Giovanni Arrighi’s Adam Smith In Beijing

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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

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William Wall is the author four novels, the most recent of which, This Is The Country (2005), has been described as a 'broad attack on the Celtic Tiger'. He has also published poetry and short stories.
 

10 Responses

  1. William Wall

    September 23, 2010 4:30 pm

    John I don’t have the book to hand at present and it’s some time since I originally wrote the review so I can’t answer your comment more directly. But there are a few general things I could say about it. Firstly, that The Great Leap Forward caused a famine is undisputed – though the extent of it is. Nevertheless, the famine was caused *because* Mao made food a priority, which is Arrighi’s point, in a country where famine had been endemic since the late 19thC (i.e. since the arrival of British Imperialism). Mao’s famine was caused by bad planning both agricultural and industrial. Contrast with the great Indian Famines of the 19th Century (for a scholarly take on capitalist famines I recommend Great Victorian Holocausts by Mike Davis, if you haven’t read it). In addition the effects of climate change and/or El Nino have to be factored in – the harvests during the time were terrible – not just because of human interference. Furthermore, the PRC learned the lessons and China made huge advances. All that being said, my intention is not to defend Mao (I know very little about him) but to defend Arrighi – albeit I’m not making a good job of it.
    Seriously though, the book is very interesting indeed, and it’s no apologia for Mao. I recommend it, particularly to a member of the Green Party for what it has to say about alternatives to endless industrial growth. His analysis of Adam Smith is also very worthwhile. He converted me from spitting at the mention of Smith’s name to a grudging admiration of his thinking.

  2. John Goodwillie

    September 23, 2010 7:00 pm

    I will, as you say, have to read the book because I don’t believe Arrighi could have been saying all you ascribe to him.

  3. Pope Epopt

    September 23, 2010 9:44 pm

    This touches on the most interesting global economic change of the next decade – how fast and to what extent will Chinese / far Eastern capitalism will come to overshadow US centred capitalism.

    What interests me is the nature of the ruling class in Chinese authoritarian capitalism. I recently listened to a podcast of Richard McGregor’s lecture at the LSE based on his book The Party, which is the first that I know of to attempt to try to find out how the Chinese Communist Party operates today. Now I haven’t read the book but what struck me most in the lecture was not just the ubiquity and effectiveness of the command economy (during the recession that heads of the three main banks were ordered to lend to businesses, and they competed with each other in achieving this) but the cadre of individuals the CCP chooses to invite to join it. It’s gone from specialists being at the top of the list to capitalist entrepreneurs.

    Some of the party must remain motivated by communist beliefs, but another chunk of it seems simply to be building a capitalist oligarchy without the disadvantages of the occasional bouts of limited representative democracy that we enjoy. Admittedly an oligarchy much better attuned to dangers of popular discontent than ours, but an oligarchy nonetheless. I’d be fascinated to know what the mix is, and how the cocktail holds together. Definitely a book to get hold of when it comes out in paperback.

  4. Donagh

    September 24, 2010 11:13 am

    Unfortunately, Mr. Noor’s comment advertising cycle gloves and other hand apparal had to be removed as his cheque bounced. Also he refused to give me his first name to make the transaction easier.

    I said, now if your first name was Doh it would look a lot better with the lefties, who generally abhor advertising of all sorts.

    @Pope Epopt
    Admittedly an oligarchy much better attuned to dangers of popular discontent than ours

    I don’t think that is necessarily the case, as there are many examples of population control (those from the countryside needing passports to move to the cities), riots as a result of being turfed off land cleared for foreign companies. What you could say is that they are aware of the limits of containment and the ability to provide jobs on a scale that other countries can’t is perhaps the best way of preventing widescale popular discontent.

  5. William Wall

    September 27, 2010 8:01 am

    I have no expertise whatever in relation to China, but it strikes me that we’re talking about an incredibly complex culture that operates on quite different principles to our Western ones and seems to think in terms of very long periods – the standard western division of political time is 4 years!