The Activist Developmental State is an idea I feel deeply ambivalent about.
The picture below of Shanghai in the 1990s and then again last year is from a blog by Roger Pielke, Jr, professor of environment studies at the Center for Science and Technology Policy Research at the University of Colorado. (Thanks to Anthony for the link and please click on the pic to go to Pielke’s website.)
This stark, and wonderful, portrayal of astonishingly rapid social, environmental and economic change rather raises the question of how it was achieved.
And, more importantly for our provincial purposes here: can we do something similar?
The New Growth Path is a plan to achieve job rich, environmentally friendly, economic growth while narrowing the Apartheid wage gap.
Saying it is a plan with those intentions says nothing about whether it has any realistic potential of achieving any of its objectives – or of perhaps leading to some unforeseen outcome.
So what did Chinese politicians actually do to “cause” these changes to happen?
Wikepedia says rapid growth came about as a result of the economic reform programme (I have left Wikepedia’s links and notes in there):
Economic reforms began in 1978 and occurred in two stages. The first stage, in the late 1970s and early 1980s, involved the decollectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start up businesses. However, most industry remained state-owned, inefficient and acted as a drag on economic growth. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. The private sector grew remarkably, accounting for as much as 70 percent of China’s GDP by 2005, a figure larger in comparison to many Western nations. From 1978 to 2010, unprecedented growth occurred, with the economy increasing by 9.5% a year. China’s economy became the second largest after the United States.
Leaving aside the obviously important question of whether these changes have led to greater human good, the New Growth Path very clearly and explicitly is going in the opposite direction on some of these issues (privatisation, contracting out, shrinking public sector) but flirts with weakening the rand to stimulate manufacturing and the traded goods sector (a central plank of Chinese growth).
Now I have no idea whether the New Growth Path will cause anything to change.
But my instinct says that the most important thing the state can do is step out of the way and allow
damned dammed (damn! – ed) up human potential to find its way to the sea – like is revealed in the pictures of this great city at the mouth of the Yangtze river.
I definitely don’t hold some extreme libertarian view that wants to shrink the state to nothing and leave everything to the magical markets. “The State” is the mechanism by which we achieve all the myriad things we would not be able to achieve individually.
But there is a fundamental choice in approach to the state’s role. Should the state do “the thing” we require to be done or should the state regulate how “the thing” is done by the markets? Many “things” are not immediately profitably so enterprising private individuals do not do them. These things must obviously be done by the state if our democratic processes determine that they are desirable or necessary things do be done. And certain undertakings are too big and complex for one private enterprise. Those things are best done by the state or forms of state that arise through international co-operations.
The New Growth Path, it seems to me, bends the stick the way of the state being required to do more as well as more regulation of the enterprise of private individuals.
I strongly suspect that this is a step in the wrong directions but I am uncertain enough to be open to persuasion.