Capitalism and Freedom: the contradictions of globalisation by Professor Peter Nolan

Capitalism and Freedom: the contradictions of globalisation by Professor Peter Nolan

Globalisation is China's challenge!

Since ancient times the exercise of individual freedom has been inseparable from the expansion of the market, driven by the search for profit. This force, namely capitalism, has stimulated human aggression and creativity and in ways that have produced immense benefits. As capitalism has broadened its scope in the epoch of globalisation, so these benefits have become even greater. Human beings have been liberated to an even greater degree than hitherto from the tyranny of nature, from control by others over their lives, from poverty, and from war. The advances achieved by the globalisation of capitalism have appeared all the more striking, when set against the failure of non-capitalist systems of economic organisation.

However, capitalist freedom is a two-edged sword. In the epoch of capitalist globalisation, its contradictions have intensified. Capitalist freedom comprehensively threatens the natural environment. It threatens to produce intense conflict over access to scarce resources. It has contributed to intensified global inequality within both rich and poor countries, and between the internationalised global power elite and the mass of citizens rooted within their respective nations. It threatens to produce a global financial crisis that dwarfs that of the 1930s. Capital has become truly global, but social and political life remains rooted in the nation. Mankind’s obliteration in a nuclear holocaust in a matter of minutes remains a constant possibility.

The epoch of ‘wild globalisation’, which was launched in the 1980s, is coming to a close. If mankind is to survive the Twenty-First Century, there is no choice but to move towards cooperative institutions that regulate global capitalism, which is the most dynamic force in human history, in the collective interest of all human beings. The possibility for success in this endeavour hinges upon the relationship between, on the one hand, the United States, and, on the other, China and the Islamic world, each of which contains 1.3 billion people. It may only be the approaching ‘final hour’ that ultimately forces human beings to grope their way towards globally cooperative solutions to contain the contradictions inherent within the capitalist system.

Professor Peter Nolan is Chair of Development Studies, Sinyi Professor in the Judge Business School and Fellow of Jesus College, University of Cambridge.

Hsin-Yun Lee said:

In today’s Tea and Knowledge session, Prof. Nolan mainly introduced how globalization has brought significant influence to China, from a historical perspective to a foreseeable future. Looking back at 1970s, it was a high time China liberalized its economy to the world. For example, they started opening up their state-owned enterprises as well as allowing the foreign direct investment (FDI). However, in 2003, a report of Citi Group still suggested that China should remove more of their constraints on their banking system. With this idea, China may well become a “normal” economic entity which based on free market. With this idea, China is still in the process of change in the era of globalization.

Another important argument that Prof. Nolan pointed out was in terms of the relation between Chinese political structure and the market. Although Martin Wolf defined that a market economy has a close and supportive relationship with democracy, it is no doubt that the outcome of free market indeed attract more and more companies come to China to invest. In addition, the failure of USSR also pushes Chinese policy makers to rethink their industrial policy. In brief, China is always preparing to join global financial system in an appropriate time.

By way of conclusion, due to a number of advantages like huge market and intelligent people, Prof, Nolan believes that China could build up a better financial system in the future and wealth will be redistributed equally to its people. In the meantime, the idea of globalization and free market will help Chinese enrich their traditional value and make China a difference in the future.

Sean Chen said:

Professor Nolan focused the talk on how globalization presents a challenge to China. He first mentioned that throughout Chinese history, the country was always integrated into the global economy and was a source of ideas and technology for the rest of the world. After modern China finally opened up to the world in the 1970s, there has been a constant push by the West to encourage China to further liberalize its economy in the framework of what’s known as the Washington Consensus. They wanted China to privatize its state-owned corporations, de-regulate its banking system, allow foreign direct investments, and open up their economy in general to be integrated into the global financial system. The West argued that only then would China have a “normal” and “non-distorted” economy. However, the Chinese examined the prospects of globalization within and identified some weaknesses with this process. For example, they noted the negative effects of rampant capitalistic globalization on global warming and the ecology of the world. In addition, the great injustice of an unequal distribution of wealth in the world is exacerbated by globalization. Finally, the industrial concentration of corporations means that China needs to protect its own state corporations from the competition of more established foreign companies. These analyses by the Chinese prevent them from fully embracing the Washington Consensus and fully liberalize its economy. With the current world financial crisis in full light, Professor Nolan concludes by suggesting that perhaps China could once again be a source of idea for the rest of the world like it has been in the past. China could show the rest of the world how to have a well-regulated financial system that would redistribute wealth more evenly among its citizens.

This report is kindly produced and edited by Hsin-Yun Lee and Sean Chen

This event was held by China Development Society. To join, please send an email to su.soc.chinadevelopment@lse.ac.uk.