Protecting China’s “sensitive” corporate monopolies

The more China’s publicly owned enterprises fatten the bank accounts of Communist Party insiders, the more sensitive authorities are to informed dissent. Chinese state capitalism isn’t halfway to anywhere—it’s arrived. What’s the point of carrying on about fixing what’s been fixed?

Ian Johnson in the New York Times reports:

“Over the past decade, state companies have maintained and expanded control over industries like automobiles, aviation, chemicals, energy, information technology, machinery, metals, steel and telecommunications.

“Mainstream criticism of this trend, however, is limited. A propaganda department directive this year explicitly banned the term 'monopoly' to describe state-owned enterprises. Journalists say they regularly have articles kept from publication if they discuss the deadening effect of state control over so many industries.

“This contrasts with the first two decades of China’s economic opening, when the overall trend was toward relaxing state control, and pro-market economists were household names.”

Click on: www.nytimes.com/2012/06/17/world/asia/in-shift-china-stifles-debate-on-economic-change.html?src=twrhp

The impulse behind this crackdown is universal. Elites may go in for recreational gambling, but have no interest in ideas that threaten their security.

The form of China’s attack on the abstractions of Milton Friedman and market economics is, nevertheless, laughably crude—it’s the work of amateurs.

In the West, publicly owned corporations have almost entirely outlived their original logic—accelerated provision of modern services and infrastructure. However, after being around for decades, they protect themselves effectively with more subtle techniques.

Rather than fight the word “monopoly,” they usually overwhelm its negative connotations with other concerns. Our monopolies are called “iconic” or “essential services” or “bulwarks” against outside cultural and economic dominance. The alternatives are portrayed as exploitative profiteers.

Time—in the West and, eventually, in China—is the greatest factor that favors the perpetuation of monopolies.

The longer they’re around, the more the alternatives look unreal and “ideologically driven.” Time, unfortunately, also corrodes their value, whether privatized or not.