By Paul Roderick Gregory, Contributor   China avoided the world recession that started in 2009. The wise communist party, we are told, ramped up infrastructure spending – unimpeded by the need for licenses, court reviews, or rights of way. The government pumped in just enough infrastructure spending to maintain China’s healthy growth rate. Skeptics of democracy and free enterprise waxed eloquent about China’s state capitalism, as directed by China’s communist party. We want more of what China is having over here – was the refrain. Democracy and free markets indeed make mistakes. No one promised free sailing of steady growth, low unemployment, and the absence of business cycles. Bubbles and busts have been a part of the capitalist system since the Dutch Tulip Bubble of 1637. We can debate the role of government in the U. S. housing bubble and in Europe’s banking and Euro crises, but no proponent of market capitalism has promised a bubble-free, recession-free world. The proponents of state capitalism and a one party system do make such promises. The Soviet Union promised that “scientific planning” would lead to steady growth, innovation, and the eventual overtaking of the United States. China’s communist leaders laud their “socialism with a Chinese face” in which sober and wise party and state officials can be counted upon to make the correct decisions. History tells another story.  The most disastrous blunders have been committed by the scientific planners of one party states. Miscalculations and errors of the market system tend to be self-correcting if they are left alone. Even when they are mishandled, the damage is minor compared to the blunders of the state capitalists. Some examples: Stalin’s “scientific planning” decision to collectivize Soviet agriculture cost the USSR more than six million lives and condemned its agriculture to a half century of miserable performance. The world’s former breadbasket became a net importer of grain. Mao’s Great Leap Forward of 1958 destroyed the Chinese family farm and doomed over thirty million Chinese to starvation. It was not until Deng Xiapeng freed the Chinese peasant (or they freed themselves, it is more accurate to say) that China’s agriculture recovered. Stalin’s death in 1953 stopped in the nick of time his Great Plan for the Transformation of Nature, which, among other things, would have changed the direction of flow of major Russian rivers. Well, do not scientific planners learn their lessons? Indeed they have made disastrous mistakes in the past, but they will not repeat them, state-capitalism advocates say. Think again: China’s great reformer Deng Xiaoping dictated China’s one child policy in 1979 as the reforms started. Not only was this program a gross violation of human rights. It transformed China from a young and vibrant society into an old population with a declining supply of labor within one generation. As a consequence, China’s leaders must figure out how to continue rapid growth with the demographics of old Europe. Score one major mistake for the scientific planners of China, even the enlightened ones behind the current reform. Vladimir Putin’s state …read more

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