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mostlysignssomeportents · 7 months

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Yanis Varoufakis’s “Technofeudalism: What Killed Capitalism?”

Monday (October 2), I'll be in Boise to host an event with VE Schwab. On October 7–8, I'm in Milan to keynote Wired Nextfest.

Socialists have been hotly anticipating the end of capitalism since at least 1848, when Marx and Engels published The Communist Manifesto - but the Manifesto also reminds us that capitalism is only too happy to reinvent itself during its crises, coming back in new forms, over and over again:

https://www.nytimes.com/2022/10/31/books/review/a-spectre-haunting-china-mieville.html

Now, in Technofeudalism: What Killed Capitalism, Yanis Varoufakis - the "libertarian Marxist" former finance minister of Greece - makes an excellent case that capitalism died a decade ago, turning into a new form of feudalism: technofeudalism:

https://www.penguin.co.uk/books/451795/technofeudalism-by-varoufakis-yanis/9781847927279

To understand where Varoufakis is coming from, you need to go beyond the colloquial meanings of "capitalism" and "feudalism." Capitalism isn't just "a system where we buy and sell things." It's a system where capital rules the roost: the richest, most powerful people are those who coerce workers into using their capital (factories, tools, vehicles, etc) to create income in the form of profits.

By contrast, a feudal society is one organized around people who own things, charging others to use them to produce goods and services. In a feudal society, the most important form of income isn't profit, it's rent. To quote Varoufakis: "rent flows from privileged access to things in fixed supply" (land, fossil fuels, etc). Profit comes from "entrepreneurial people who have invested in things that wouldn't have otherwise existed."

This distinction is subtle, but important: "Profit is vulnerable to market competition, rent is not." If you have a coffee shop, then every other coffee shop that opens on your block is a competitive threat that could erode your margins. But if you own the building the coffee shop owner rents, then every other coffee shop that opens on the block raises the property values and the amount of rent you can charge.

The capitalist revolution - extolled and condemned in the Manifesto - was led by people who valorized profits as the heroic returns for making something new in this world, and who condemned rents as a parasitic drain on the true producers whose entrepreneurial spirits would enrich us all. The "free markets" extolled by Adam Smith weren't free from regulation - they were free from rents:

https://locusmag.com/2021/03/cory-doctorow-free-markets/

But rents, Varoufakis writes, "survived only parasitically on, and in the shadows of, profit." That is, rentiers (people whose wealth comes from rents) were a small rump of the economy, slightly suspect and on the periphery of any consideration of how to organize our society. But all that changed in 2008, when the world's central banks addressed the Great Financial Crisis by bailing out not just the banks, but the bankers, funneling trillions to the people whose reckless behavior brought the world to the brink of economic ruin.

Suddenly, these wealthy people, and their banks, experienced enormous wealth-gains without profits. Their businesses lost billions in profits (the cost of offering the business's products and services vastly exceeded the money people spent on those products and services). But the business still had billions more at the end of the year than they'd had at the start: billions in public money, funneled to them by central banks.

This kicked off the "everything rally" in which every kind of asset - real estate, art, stocks, bonds, even monkey JPEGs - ballooned in value. That's exactly what you'd expect from an economy where rents dominate over profits. Feudal rentiers don't need to invest to keep making money - remember, their wealth comes from owning things that other people invest in to make money.

Rents are not vulnerable to competition, so rentiers don't need to plow their rents into new technology to keep the money coming in. The capitalist that leases the oil field needs to invest in new pumps and refining to stay competitive with other oil companies. But the rentier of the oil field doesn't have to do anything: either the capitalist tenant will invest in more capital and make the field more valuable, or they will lose out to another capitalist who'll replace them. Either way, the rentier gets more rent.

So when capitalists get richer, they spend some of that money on new capital, but when rentiers get richer, them spend money on more assets they can rent to capitalists. The "everything rally" made all kinds of capital more valuable, and companies that were transitioning to a feudal footing turned around and handed that money to their investors in stock buybacks and dividends, rather than spending the money on R&D, or new plants, or new technology.

The tech companies, though, were the exception. They invested in "cloud capital" - the servers, lines, and services that everyone else would have to pay rent on in order to practice capitalism.

Think of Amazon: Varoufakis likens shopping on Amazon to visiting a bustling city center filled with shops run by independent capitalists. However, all of those capitalists are subservient to a feudal lord: Jeff Bezos, who takes 51 cents out of every dollar they bring in, and furthermore gets to decide which products they can sell and how those products must be displayed:

https://pluralistic.net/2022/11/28/enshittification/#relentless-payola

The postcapitalist, technofeudal world isn't a world without capitalism, then. It's a world where capitalists are subservient to feudalists ("cloudalists" in Varoufakis's thesis), as are the rest of us the cloud peons, from the social media users and performers who fill the technofuedalists' siloes with "content" to the regular users whose media diet is dictated by the cloudalists' recommendation systems:

https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys

A defining feature of cloudalism is the ability of the rentier lord to destroy any capitalist vassal's business with the click of a mouse. If Google kicks your business out of the search index, or if Facebook blocks your publication, or if Twitter shadowbans mentions of your product, or if Apple pulls your app from the store, you're toast.

Capitalists "still have the power to command labor from the majority who are reliant on wages," but they are still mere vassals to the cloudalists. Even the most energetic capitalist can't escape paying rent, thanks in large part to "IP," which I claim is best understood as "laws that let a company reach beyond its walls to dictate the conduct of competitors, critics and customers":

https://locusmag.com/2020/09/cory-doctorow-ip/

Varoufakis points to ways that the cloudalists can cement their gains: for example, "green" energy doesn't rely on land-leases (like fossil fuels), but it does rely on networked grids and data-protocols that can be loaded up with IP, either or both of which can be turned into chokepoints for feudal rent-extraction. To make things worse, Varoufakis argues that cloudalists won't be able to muster the degree of coordination and patience needed to actually resolve the climate emergency - they'll not only extract rent from every source of renewables, but they'll also silo them in ways that make them incapable of doing the things we need them to do.

Energy is just one of the technofeudal implications that Varoufakis explores in this book: there are also lengthy and fascinating sections on geopolitics, monetary policy, and the New Cold War. Technofeudalism - and the struggle to produce a dominant fiefdom - is a very useful lens for understanding US/Chinese tech wars.

Though Varoufakis is laying out a technical and even esoteric argument here, he takes great pains to make it accessible. The book is structured as a long open letter to his father, a chemical engineer and leftist who was a political prisoner during the fascist takeover of Greece. The framing device works very well, especially if you've read Talking To My Daughter About the Economy, Varoufakis's 2018 radical economics primer in the form of a letter to his young daughter:

https://us.macmillan.com/books/9780374538491/talkingtomydaughterabouttheeconomy

At the very end of the book, Varoufakis calls for "a cloud rebellion to overthrow technofeudalism." This section is very short - and short on details. That's not a knock against the book: there are plenty of very good books that consist primarily or entirely of analysis of the problems with a system, without having to lay out a detailed program for solving those problems.

But for what it's worth, I think there is a way to plan and execute a "cloud rebellion" - a way to use laws, technology, reverse-engineering and human rights frameworks to shatter the platforms and seize the means of computation. I lay out that program in The Internet Con: How the Seize the Means of Computation, a book I published with Verso Books a couple weeks ago:

https://www.versobooks.com/products/3035-the-internet-con

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital

#pluralistic #yanis varoufakis #socialism #communism #technofeudalism #economics #postcapitalism #political science #rent-seeking #rentiers #books #reviews #gift guide

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newsfrom-theworld · 5 months

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BRANDS TO BOYCOTT

1 Consumer boycott goals:

Let's start by boycotting these brands that are directly involved in Israeli apartheid

'' BIG THREE''

Mc Donald: gives free meals to Israeli soldiers

Disney ( sadly, Disney was my childhood): declared support for Israel by pledging $2 million

Starbucks: sued his union over its pro-Palestine positions

Siemens

Siemens (Germany) is the prime contractor of the Euro-Asia Interconnector, an Israel-EU undersea power cable that is expected to connect illegal Israeli settlements in the occupied Palestinian territories to Europe. Siemens brand appliances are sold all over the world.

PUMA

PUMA (Germany) sponsors the Israel Football Federation, which governs teams in illegal Israeli settlements in the occupied Palestinian territories.

Carrefour

Carrefour (France) is a facilitator of genocide. Carrefour-Israel supported Israeli soldiers who took part in the genocide of Palestinians in Gaza with gifts of personal parcels. In 2022 it entered into a partnership with the Israeli company Electra Consumer Products and its subsidiary Yenot Bitan, both of which were involved in serious violations against the Palestinian people.

AXA

When Russia invaded Ukraine, the insurance giant AXA (France) took targeted measures against it. Yet as Israel, a 75-year-old regime of colonialism and apartheid, wages a genocidal war on Gaza, AXA continues to invest in Israeli banks that finance war crimes and the theft of Palestinian land and natural resources.

Hewlett Packard Inc (HP Inc)

HP Inc (USA) provides services to the offices of the genocide leaders, Israeli Prime Minister Netanyahu and Finance Minister Smotrich.

SodaStream

SodaStream is actively complicit in Israel's policy of displacing Israel's indigenous Bedouin-Palestinian citizens in the Naqab (Negev) and has a long history of racial discrimination against Palestinian workers.

Ahava cosmetics

Ahava have their production site, visitor center and main store in an illegal Israeli settlement in the occupied Palestinian territories.

D/MAX

RE/MAX (USA) markets and sells property in illegal Israeli settlements built on stolen Palestinian land, thus enabling Israeli colonization of the occupied West Bank.

2 Divestment objectives:

Elbit Systems

Elbit Systems is the largest apartheid Israeli arms company. It “field tests” its weapons against the Palestinians, including in Israel's ongoing genocidal war against the Palestinians in Gaza. In addition to building killer drones, Elbit produces surveillance technology for the apartheid wall, checkpoints and fence in Gaza, enabling apartheid. The US and EU use Elbit technology to militarize their borders, violating the rights of refugees and indigenous peoples.

HD Hyundai/Volvo/CAT/JCB machinery

by HD Hyundai (South Korea), Volvo (Sweden/China), CAT (United States) and JCB (United Kingdom) have been used by Israel in the ethnic cleansing and forced displacement of Palestinians through the destruction of their homes, farms and commercial activities, as well as the construction of illegal settlements on stolen land, a war crime under international law.

Barclays

Barclays Bank (UK) holds more than £1 billion in shares and provides more than £3 billion in loans and subscriptions to nine companies whose weapons, components and military technology have been used in Israel's armed violence against Palestinians.

CAF

The Basque transport company CAF builds and provides maintenance services to the Jerusalem Light Rail (JLR), a tram line serving illegal Israeli settlements in Jerusalem. The CAF benefits from Israel's war crimes on stolen Palestinian lands.

Chevron

The US fossil fuel multinational Chevron is the main international company extracting gas claimed by Israeli apartheid in the eastern Mediterranean. Chevron generates billions in revenue, bolstering Israel's war chest and apartheid system and exacerbating the climate crisis.

HikVision

Amnesty International has documented high-resolution CCTV cameras made by Chinese company Hikvision installed in residential areas and mounted on Israeli military infrastructure for surveillance of Palestinians. Some of these models, according to Hikvision marketing, can connect to external facial recognition software.

TKH Security

Amnesty International has identified cameras from the Dutch company TKH Security used by Israel for surveillance of Palestinians. TKH supplies the Israeli police with surveillance technology used to enforce apartheid.

Other brands:

Zara

Zara's latest marketing campaign uses corpses in plastic wrapping, and warzone aesthetics, mocking the genocide by israel in Gaza. In a previous incident Joey Schwebel, a Canadian-Israeli dual national and chairman of israel's Zara franchisee Trimera, hosted the convicted terrorist Itamar Ben-Gvir at his home in the lead-up to the Israeli elections. Zara did not made a statement distancing themselves from this association and allowed this ad campaign to run.

Adidas

Adidas uses isr@eli manufacturer, Delta Galil, to manufacture its underwear range.

Prada:

Prada Beauty is a partnership with L'Oreal, which is a 'warm friend of Isr@el'.

Louis Vuitton:

The owner of Louis Vuitton's parent company, LVMH, Bernard Arnault invests hundreds of millions in Isr@eli companies

Dior:

The owner of Dior's parent company, LVMH, Bernard Arnault invests hundreds of millions in Isr@eli companies

Caterpillar:

Caterpillar bulldozers have been used in the demolition of Palestinian homes. The D9 bulldozer was specifically designed for the IOF.

American Eagle:

American Eagle posted an image of the Isr@eli Flag on their flagship billboard in Times Square showing their support for the apartheid state.

Fenty Beauty by Rihanna:

The owner of Fenty's parent company, LVMH, Bernard Arnault invests hundreds of millions in Isr@eli companies

Eurovision:

Eurovision is allowing israel to compete this year despite the genocide theyre comitting and they will use this opportunity to spread propaganda

Donna Italia

Sources:

BDS

this site

this specifical post on Twitter ( X )

if i discover news brands i will edit the post

And Always

Free Palestine, now and always.

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fatehbaz · 1 year

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In 1901, Liang Qichao, a prominent Chinese journalist, wrote an essay entitled “The New Rules for Destroying Countries” (“Mieguo xinfan lun”).

In it, he presented what he had come to understand were the patterns of nineteenth-century Euro-American colonial-imperialist world domination into which China was being drawn. Egypt is the first among five examples he cited of a people and a state crushed by these “new rules.” No simple military invasion or despoiling occupation, the new rules proceeded under a subtler logic. According to Liang, English financial advisers had inserted themselves into the Egyptian court, inducing the state to indebt itself so completely that international bankers could take over from within. This ingenious mode of domination constituted what Liang called “formless dismembering,” hardly detectable as it proceeds, and announcing itself suddenly once it has taken place. Without quite articulating it, Liang was theorizing the advent of finance capitalism in relation to colonialism, with Egypt at its core. [...]

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Aaron Jakes [...] takes up the relation between imperialist domination through the financialization of capitalism in the colonies [...] in his comprehensive account of the British occupation of Egypt from 1882 to 1914. [...] The [financial] crises, produced in the metropole [London, Paris, New York, etc.], were analytically and practically worked out by yoking colonies as productive places and colonials as laboring and culturally marked/racially othered bodies to metropolitan concerns over empire [...], making Egypt a “laboratory in which to settle those greater questions of the Empire” (25). [...] [T]he original goal of British colonial governance was to enhance [...] cotton-growing for export to the global market and capital investment/speculation. [...] The British restructuring of rural space and agrarian social relations [...] severely constrained the room for maneuver of the Egyptian peasantry, who had long used the porousness of the relations among land, property, labor, and power to gain whatever advantages they could. Peasants were now locked firmly in place, and when [...] [financial] crisis hit, their indebtedness left them relatively defenseless. By 1905, superficial prosperity hid roiling discontent with economic development but also with colonial legitimacy. [...]

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[T]he Egyptian journalist Ahmad Hilmi recognized the British discourse of development as “gilded speech” that created an economistic reality without accounting for the lived complexity of actual Egyptians. As Jakes puts it: “despite the occupation’s command over the means of representation, the shared sentiments and experiences of the Egyptian people were irreducible to the charts and tables that adorned the pages of Cromer’s annual reports” (118).

In comparing Egypt’s poverty to the British-produced poverty of Ireland, for example, the economic boom of gushing capital investment was revealed to be a mechanism of wealth accumulation for the few. [...] [T]he gap between rhetoric and reality [...].

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All text above by: Rebecca E. Karl. “Review of Egypt’s Occupation: Colonial Economism and the Crises of Capitalism.” Jadaliyya online. 21 June 2022. [Bold emphasis and some paragraph breaks/contractions added by me.]

#abolition #ecology #imperial #colonial

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catgirlforeskin · 21 days

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"How will things work under anarchy?" mfs when they are asked about how will things work under DOTP

Joke about forcing everyone to work

"Same as under capitalism, but now the rulers don't actually own property and therefore will not be interested in abusing power"

Some other options?

Yeah I think the whole “oh yeah, we’ll what about x under your system” whiteboard bad faith gotcha routine that usually comes from liberals but sometimes various left-wing groups going “pfft, your system doesn’t have real solutions like mine does” back and forth is generally silly and counterproductive.

But my beef is about class and “ends justify the means” arguments. Because the general framework of “we empower the working class and suppress the capitalist class until we’ve done away with class altogether” doesn’t really work when you create a new class of state functionaries who fill in for the capitalists of old.

Either it’s Engels style “but we NEED factory managers at the end of the day” or “we’re going to have a ruling class temporarily and then it’ll wither once we’re ready for communism” and one I just fundamentally disagree with and the other doesn’t take into account the class contradictions it creates.

I do think it’s reasonable to have times where you go “okay we need to have austerity or switch to war production or whatever bad thing to get through an ongoing siege or crisis” but that should always be a decision made democratically and not by a distinct class, because then you hit the inevitable position of “well we need to indefinitely extend the emergency powers I’ve been granted because there’s always an emergency.” Among marxist states we can look to Cuba as a good example of the former, and the Soviet Union of the latter, which liberalized itself to death.

I think generally in our current historical moment I’ll support just about any power in dethroning American capitalist imperial hegemony and think it’d be unambiguously better for China to hold that position (Xi pls come build me high speed rail I will personally pilot the Chengdu J-20 air superiority fighter jets to ensure your victory) but I also think we can aim higher, and really, as climate cataclysm worsens in the coming years we’re going to need to

#asks

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romanceyourdemons · 9 months

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the pre-code anti-drug propaganda exploitation film marihuana (1936) does pretty much all the things you would expect it to. it rails against youth culture, fearmongers about the criminalizing and violence-inducing properties of marijuana, draws on the horror of drug use (low-class) infecting the upper class, and ends with the up-and-coming drug dealer becoming a hopeless addict who meets her deserved fate at the hands of the cops and her treacherous gang members. in many ways, this lurid, melodramatic, moralistic film is everything i expected. but it also surprised me. for one thing, it seems that in the 1930s marijuana was not racialized as black the way it overwhelmingly has been for generations now. it was hardly racialized at all—all the characters were white—but the gang leaders were italian in fitting with stereotypes about organized crime, and the title scrawl equated marijuana use among the youth of the 1930s with the opium crisis china faced through and beyond the nineteenth century, and furthermore called marijuana “hashish of the orient,” further framing it as exotic and unamerican. this cultural rhetoric surprised me. but something about the film specifically that surprised me is that, rather than relying on lengthy scenes of violence and sexuality (supposedly induced by marijuana) the way reefer madness (1936) does, this film builds up a pathos-based narrative of a young woman neglected by her nouveau riche family and a young man with no prospects, who are taken in by a gangster who claims to be their friend, but who really just wants to exploit them. the violence and sexuality, though present, are by and large extremely implicit. family dynamics and the importance of marriage and matrimony are the engines that drive the story, not just the endless cycle of crime and violence the exploitation genre is given to. and, although i never would have expected it, the cinematography and editing are gorgeous for much of the film. although the purpose of marihuana (1936) is not subtle and neither are most of the devices it uses, i was surprised by the artistry and even sensitivity with which this exploitation film was made. and i’m a little mad about it

#ryddles

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copperbadge · 1 year

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Hi, Sam! somewhat contradictory, i don't know if this goes on Radio Free or not? But maybe with the bird microblog imploding, people should get on archiving stuff on there? Not just screenshots but internet archive and ao3

Oh sure, that can go in RFM -- I'd consider it "News To Know". My unfamiliarity with Twitter means I'm not qualified to discuss how that's done (I don't know how to and don't plan to archive mine) but if people want to link to tutorials on how to archive their own work or others', they can do so here. If I get a bunch of different entries I'll weed through for the best couple of links, as I generally do.

For what it's worth, I don't think twitter is going anywhere; nobody is too big to fail, of course, but too many important people use it for too much validation. There would be a genuine mental health crisis amongst the elite of the world if Twitter suddenly vanished forever.

I think what is likely to happen after Twitter goes private tomorrow is that either someone at Twitter will be able to manage him and sort shit out, in which case people who like Twitter have no reason to worry, or Musk will continue to failwhale until there is a very real peril of Twitter going down for good. At which point either his creditors will approach him, or he will approach them, about how they fix this. He's going to end up wiping his debt by trading chunks of Twitter away to whoever holds his IOUs, because Twitter genuinely is an extremely valuable property and people with the kind of money to lose lending it to Elon Musk know that. The new owners will invest a bit in getting it back to where it was, then take it public again and probably make a killing as people try to get in on the ground floor of Twitter's Resurgence.

I don't think Musk planned this because I don't credit him with the good sense nature gave a cat, but that's my prediction.

Ultimately, right now an insecure narcissist with a shitload of debt has the world's greatest addiction in the palm of his hand, but someone's got his balls in their fist. If Russia or China really wanted to fuck the West, they'd start buying up Musk's debt now, and offer him the option of paying it off by ceding ownership of the company to, say, a conglomerate of local billionaires. Both countries have well enough billionaires, and enough government leverage over them, to make that happen.

But yeah, I don't think twitter's going anywhere, it's just going to suck more than usual until someone buys him out. Then things really get exciting.

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argumate · 9 months

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The fundamental issue slowing growth in China right now is not the way in which authoritarianism undermines incentives and property rights and thus confidence and investment in the private sector. The real issue is that the Chinese regime, by authoritarian means - but also by using more subtle techniques of financial repression - underwrites massive socio-economic inequality. It is the suppression of household disposal income and thus effective demand, which is the root problem of the Chinese economy. The share of consumption remains staggeringly low and the share of investment hugely inflated. China’s economic problem is on the demand side with households and consumers not the supply-side (with business owners and investors).

This lopsidedness would be socially unbalanced, but it would not be a source of crisis were the regime willing to settle for more reasonable growth rates. But it is not, so it compulsively and repeatedly opts for debt-financed investment and to ensure that this takes place the regime is repeatedly drawn to interfere. It is the lopsided political economy and the regime’s growth priorities not the CCP’s compulsive authoritarianism or Xi’s third term that are the drivers of intervention.

Investment-led growth would not a bad thing so long as China still needed basic infrastructure. Thirty years ago China was still desperately in need of infrastructure, which is why China’s ferocious growth drive was the world historic transformative triumph that it was, lifting hundreds of millions out of poverty. But, in the last fifteen years, investment has reached its limit. China reached the point of diminishing returns. Whether the investment is public or private matters less than the aggregates. They are simply too big.

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notayesmanseconomics · 3 months

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Financial markets in China are being affected by the ongoing property crisis

This morning the economic news and agenda is being set by events in China. We can start with this. Chinese stock collapse accelerating. SHENZHEN COMPONENT INDEX FELL MORE THAN 3% CHINEXT INDEX FELL 2.4% SHANGHAI COMPOSITE INDEX FELL 2.7% ( CN Wire) So a rough start to the week and it feels even worse in Hong Kong. Another day, another dip for the Hang Seng Index, down 2.3% today. It’s plunged…

View On WordPress

#business #China #Chinese Yuan #economy #Finance #fiscal black hole #Fiscal Boost #Hang Seng #house prices #Japan #managed exchange rate #Nikkei 225 equity index #property crisis #Renminbi #shanghai composite

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materialsscienceandengineering · 1 year

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Researchers aim to solve the rare earths crisis

During a time of immense global uncertainty, managing supply chains for critical materials has been a top priority for many governments and large organizations. But what happens when certain materials are concentrated in the hands of one single nation—as most of the world's rare earth metals are with China?

Rare earth elements are essential in manufacturing a range of high-tech devices. In particular, they are used in the production of high-performance magnets that are, themselves, fundamental components in a whole host of technologies. For years, researchers have been searching for new magnetic materials that can act as substitutes for the critically scarce components.

Engineers at Northeastern now believe they can solve the puzzle, and have patented a process to accelerate the creation of one such rare earth magnet alternative—a mineral known as tetrataenite, whose magnetic properties make it a leading candidate to replace magnets made of the scarce material.

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kintsuru · 4 months

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#中国

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fatehbaz · 1 year

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George Macartney, traveling through southern China following his disastrous embassy to Beijing in 1793, noted thousands of acres of newly planted trees. [...] [T]hese were anthropogenic forests [...]. Miller persuasively demonstrates that during the Song-Yuan-Ming period, private silviculture in the Jiangnan region provided sufficient timber for the Chinese state. [...]

Up through the Tang dynasty, trees were logged from the wild, in what Miller calls “the age of abundance.” From a legal standpoint, the labor of harvesting trees transformed them into property; logging it made it yours. By the Song dynasty, supply no longer matched demand, a situation worsened by growing urbanization, overharvesting, and the foreign states that blocked access to northern forests. The Song dynasty responded to this crisis in the eleventh century with strategies to manage and conserve forests.

What survived from these experiments was not government-managed forests or a professional forest bureaucracy as in France, Korea, Venice, and Prussia, but rather private silviculture and commerce. Private tree plantations sprouted up south of the Yangzi River, including not just fir but also “pine and camphor for timber; bamboo for poles and paper; palm for thatch and fiber; tung, lacquer, tallow tree, and camellia for oils and resins; mulberry to feed silkworms; tea to drink; and a wide variety of species for fuel, fruits, and nuts” (p. 4).

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Changes to land survey regulations in the twelfth century led to more forest land coming under government tax oversight, transforming open-access woodlands into private property.

During what [Miller] calls “the wood age,” or early modern period, private timber plantations solved the problem of procuring timber in China, but silviculture created landscapes not conducive to biodiverse flora and fauna. Trees may not have “retreated,” but megafauna like tigers and elephants did, along with the old-growth forests that had once supported them.

This trend happened in Europe too [...]. In Europe, bureaucracies expanded to oversee domestic forests while also colonizing abroad to obtain timber.

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Text by: Kathlene Baldanza. “Review of Miller, Ian Matthew, Fir and Empire: The Transformation of Forests in Early Modern China.” H-Asia, H-Net Reviews. April 2022. [Bold emphasis and some paragraph breaks/contractions added by me.]

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mariacallous · 8 months

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For the last three decades, the Chinese economy has resembled an impressionist painting: beautiful from afar, but a jumbled mess up close. China’s economic model has centered around investment-led growth made possible by the supply of cheap capital extracted through domestic financial repression, using a combination of policies—such as interest rate caps, capital controls, and restrictions on credit allocation directions and financial market entry—to channel capital into state-prioritized sectors. While this model has contributed to China’s rapid rise, it has also led to the entrenchment of structural issues that began to emerge well before President Xi Jinping assumed power in 2012. Instead of taking the chance for reform, though, Xi’s policies have only worsened these issues.

China faces three major structural challenges that expose it to the risk of economic stagnation akin to Japan’s “lost decades”: Escalating debt coincides with decelerating growth, sluggish household consumption lags overextended supply, and adverse demographic trends have blunted China’s edge in cheap but skilled young labor, which amplifies social welfare costs and causes housing market demand to dwindle. The inevitable reckoning of China’s structural challenges has been accelerated since Xi’s ascendence.

The fuse on this economic time bomb is steadily shortening. In recent months, critical economic indicators—from industrial profits and exports to home sales—have all recorded double-digit percentage declines. In July, while consumer prices rose globally, they fell in China, raising concerns that deflation could worsen the difficulties faced by heavily indebted Chinese companies. A convergence of idiosyncratic factors now threatens to ignite a crisis in the property and construction sector, which makes up nearly 30 percent of Chinese GDP. China Evergrande’s recently filed for bankruptcy. Coupled with the impending default of Country Garden, another major property developer, after missed bond payments this month, it has deepened the already profound sense of uncertainty and fear among the business community.

This economic uncertainty is further heightened by the Chinese Communist Party’s ever-shifting targets of anti-corruption and anti-espionage campaigns. Health care is the latest sector to fall under the gaze of authorities, even as the effects of previous campaigns against tech, private education, gaming, and finance still linger. In the background, the friction between China and the United States continues largely unabated. Private conversations among Chinese citizens, particularly the young, reveal an undercurrent of pessimism and unease. Among the contributing factors is the looming specter of military conflict with the West regarding the future of Taiwan. China’s one-child generation would shoulder the weight if such a conflict were to happen, an existential threat of unparalleled proportions.

Milton Friedman was partially correct when he famously stated that “[i]nflation is always and everywhere a monetary phenomenon.” In China, the manifestation of economic deflation symptoms—even transitory—has been shaped by Xi’s departure from the reform and opening up policy and the return of expansive political, ideological, and geoeconomic aspirations reminiscent of the Mao Zedong era. We might dub the resulting phenomenon “Xi-flation,” deflation with Chinese characteristics. The cumulative policy shocks of the last five years have exacerbated, rather than quelled, the structural challenges that have been dragging—but not crashing—China’s growth.

The posture of China’s teetering-but-not-tumbling growth trajectory has long called for careful structural reform. The goal should be to squeeze out the property market bubble without bursting it, to alleviate income inequality without stifling entrepreneurship, and to foster fair competition without hurting productivity. The success of these reforms hinges on a calibrated policy orchestration. Instead, Xi’s policy has produced grandiose political rhetoric, such as “common prosperity” or “shared human destiny,” mixed with clumsy and misguided enforcement.

Economically, Xi has been a bull in a china shop. His economic policies have often shifted focus but always emphasize the party’s overarching control across nearly all dimensions of China’s economic and financial activity. Since 2017, foreign companies operating in China have organized lectures for employees to study the role of the party and Xi speeches. As of October 2022, 1,029 out of the 1,526 of the mainland-listed companies (more than two-thirds) whose shares can be traded by international investors in Hong Kong acknowledge “Xi Thought” in their corporate constitutions and have articles of association that formalize the role of an in-house party unit.

In fairness, Xi did not create China’s structural woes. However, the reform and opening up policy suffered a quiet, unheralded death as Chinese policy thinkers attempted to compensate for the absence of prudent economic strategy under Xi by ceaselessly leaping from one grand idea to the next under the banner of national rejuvenation.

For example, since December 2016, the phrase “houses are for living, not for speculation” has become the principle to curb the property sector. In 2017, the “thousand-year project” Xiong’an New Area was launched as a city of the future. In 2019, “establishing a new national system for innovation” entered the lexicon for state-led science and technology innovation. Since 2020, “common prosperity” has become the mantra behind which to launch antimonopoly and antitrust probes into China’s tech sector. And since November last year, when Xi suddenly reversed China’s zero-COVID policy, the new catchphrase has shifted to “consumption promotion.”

Xi-flationary policies have exacerbated China’s latent structural problems and rung up a steep tab. For instance, Xi’s regulatory crackdown on China’s leading tech companies wiped out more than $1 trillion in market value, a figure comparable to the GDP of the Netherlands. The zero-COVID policy incurred costs of at least 352 billion yuan ($51.6 billion) for Chinese provinces, almost twice the GDP of Iceland ($27.84 billion in 2022).

The financial cost of these policy missteps is not their worst aspect. The most profound cost of Xi-flation so far is an unprecedented run on confidence in the Chinese economy from within and without. Beijing’s old economic playbook has run out of pages when it comes to tackling this crisis. China cannot export its way out of today’s economic challenges or stimulate its way toward a full recovery without also addressing the underlying political cause. As China moves up global supply chains, foreign companies are increasingly looking for alternative countries to sources for inputs and locate production to ensure they do not fall on the wrong side of any lines drawn as part of Western policymakers’ drive to “de-risk” their reliance on China.

This is, in part, a belated reaction to the willingness of China under Xi to use economic coercion. Researchers from the International Cyber Policy Centre found that between 2020 and 2022, China resorted to economic coercion in 73 cases across 19 jurisdictions, a marked increase compared to China under Xi’s predecessors.

China’s waning comparative advantage is a long-term structural problem, but political and geopolitical factors drive the current run on confidence. As Xi continues to consolidate power, the once lucrative China premium will be further discounted due to the growing regulatory and geopolitical uncertainty. Chinese technocrats cannot fully address this run on confidence using only their limited economic toolbox, such as the People’s Bank of China’s use of the so-called precision-guided structural monetary tools to selectively provide credit for state-preferred sectors.

Xi’s global assertiveness has caused negative spillback for China’s economy. Amid China’s fraying ties with the West and multinationals hastening to diversify their supply chains, ordinary Chinese households are left to deal with mounting anxiety. They are economically less secure as a consequence of Xi’s zero-COVID policy, and they are increasingly concerned that geopolitical forces beyond their control have limited their individual futures. Xi’s commitment to reunite Taiwan with the mainland, by force if necessary, has created the perception among some in China that conflict is inevitable—the same as in the United States. This loss of confidence aggregates across hundreds of millions of Chinese households, underpinning an economic condition that James Kynge has characterized as a “psycho-political funk.”

An essential factor behind China’s economic success during the reform and opening up period was what economist John Maynard Keynes termed “animal spirits”—those emotional and psychological drivers that push people to spend, invest, and embrace risk. For decades, China not only benefited from the inflow of foreign direct investment and technology from the West, but also enjoyed a steady tailwind from the optimistic outlook of Western business leaders eager to capitalize on the globalization trend. When Western companies briefly reconsidered their involvement with China in the aftermath of the Tiananmen protests, Deng Xiaoping rescued the situation by embarking on his influential southern tour in 1992. During his tour, he the world of the party’s commitment to economic reform, stating, “It is fine to have no new ideas … as long as we do not do things to make people think we have changed the policy of reform and opening up.”

However, Xi’s policies have undone much of Deng’s legacy and upended China’s prior economic success formula. China’s appeal as a destination for both tourism and business has dimmed, and a growing number of the country’s elite look beyond the border for their future. If this trend continues, China may fall into the dreaded middle-income trap or face even graver risks such as a financial crisis. A financial crisis in China would have far greater consequences than any other previous emerging market crisis. The size of China’s economy and its level of integration dwarf that of South Korea in the late 1990s, when it was at the epicenter of the East Asian financial crisis.

The West has a genuine interest in preventing the economic downfall of China. Washington and Brussels must closely coordinate to ensure their de-risking policies send a clear message to Beijing on its intended goals and limits by drawing a bright red line around sectors with potential military dual use while clarifying in which circumstances cooperation is still encouraged. Otherwise, the West risks legitimizing Xi’s claims that economic containment is to blame for China’s economic woes, and that further self-sufficiency is the only antidote. The West must be careful to communicate that its policies are designed to avoid the global alienation of 1.4 billion Chinese people.

When the Asia-Pacific Economic Cooperation summit meets this November in San Francisco, the sister city of Shanghai, China’s economy may be on considerably less sure footing than the United States for the first time in decades. That may prove to be an opportune time for both countries to repair the world’s most consequential bilateral relationship.

The Biden administration can take a page from the playbook of Otto von Bismarck: “Diplomacy is the art of building ladders to allow people to climb down gracefully.” A good start would be for the United States to lend a ladder this fall and help China clean out its gutters—if a Xi-led China is capable of accepting the help.

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