The forgotten patrimonial capitalism
- By Gao Liankui
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E-mail China.org.cn, November 15, 2014
Patrimonial capitalists are dramatically different from the above two groups. They quit concrete business a long time ago. Though they seldom make public appearances, they are busy in their own little world, for example they may join mysterious clubs of various sorts.
The Council on Foreign Relations (CFR), the Mont Pelerin Society (MPS) and the Million Dollar Round Table (MDRT) are among the most famous of such groups. Often referred to as "the global shadow government," these groups convene each year but decline any interviews from the press. The identities of their members are seldom known except that they are influential figures in different countries.
Behind their mysterious veils, their intentions are bluntly clear: using their financial power to influence policymaking, especially in seeking favorable investment and tax policies.
Objectively speaking, "Capital in the Twenty-First Century" did not target the Austrian School at all, but the Austrian School acted as if enemy was at the gate. Many Austrian School scholars in China rushed to slam the book on their social media accounts. The reason for such a far-fetched hatred is that the book condemns patrimonial capitalism.
The Austrian School represents a solid majority of China's critics. Zhang Weiying, Chen Zhiwu, Mao Yushi and Xue Zhaofeng are among the reputable economists in China who uphold Austrian School doctrines, although there is not yet a patrimonial capitalist class in China. But even so, economic opinions in China has been severely misled by the Austrian School, which is why I wrote the book "Preventing Against Being Misled" in my own bid to bring economic opinions in China back on track.
In fact, Western mainstream economists do not believe in the market economy, but deem it dysfunctional. In contrast, theories on market flaws far outnumber those about market efficiency. Mainstream economic ideologies in China are at most based on several so-called bestselling books - "The Road to Serfdom" by Friedrich Augustvon Hayek, "Free to Choose: A Personal Statement" by Milton Friedman and "America's Great Depression" by Murray Rothbard. These books enjoy sacred status in the contemporary Chinese economy; they are far-reaching influential and frequently quoted. But I would not agree they are decent books.
"Capital in the Twenty-First Century," as a popular economic work, is too important to be neglected in China, where the patrimonial capitalism will emerge sooner or later. Some patrimonial capitalists have already come into public view. How these people will dispose of their wealth will affect China's future. From this point of view, the book is worth reading.
The writer is the head of the World Economy Project at the Chongyang Institute for Financial Studies, Renmin University of China.
The article was translated by Chen Boyuan. Its unabridged version was published in Chinese.
Opinion articles reflect authors' own views, not necessarily that of China.org.cn.
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