"Communism that works"

Some people writing in Spiegel Online (English version) think that the Chinese have proved what all unrepentent left-wingers have secretly wished for: that Communism can be made to work after all.

View it here: http://www.spiegel.de/international/spiegel/0,1518,465007-2,00.html

It's a good overview of the was "China, Incoprorated" functions as a vast low-cost factory, witht he politburo functioning as a board of directors, which can get on with the job of focussing on the job in hand, without the boring political bit of relating to voters, appearing on talk shows and generally looking after the appeal of the party.

It is undeniably a remarkable transformation going on in China. The phrase "economic miracle" has been over-used and in this case its not really miraculous, of which more in a moment.
(Incidentally, I think I was about 11 when I learned my second German phrase - it was "wirtschaftwunder". The first, obviously, was "blitzkrieg".)
First comment, though, on the Spiegel feature is the crass assumption in the article that the Chinese like it this way. They aren't asked whether this is what they want their country to do. They just have to suffer the pollution, land-grabs, corrupt officials and everything else.
Asks people in India, and they say - freely - that they prefer to have democracy. The wealth is on its way anyway.
Second, and more importantly, is this.
You're the rulers of a country with over 1 billion people. You have fortuitously managed to free agriculture and as a result the countryside can now feed the towns. You have a large, docile, cheap labour force, the right to use any piece of land for a state purpose, nobody can obstruct your plans by legal objections, because you own the judges.
You look at Hong Kong and see that 4 million people can create a world class manufacturing, finance and toursit centre and become very rich.
Not a difficult call, is it, to decide that you can do it with 1 billion people?
You don't have to invent anything, you don't have to make tough calls about what system will work best. You just copy what is done in Europe, Japan and America.
Adam Smith noticed that colonies have second-mover advantage - they know what will work. They become rich very fast.
China is doing the same. The managers of the country know that they will need motorways, railways, airports and regional airports, so many power stations and so many dams etc. They can plan for these by noting how many are needed elsewhere.

The comparison with with the last time a country was tagged with the suffix "Incorporated". This was Japan, in the 60s and 70s. Then, too, it was thought that the Ministry of Industry and Technology had a genius for economic indicative planning. But the exchange rate was 250 yen to the dollar. At that rate, they could make anything cheaply and sell it.

Their problems came when the economy matured, the exchange rate rose and they had to compete properly. China will have the same issues - but without a democratic process to provide the outlet for people's complaints.

I predict that they will get the worst of both worlds: a Communist system with enough wealth to buy the surveillance to control everybody, and a capitalist system with a capacity for brutalising the labour force and driving down wages relentlessly in the desperate need to compete. At present wages are rising 14% per year. Whether that will happen when the exchange rate rises and squeerzes profit margins is another matter.