argues convincingly (in Adam Smith In Beijing) that we are seeing the end of the most rapacious social and economic system the world has ever known. What he calls ‘destructive capitalism’ is, he argues, a peculiarly Western form of accumulation that has almost destroyed the planet. It had its beginnings in the Industrial Revolution, and is characterised by seemingly endless over-accumulation, commodity fetishism, expansion and collapse cycles, empire-building and the exploitation of empire, and the destruction of peoples and the natural environment. Slavery and indentured servitude, imperialism and environmental degradation, wars of expansion and the arms races, are all natural elements of ‘accumulation by dispossession’. It is a depressing thought that we in Europe have been responsible for the greatest plundering of mankind and its home that has ever taken place on earth. The good news for Homo Sapiens, however, is that our time is coming to an end.

There have always been two forms of economic expansion. Ours is the one we believe to be the sole possessor, but in the East, particularly in East Asia, a second way has existed for a great deal longer. What Arrighi calls ‘the industrious revolution’ of China, based on Confucian principles of social harmony and balance, has, so to speak ploughed its own furrow. In this system, unlike the Western one, food is the foundation of social wealth and accumulation does not involve dispossession.  It sounds like an idyll, and of course no such argument is made by Arrighi.

However, China has rather a long history to study. In the sixteenth century it was by far the richest economy in the world, and had been so for many hundreds of years. China has been a state for four thousand years, and its borders have been more less fixed in their present form for the past two thousand, and except for a short period in its history, roughly the 200 years to the present, has been by far the richest country in Asia, and one of the richest in the world.

What destroyed those riches was the British  intervention  in the form of the Opium Trade, which at first was conducted illegally, but which was officially sponsored by the British government through the Honourable East India Company , and which was eventually enforced on the Chinese by gunboat and warship. Foisting opium on China was an essential leg of the revenue triangle that laundered the plunder of India and made Britain great. By the time the Chinese had appointed ‘the vigorous and incorruptible Lin Xexu’ to fit the wave of opium smuggling that was destroying Chinese society, it was too late. A country that had never bought into the arms race, had never invaded another country, had no overseas empire, was facing the British Imperial Navy. A single steam-powered warship was sufficient to ’show the flag’ - in one day in February 1841 it destroyed nine Chinese warships, five forts, two military bases and a shore battery. This was sea-power indeed. Employed in the interests of the capitalists of the East India Company, it symbolised western capitalism at its most destructive. It brought an end to a system of governance that had stood China and many of its neighbours in good stead for thousands of years.

What was this system and why was it different to the Western one?

The Chinese system could be best described as a centrally controlled market economy. Unlike the western model, it was not individualist but social in its outlook. It understood that social harmony was a prerequisite of stability. It frowned on exploitation and over-accumulation. But most of all, it differed from the western system in that the state was never subjugated to the interests of capital. Capitalists existed in China from long before they did in the West, but the state was essentially hostile to their activities and insisted on limiting them. For example, for many hundreds of years private mercantile voyages outside Chinese waters were forbidden by law. A side effect of this was that Chinese advances in navigation and shipbuilding, remarkable in their time (they invented the compass, for example) did not lead to an expansionist phase and the creation of an overseas empire. To counter-balance the activities of capitalists and traders the state operated a universal granary system which stockpiled grain in times of plenty and sold back to the peasantry in times of shortage, thus neatly managing to stabilise the price of grain and keep the people fed.

In addition, Chinese industry has always been heavy on manpower and light on energy. The Western Industrial Revolution was a rapacious consumer of energy and, consequently, of natural resources and that is what has led us to the present situation of Global Warming and peak oil. By contrast, the Chinese ‘industrious’ system concentrated on employing as many people as possible. Of course, the Western system has led to many valuable innovations, but Arrighi points out that such innovations would have been impossible in a country the size of China anyway. One example will suffice: Britain tripled its consumption of cotton by the invention of the Spinning Jenny: had China invented it there would not have been sufficient money in the world to pay for an equivalent increase in production.

Under Mao further huge strides were made. Education and healthcare, employment and social security, the empowerment of workers - these were all massive achievements generally scorned by the West. But Mao did not lose sight of Chinese history, and Maoism is a form of Marxist-Lenininism that takes into account several thousand years of Chinese thought. In particular, Mao was influenced by the practices and writings of Chen Hongmou, an eighteenth century civil servant. Mao’s concept of the ‘mass line’ meant that the Chinese Communist Party always saw itself as both a ‘vanguard party’ leading the masses, and a party that needed to learn from the masses. The Maoist revolution, unlike the Bolshevik one, was based on the rural population, and Maoism made food a priority. Between 1952 and 1978, for example, the communes had more than doubled China’s irrigated land. Even The World Bank could write (in 1981) that China’s poor were ‘far better off in terms of their basic needs than their counterparts in other poor countries. They all have work, their food supply is guaranteed through a mixture of state rationing and collective self-insurance, most of their children are not only in school but comparatively well-taught, and the great majority have access to basic health care and family planning services… Life expectancy… is outstandingly high…’  In 1981, Irish people did not have full employment, access to basic healthcare and family planning services. In addition, Ireland and much of the western world was in the grip of one of those crises of accumulation that are typical of the western capitalist cycle, and Ireland for one had 17% mortgage rates, 20% unemployment and mass emigration, not to mention a corrupt government led by the famously corrupt Charlie Haughey who urged us to ‘tighten our belts’ while he flew to Paris to buy handmade shirts in the Charvet shop.

The reforms of Deng built on Maoist principles and led to a further increase in life-expectancy, literacy and food production, and ultimately to the most recent reforms and China’s boom.

These latter developments coincided with the eclipse of the world’s last Capitalist state - the USA. By 1981, the USA had already been humiliated in Vietnam. The Vietnam War showed that the continued wealth-generation of the USA was not sufficient to establish global hegemony. Arrighi analyses this decline at considerable length and the arguments are much too complex to go into here. Suffice it to say that the Iraq War - intended to re-establish USA power in the 21st century - has backfired badly and completed the destruction of USA hegemony, and China now owns most of the USA’s foreign debt and consequently is in a powerful position to dictate terms to its debtor.

So where is China going? Arrighi is frank about the possibilities. It is possible that the Chinese Communist Party is succumbing to the lure of rapacious capitalism. Arrighi thinks it unlikely, however, given the long history of Chinese thought with both Confucian ‘harmony’ and revolutionary principles in the background of how Chinese people think. Nevertheless, it is impossible at this point to predict how the latest reforms will go. Even now, however, the administration is responding to social unrest in the countryside by a re-alignment of policies.

It is also possible to say that the days when the International Monetary Fund and the World Bank could dictate terms to the South are numbered if not actually over. The Friedmanite shock therapy reforms forced on hapless Third World countries by those institutions which led to fascism and dictatorship all over the South have also backfired. ‘When Argentina needed loans so that it could say goodbye to the International Monetary Fund, Venezuela committed $2.4 billion. Venezuela bought $300 million in bonds from Ecuador.’ Not only Chavez in Venezuela, but the growing Asian states, including the vast Indian and Chinese economies, are redirecting their surpluses away from the West.

For an understanding of how Capitalism is faring in its European incarnation, Giovanni Arrighi’s Adam Smith In Beijing cannot be beaten. It is essential also for an understanding of what is actually going on in China.  I recommend it to our Irish government, still fixated on fading globalisation and neo-liberalism, going cap-in-hand to Washington, and as we saw recently, accepting the ‘honour’ of ringing the bell in the New York Stock Exchange. They might as well offer to clean the whips in a barracoon in the Bight of Benin - the system is no less brutal and only slightly less dead.

This review was originally published on Friday 18 July 2008 on my own blog.

Some useful links

Giovanni Arrighi at Wikipedia

Article by Arrighi at The New Left Review (Subscription)

Adam Smith in Beijing at The Book Depository