Column : Crony state capitalism

Nov 19 2012, 01:10 IST
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SummaryAt the recent Chinese Communist Party Congress in Beijing, Hu Jintao duly denounced corruption.

How primitive accumulation overlaps and diverges across India and China

At the recent Chinese Communist Party Congress in Beijing, Hu Jintao duly denounced corruption. As it happens, his own Prime Minister Wen Jiabao has been exposed by the New York Times as having massed several billions dollars worth of fortune for his ‘joint’ family, including his old mother. If China had a free press or an RTI, more could be found about how the princelings have amassed fortunes. Even without a free press, the case of Bo Xilai and his wife has told us enough about how the elite in China get rich and how they take the law in their own hands. In Bo Xilai’s case, it was the accident that his wife was alleged to have murdered a foreigner which caused a revelation. Thus, globalisation caught up with the insular habits of the Chinese elite and they could not hide from that light.

When William the Conqueror won in 1066 and become the King of England, he divided the land into large chunks and gave these to his faithful military generals. That is how the feudal fortunes were created and the Dukes and Earls went on to become the ruling classes. In China, the original hardy men who were with Mao on his long march have been rewarded in the same way. It is they and their heirs who run China and capture all the pivotal positions. Even with a docile electorate that communist parties create, no risks are taken. The princelings get into positions early on—at about 20 years in the case of the latest duo Xi Jinping and Li Keqiang. The next likely successors who will take over in 2022 are already being spotted among the 200 or so who will be on the Central Committee. Of course, bad as corruption is, it is better than the Maoist regime where as many as 36 million starved to death in the largest famine in history, just to bolster Mao’s revolutionary credentials.

The key is state capitalism and state regulation. State capitalism allows the princelings to convert the access to the units of state ownership into money-earning opportunities. Banks, especially, are a large source of loans which need never be repaid. This also happens when there are regulations imposed by the state and, if you want to circumvent them, a largish bribe can clear your way. Chinese bloggers have now begun

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