Markets And Morals: A Chinese Case For Capitalism

Essay: China is consumed by the ethical rot that seems to pervade society, from official corruption to tainted food. State TV and others in Beijing are quick to blame market forces for this "moral debacle." But one writer takes a closer

A shopping mall in Shanghai (troismarteaux)
A shopping mall in Shanghai (troismarteaux)
Bao Gangsheng

BEIJING - From the endless scandals of dubious milk or poisonous capsules made of recycled leather, the moral climate has become one of the most pressing concerns among the Chinese media and academia. Some call it "social defeat," others talk about China's "collapse of morality." Whatever they call it, the subject is basically the same.

Yet what is also worrying is how programs produced by CCTV, the Chinese official media, all come to the same conclusion about these scandals: it is the fault of the market economy, driven by a bunch of greedy and unscrupulous businessmen who have lost sight of their moral bottom line in the pursuit of profits. This corresponds perfectly with Marxism, still the Chinese Communist Party's ideological education guideline, where private profits are seen as the driving force to make people willing to trample over the law and the lives of others.

And so is the market economy really to blame? It's hardly convincing since the places where this economic profit model is more developed should also be the places with the least morality. Yet this is simply not true. If we take North America or Europe as examples of places where the level of the free market system and per capital income is much higher than China, not only does the phenomenon of a moral breakdown not exist, but scandals of official corruption, bribery, and food security issues are also much scarcer.

The market economy can actually encourage moral values. Whether we talk about pre-modern China or in the West today, shops and companies that have been around for decades -- or even centuries -- often abide by stringent quality requirements and professional ethics. In other words, with the help of competition, the market economy rewards those with virtue and integrity.

Seemingly, in a company, workers who are most likely to be promoted are those with not just outstanding capability but also reliability. Sometimes, the standard of one's character can be even more important than one's competence.

The logic of moral breakdown

So what can explain China's moral debacle in so many differnt facets of life? Montesquieu and Baron d'Holbach, both prominent figures in the French Enlightenment, believed that a country's moral status, social atmosphere and civility are to a great extent shaped by the country's political status, institutional arrangements and governmental behavior.

The American scholar Angelo Codevilla simply puts it this way as the title of his book The Character of Nations: How Politics Makes and Breaks Prosperity, Family, and Civility. There's a lot worth learning from his theoretical perspective. First, a society's morality is directly under the influence of its rule of law. A society where illegal market behavior is not punished will encourage such behavior. The result will be bad money driving out the good.

Unfortunately this is precisely China's current situation: after 30 or more years of reforms, the sound rule of law is still not established. From the world's experience, no country where the rule of law is absent can ever shape a society with good citizens, moral business ethics and social practices. Therefore, the market economy is not to be blamed, but rather the "hidden rules' which exist in every corner of our society. If a businessman who manufactures and sells fake medicine does not go broke or go to jail, but manages to continue his business by bribery and relations, the bad example will obviously be repeated.

Besides, morality is influenced by government intervention in market activities. When a government's control is too close and the burden on business too heavy, too many resources will be at the disposal of the government, and this will almost surely endanger morals. This is because repressive control and a high tax burden will induce or force enterprises into illegal operation. And once the companies choose to go into irregular operations, they are bound to avoid all possible regulatory controls by corrupting the regulatory officials.

When the government disposes of too many resources, those who can acquire huge orders through bribery will adopt rent-seeking as their main business strategy. Such businesses won't have any interest in fair competition, nor in raising the quality of their business; nor will they upgrade their technology or improve their efficiency so long as they enjoy their "political marriage." The collusion of rights and interests between Liu Zhijun, China's now jailed former Minister of Railways, and the businesswoman Ding Shumiao is the best example of such a loophole.

Official behavior is society's moral weathervane

Much too often the public sees the presence of officials at extravagant banquets. If the lavishness of officialdom (high society in the view of a lot of ordinary people) is regarded as a symbol of prominent identity, it's no wonder that it is very difficult to shape a society in which thrift and prudence are considered to be virtues.

In a country where the political class possesses full power, and that power operates in a top-down manner, it's bound to shape a social atmosphere of rigid hierarchy rather than an environment of freedom, equality and consultation. This in turn makes the ones who are at the top of the power pyramid autocratic and supercilious, while the ones at the bottom are more likely to take fawning and flattering as the essence of their duty. This is yet another mechanism that shapes morality.

To put it simply, only when the government's actual policy corresponds to its stated objectives -- when officials generally practice what they preach to the public -- can a country build an honest basis of political order and legitimacy. The government's announced statistics are credible. The education system really encourages each student to develop integrity. The media reports objectively what's really happening. Only then can the virtue of honesty encourage every citizen.

Unfortunately what one feels anxious about in today's China is that private lies are most likely to be the continuity of public lies. Corporate frauds are but the extension of public frauds. When the public domain is not generally honest, it's asking the impossible if it expects to shape a country's morality.

There's no doubt that the market economy has its limits and its effects on a nation's moral status. Nevertheless, the influence won't necessarily be a negative one. It is indeed absolutely possible for it to coexist with virtues. Compared with the market economy, the tripod of political status, institutional arrangements, and governmental behavior have a rather greater impact on morals. When a society appears to heading to a universal moral debacle, one should reflect more on its politics than on the market economy.

Read the original article in Chinese.

Photo - troismarteaux

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Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3


LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.

Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

For if nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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