Michael Hudson Asks Naked Capitalism's readers...

 

 Michael Hudson's article "If Democracy Winds Up Creating Financial Dominance, What Do We Call China?" attracted a flood of comments, on the blog "Naked Capitalism", to which I added my two cents.

Here follows an edited version of my comments.

The history of civilizations is a history of institutional reproduction of power societies over the long haul of many generations.  Arnold Toynbee's studies of the TCA civilizations  (TCA = Tri-Continental-Area = to avoid the lame euro-centrism notion of "Middle-East") show us that many were born but few lasted the length of a few generations. The stabilization of power, at the end of the societal transition from the tribal to the power-model of society, has indeed been a very difficult and very long process in the TCA that was finally solved when the men of power succeeded to secure the collaboration of men of knowledge. The old stumble-block of institutional reproduction was indeed solved once the populations got to share a common worldview over the entire territory of early-kingdom or early-empires.


To counter the contemporary Western model of society, that is being held captive by financial "rentiers', Michael Hudson finds one possible answer in the Bronze Age TCA where "philosopher-kings", as a sign of good-will to their subjects, liberated them from the shackle of debt at their coronation. Left uncontrolled debt had indeed the particularity to enslave the debtors which they wanted to avoid at all costs because it allowed rentiers to accumulate ever more gold and silver which gave them too much ammunition in their fight to usurp their power.  So the management of debt, by early-kingdoms and empires, was rooted in the perceived necessity to ensure the reproduction of the institutions of power.


Trying to characterize the Chinese societal model by relating its performance to the freeing of debt in the bronze-age is audacious to say the least. First our knowledge about China's antiquity is not as advanced as in the TCA because systematic archaeological digging only started after Song Jiang who was Minister of Science and Technology decided to invest in it sometime at the end of the 90ths. Europe had started to dig systematically in the TCA by the midden of the 19th century ! But there are other more fundamental reasons, why we should not rush to judgment about characterizing the Chinese polity, that go back further than the bronze age  ... during the transition from tribal-societies to power-societies that started sometime 12,000 years ago and concluded sometime 5,000 years ago when a radical differentiation occurred in what happened societally in the TCA and in China.


The Modern West followed the model of TCA civilizations that was founded in rupture with the past. Christianity, as the founding worldview of the Roman empire imposed indeed  "societal evolutionary rupture" : -- rupture from animism -- rupture from past institutions -- rupture in governance (power versus knowledge)  -- rupture with the past was later inherited by science, tech, and capital, and so on and on...


The tendency toward rupture was the reason the TCA transition to power-societies and more particularly their institutional reproduction was such a difficult process that festered over the span of 7,000 to 8,000 years. These troubled times had still not been erased from the memory of the early kings and emperors and so they were particularly vigilant to eliminate all destabilizing practices that appeared as a risk to further institutional reproduction. But the memory, of those difficulties to ensure institutional reproduction, would soon fade away which explains why the Greeks and Romans abandoned the debt jubilees that were practiced by early-kingdoms and early-empires. 

 

China is China and history in China is characterized by "societal evolutionary continuity" which is the opposite of "rupture".  By this I mean that animist knowledge slipped imperceptibly into the worldview of its power-societies and the animist (wo)men of knowledge gradually initiated the societal governance of power societies which, in the West, is being considered the domain of the men of power. This very profoundly marked its next 4,000 years of dynastic rule and in consequence China's societal life does not fit into the Western conceptual body of social and political sciences that was molded on a civilizational path marked by "rupture". And so the West's conceptual descriptors fail to catch the reality of Chinese societal life.


Some might ask "but what do you mean with all these abstractions ?". 

In short  

1. China's transition from tribal-societies to power-societies was imperceptible. It was slow and progressive over time and it was thus extremely smooth compared to what happened in the TCA. A movement toward tribal cultural unification had set in quite early on around the whole world some 35,000 to 40,000 years ago that was further expanded regionally, some 10,000 years ago, in the territory of present day China.



2. In contrast to China the TCA tried to violently destroy all traces of animism. Abandoning Göbekli Tepe and covering it under a thick layer of dirt, some 10,000 years ago,  was the most convincing demonstration of this thesis. The problem with a worldview rupture is that societal groups absolutely need a worldview to share with their members in order to be able to reproduce their institutions over time (---> they help dissipate individual anxiety ---> which helps building trust among the individuals ---> which boosts societal cohesion ---> which greatly facilitates institutional reproduction).  New ideological narratives, that contrasted starkly with the pragmatism of animism, had to be   — invented  — shared by large segments of the population  — be co-opted by the men of power.  This process took some 7,000 to 8,000 years and much violence as is attested in the Torah and in the Old Testament.



3. In the territory of present-day China the first dynastic sovereigns were animist sages who preserved the animist knowledge base which to this very day is flourishing in what is called "the Chinese Traditional Culture" : Chinese Traditional Medicine, Chinese Traditional Martial-Arts, Chinese Traditional Governance, Chinese Traditional arts,  Chinese Traditional Cuisine, and so on and on... The present integration of Western scientific and economic tools is strategized so as to return the Chinese nation into the fold of its cultural continuum (axioms of civilization and Traditional Chinese culture).  Ten twenty years down the road, fifty at the most, the Chinese will have separated themselves from Western conceptual models and their universities will churn out new models rooted in their cultural continuum.  The restructuring of "The Aunt Group" as a financial entity controlled by the Central bank is an illustration of how Chinese governance answered Jack Ma's ‘rentier’ ambition of letting "Aunt technologies" capture society through debt. In light of this brazen act of governance the fine of Alibaba has to be seen as nothing else than a smokescreen to distract the blind minded.



4. In the territories of present-day Late-Modern Western societies power has been reduced solely to maximize the interests of the men of power : big capital  holders and their servants (politicians, intellectuals, and technical specialists).  For proof you just have to check the academic studies related to wealth accumulation. The only thing they measure is the wealth of the international class of technical specialists serving the big capital holders. But who are these big capital holders ? They are hidden under the anonymity reserved for the contributors to the world's biggest wealth funds who are managed by their highest paid servants.
   

In light of this what I suggest is that the Western conceptual model has zero chance of ever comprehending what goes on in China. So thinkers have to quit their intellectual provincialism to immerse themselves in the other's worldviews and models...

Conclusions :

1.  Governance = power versus knowledge :



• Power in the TCA and by extension in the West was all about force and control of the minds by a minority to protect the privileges of their "men of power" and the "men of knowledge" working for them.
  



• In China power evolved as a non-written contractual knowledge service akin to the traditional service of the tribal (wo)men of knowledge and it was exercised by people from different social origins that had succeeded state exams. 



• Those 2 ideas are irreconcilable and their impact on peoples' daily lives has left traces that are measurable in term of quality of life, of dynamism and of innovation.



2.  About the role of the state in the economy :



• In the TCA and in the West that role initially was limited to extract part of the citizen's work to pay for the extravagances of the men of power. But in early power societies the memory of the calamitous transition to power societies was still registering in the minds of the men of power and so they avoided the impact of too much debt by declaring debt jubilees. Later, after the men of power had forgotten the memory about the difficulties of institutional continuity, the rentiers captured their societies through debt and owned the mechanisms of state governance like democracy and decision making. Since then Western states have developed exclusively into instruments for maximizing the returns on investment by big capital holders. The whole Covid-19 episode gives indeed an apt illustration of how profits trump people's well-being in Western governnance.



• In China the role of the state was to procure stability so that the citizens could maximize the production of their daily lives. This idea is central to the Chinese vision of society. The individuals are indeed freely in charge of the production of the daily life of their families. The state is there to protect the families' undertaking and so it is expected to have as light a footprint as possible. The most famous Confucian Classic "The Analects" signals 2 fields in particular  : — the protection from outside interference  — low taxes and the least interference possible in people's lives. And the Confucian classics furthermore recognize that the citizens have the right to demote the emperor and his team if he does not satisfy these 2 conditions.



• So if we were in need of a formula to characterize Chinese governance I suggest this idea of a non-written contractual governance "knowledge service" that maximizes the well-being of peoples' daily lives.  

Lessons

1. During the Last Ice Age the world population adhered to animism. Life was egalitarian. There were no power institutions. The only tribal institution was of a contractual nature and related to a community service in the form of knowledge formation.  But in a modern political sense decisions were always taken at the unanimity. Such a type of organization was made possible by the small nature of tribal societies that allowed their members to know and trust each other (Robin Dunbar : small group theory).



2. The transition to power-societies, that engaged civilizational paths, produced radically different outcomes in East-Asia and in the Tri-Continental-Area.  In the TCA the animist knowledge base accumulated over the past 100,000 years was violently liquidated and new ideological narratives had to be invented which hindered the institutional reproduction of new forms of governance. Once  the men of knowledge collaborated, under the authority of the men of power, their narratives were adopted as state narratives which facilitated institutional reproduction over the long haul of multiple generations.



3. In East-Asia tribal animism slipped smoothly into power societies launching a civilizational realm. The men of knowledge gradually had taken charge of governance which is the domain of the men of power. This explains why, all along the path of the Chinese civilization, the men of power were equally men of knowledge.  



4. In the TCA the men of knowledge were subservient to the men of power. Later, in the Roman West, with Gelasius’ “two sword doctrine” power was detached from Knowledge. During Early-Modernity the emergence of nation-states gradually reversed Gelasius’ act and in Late-Modernity the servants of big capital turned Postmodernism and critical theory into Neo-liberal instruments that relegated knowledge in the garbage bin of history.  The irony of the whole story is that an ubuesque Wokenism is rerouting eyeballs away from what matters for people's daily lives while Western governance systems are imploding...
   



5. The lesson of history is that the sole instrument that has been observed to deliver continuous positive societal evolution is known as "long haul Knowledge formation" which is not to be confused with science that is financed by big capital holders and their servants in order to churn out "short term generated knowings" that are intended exclusively to maximize their returns on investment. Covid-19 is here again as an apt illustration of how capital investments in "short term generated knowings" surf on social misery to increase the fortunes of the minority few...   Vaccines anyone ?