800px-Chongqing_Night_Yuzhong.jpgEconomy Polarizing Political Economy 

Political Realism and Private Power

By James H. Nolt

My corporatist approach is far more useful than the standard realist and liberal theories that inform most mainstream commentators in considering a potential U.S.-China trade war. Corporatism understands that independent strategic action by private forces, often business interests, significantly affect social dynamics, including, in this case, international relations. Corporatist or polarized political economy rejects the notion of the “state” and the “market” as two distinct realms that are, respectively, the objects of study of political science and economics. Corporatism endorses political realism, but only insofar as private power and strategy are fully integrated.

Realism and liberalism share this idea of state and market as distinct realms, but differ regarding their relative roles. For realists, states are the only strategic actors in international relations. They explain patterns and events largely by changes in strategies and the balance of power among states. Different versions of liberalism emphasize various exceptions to this realist notion of the primacy of state power. For example, some argue that domestic politics influences state behavior. Other liberals contend that the inertia of economic interdependence constrains state behavior. Still others contend that international law, norms, and institutions shape how states interact. Few liberals dispute the realist idea that states are crucial actors in international relations; they just disagree with realists about what motivates and constrains state behavior. Realists believe the only effective restraint on state behavior is the power of other states.

But both realist and liberal theorists miss so much. In particular, they share a Platonic view of states and markets as ideal types that exist distinctly from each other. In my view, elements of governments from any time in history are often motivated by factional or private interests. In the terminology of Aristotle, most real political regimes are corrupt or self-interested. They rarely act consistently as public-spirited leaders of a collective entity, a nation-state, but primarily aim to secure their own wealth and power against rivals, domestic and foreign. Aristotle’s more cynical view of the motivations of the powerful was revived during the Renaissance by Machiavelli, whose work also influenced Hobbes, Montesquieu, Hume, and in turn the American constitutional authors, especially James Madison.

Across the political spectrum, many students of politics during the tumultuous 20th century became increasingly dazzled by the twin pillars of ideology and institutions. Sordid business interests fell by the wayside. Economists reinforced this disinterest in private power by assuming against all evidence that private power is trivial, thereby treating everything that happens in the private sphere as a result of non-strategic or inertial forces. Conservatives admonish the most powerless people, telling them to take personal responsibility for themselves, while hiding the personal responsibility of the rich and powerful behind Platonic masks called “the market” and “the state.” Liberals struggle endlessly over labels and identity, the currency of ideology, and too often ignore massive agglomerations of power, particularly those in the private sphere. Even supposedly materialist socialists often become more concerned with ideological labels than with the realities of power and strategy.

A century ago, because of Progressive Era revelations, the reading public understood private power in the form of huge trusts, or business conglomerates, that acted in their own self-interest. Newspapers, rather than talking about an all-encompassing “market” that has a mind and metric of its own—an elemental inertial force—regularly explained events like the Panic of 1907 or the Great Crash of 1929 as the outcome of battles between rival bears and bulls: named individuals with specific self-interested strategies. Public discourse about power has deteriorated since then.

When I consider cases like the potential for a U.S.-China trade war, I do not assume either government is acting as a unified expression of the interests of the society it governs. Government officials may represent a specific social force or faction, or they might just act according to their own venal concern to secure their personal wealth and power. Either situation has specific consequences.

From the outside, China looks like an enormous, unified, inscrutable, and powerful one-party socialist state. That is how it is typically portrayed in the media and by many authors. Having studied it and having lived and worked there for many years, I have a different view. I sense that the capitalist ethos is more firmly and broadly dominant in China than in the U.S. People there, including most Communist Party functionaries, are more oriented toward business and money making than are most Americans. Rapid economic growth has helped to broadly instill a strong desire to secure and expand personal wealth. This widespread ideology has material roots: Nearly all Chinese know people around them who have gotten rich rapidly. Furthermore, most Chinese understand the relationship between wealth and political power. Securing wealth requires political influence. People there might dream of a “free market” elsewhere, but in their own experience, wealth and power go hand in hand. One reason China is one of the few countries in the world where a majority of the public admires U.S. President Donald Trump, despite his anti-China rants, is that they see him as being more realistic (most Americans would say corrupt) about the close relationship between wealth and power. Much of American public dialogue sounds idealistic and naive to Chinese ears, but Trump, by word and deed, exposes real hardball politics. Of course, many Chinese merely gossip about the realities of their corrupt political economy rather than flaunting them to the world the way Trump does, so they also admire his freedom.

One reason China’s President Xi Jinping has been pushing a more vigorous anti-corruption campaign is that systemic corruption has weakened the ability of the Chinese government and party to implement reforms that may be necessary to stave off disaster. Ironically, the reality of China is more like the ideology of America. In other words, inertial forces are so strong in China because individual self-interest is so rampant. The U.S., despite obvious gridlock in Washington, is more strategically effective because many of the institutions of U.S. public and private power, from the military to the host of giant corporations, subordinate private interests to corporate strategy. In China, power is widely distributed and therefore weakly centralized and coordinated. In America, every politician rhetorically “loves” small business but actually panders to huge corporate interests that throttle small business at every turn. China has its big businesses too, but they, like everyone else, are struggling to thrive amid a cacophony of ever-changing rules and powers. Even the most powerful and prosperous seldom feel secure, not because the government is so powerful, but because the established rules are so weak. It is like frontier capitalism, the Wild West. Next week I will consider the potential calamity when the political self-interest of Trump clashes with the corporate agenda of the current Chinese Communist Party leadership.



James H. Nolt is a senior fellow at the World Policy Institute and an adjunct associate professor at New York University.

[Photo courtesy of Jonipoon]

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