Bloomberg, in a recent article, writes "Former Federal Reserve Chairman Alan Greenspan said China will be the U.S.'s major competitor by 2030 and the world's economic fate depends on how much more Chinese leaders embrace markets."
The article also quotes Greenspan directly from his new book: "If China continues to press ahead toward free-market capitalism, it will surely propel the world to new levels of prosperity.''
Greenspan also sees free-market competition as having already led to a lessening of power concentrated in China's top leaders hands and, in the long run, potentially leading to a more democratic form of government.
Throughout, Greenspan's comments on China show his strong libertarian bent. He had also befriended Ayn Rand and, undoubtedly, she played a large role in convincing Greenspan of the benefits of free markets.
At Red Cat Journal, we also believe strongly that free markets are the best way for China to continue along the path of growth and wealth creation. Market determined prices, combined with freedom to innovate and allocate resources as investors see fit, should result in higher economic efficiency and allow China to maximize the use of its human and other resources.
We are less sure that free market capitalism will necessarily, at least in the near future, lead to a Western style democracy (i.e. - one man, one vote for the country's leader and legislative representatives). Certainly China has been becoming more and more democratic already, since the Communist revolution, without a popularly elected leader. It has been becoming more democratic in the sense that its leaders are becoming more and more accountable to the people of China. China's leaders know that if they do not provide progress towards a better quality of life for China's people at a fast enough pace, the result could be heavy social unrest and, in the worst case, revolution.
The accountability of China's governments to its people has been ensured, in this fashion, for 2,000 years, in the form of dynastic overthrow and change. The fact that this system has resulted in the longest running unified national entity still existing (barring a few centuries of periodic fragmentation) is more likely to result in inertia and caution towards experimenting with a system which may cause more instability, rather than less.
It is inconceivable that the elite of China would allow its leadership to be determined by 800 million uneducated peasants. It is also hard to imagine that, in the near future, this form of selecting a leader would necessarily result in better leadership for China. Instead, China's leaders are determined by consensus among a more narrow group of people, namely its political elite. Until China's population is widely educated and fully understands the real impact of different policy directions on the quality of life for its people, it is unlikely that a popularly elected leadership will produce better results. This is still some ways off (and it is aguable whether or not it has been acheived in Western democracies today), although it is certainly not an impossibility.
Read the whole Bloomberg article here:
Read more about Ayn Rand here: http://www.nytimes.com/2007/09/15/business/15atlas.html?em&ex=1190174400...