Stephen Kotkin: uncertainty

Transcript context

…You've written other books about the collapse of the Soviet Union. There's this last ditch effort in the Eastern Bloc where there's falling productivity, to borrow more money, invest more into finding this last ditch technological miracle that can cure all their problems. How similar is that, in your opinion, to what's happening in China? The dissimilarity is that while Eastern Europe was struggling to export and they had a trade deficit, China, many people argue, is exporting too much. Do you see any similarity between where Eastern Europe was in 1989 versus where China is today? Or are you not as concerned about China right now? It's a very difficult question to answer very briefly, but it's a really important question. There are tremendous differences, of course, civilizational differences let alone system differences. We wouldn't want to elide those differences. What's similar is the Marxist-Leninist monopoly on power. People ask me, is China a Marxist-Leninist regime? I usually say it's a Leninist regime because that's undisputable. Do they believe in Marxism or not? People disagree on this. How many true believers are there? Is Xi Jinping a true believer? That's a difficult argument to win because the evidence is contradictory and because we don't know the inside of the system. It's still in power, it hasn't fallen. But it's clearly a Leninist system. A Leninist system can't be half-pregnant. You can't be half-communist. You either have a communist monopoly or you don't. What happens in communist political reform, not economic reform where they allow some market behavior, but where you liberalize the system and you open it up politically… You say, DK, let's have debate inside the party. Let's allow pluralism inside the party's rule, meaning we're going to keep the party but we're going to allow different tendencies in the party. The problem with that is some wiseacre raises their hand and says, “I don't want the party. I want another party. I don't want the Communist Party. I want a Social Democratic party, or I want a right-wing party, or I want a centrist party.” And you say, “No, no, no, that's not the rules here. The rule is only debate within the party's monopoly, not that you can have another party.” What happens is there's no way for them to open debate and then to put a lid on the debate. It becomes a Pandora's box. You can't be half-communist, half-monopoly. You either have the monopoly or you don't. Every time they liberalize politically, the system liquidates itself. Hungary in '56, Czechoslovakia in '68, and Gorbachev. Had Gorbachev not happened, China might have done its own Gorbachev. Had they not seen Gorbachev accidentally liquidate the party, they might have done political reform, opened up the party, and watched the thing unravel. Or they would have had a crackdown and put the lid back on much bigger than the Tiananmen episode in June 1989. They're not going to do political reform because they know from studying the Gorbachev case, which everybody studies in party school where all the cadres have to go to be trained. They're not going to open up the system politically because that's suicide. They're not going to commit suicide like what happened with Gorbachev. This means their policy options, their menu of policy options, is limited. They can open up the economy, but if it gets too open and too liberalized, too many people with independent sources of power and wealth, too many Jack Ma’s, they lose control potentially. They can open up the system economically, but then they have to somehow reimpose controls. many people with independent sources of power and wealth, too many Jack Ma’s, they lose control potentially. They can open up the system economically, but then they have to somehow reimpose controls. But if they reimpose too many controls, the GDP goes down and they don't have the job creation. You have this constant back and forth of how much economic liberalization you can have before it becomes a threat, or how little economic liberalization you can have before it becomes a threat to your ability to create jobs and wealth. That's the dilemma they're in. The Soviets in the '70s and '80s were looking at the system. They didn't want to change the system Gorbachev-style. They didn't want to liberalize it politically. They were willing to introduce some market economic liberalization, some market incentives. They tried that in '65, it actually didn't work. Then the Prague Spring happened in '68 and scared the bejesus out of them. Reform looked like the end of the system. They tried a little bit of economic liberalization. It didn't work. They didn't want to open up the system politically. So what's left? Technological fantasies. Maybe technology can perfect planning. All the pathologies of the planned economy, all the inefficiencies of the planned economy can be overcome with computers. Maybe if we invest heavily in tech, we don't have to make the hard choices of deep and fundamental structural change which would end our party's monopoly. We can keep the party. We can keep the party's monopoly. We can even keep the state-owned economy, but we can just tweak it with the tech and supercharge it or even turbocharge it and make it work that way. Computers, tech, will save us from the hard choices of deep structural reform which will threaten our power. We know how that worked. It didn't work. Now you're looking at China today. You have a Communist Party monopoly. You can't be half-pregnant. You can't open up politically. How are you going to reintroduce dynamism? How are you going to get the GDP growth? How are you going to get job creation? How are you going to get societal buy-in? If you go too far in that direction, that could threaten the regime. If you don't go far enough… So we got tech. The tech can make our dictatorship function better. Not just our economy, our productivity, our job creation, managing through the demographic crisis, not just the economic and social benefits from tech that tech could deliver…Tech could maybe make our communist dictatorship immune from challenges because surveillance is all-encompassing, because of our ability to spot things before they happen. So you can see where they would be so seduced, so tempted to believe that tech is the solution. Here's the problem with that argument. First, it didn't work the last time. That doesn't mean it won't work this time, but the track record, even though it's a small number of cases, is not good. But the other problem is political legitimacy. You can't get political legitimacy.…

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