In an effort to boost its flailing stock market, and apparently learning nothing from the US experience, China has authorized local pension authorities to put workers’ pensions into national stocks, bonds, and derivatives. This is in fact a much bigger deal than the same thing happening in the US (where local and state level pensions have been playing the stock market, and not always winning, for years), because not only does it strip away some of the last facades of socialism from China’s capitalist core, but this affects virtually every worker in China, because unlike in the US almost all Chinese pensions are run through local bodies. This is risky to say the least, and seems to vastly widen the potential fallout of another financial crisis. But, given that our readership consists of very few retirement-age Chinese nationals, why should we care?
First, it shows the danger of a government staking its legitimacy solely on economic growth. Economic growth is important, but equally important is that it be in service of the people. Many analysts have pointed out that the Chinese Communist Party is able to maintain support despite political repression, growing inequality, and economic disaster only be ensuring a certain level of growth. Republicans have been promising largely the same thing: Drill, baby, drill! Destroy unions to foster growth! China has shown that, in the absence of labor protections or environmental regulation, very rapid growth is possible. But it is also showing us the problem with counting on that level of growth to justify the human and environmental sacrifices made on its altar: unfettered, unbalanced growth will always demand more.
It also has implications for foreign policy, especially for those on both the far right and far left who are rightly concerned about the power of global plutocrats. If we’re really concerned about the spread of a ‘neoliberal’ mindset, which sees the government as merely an apparatus to appease the markets (what Paul Krugman brilliantly describes as the ‘confidence fairy’ theory of laissez faire economics), China’s willingness to risk its people’s pensions to re-inflate the stock market should be solid evidence, nay, proof positive, that a ‘post-American world’ will not have any more humane or less capital-dominated goals than an American one. While in Western Europe and increasingly in the US there is real resistance to this shift, China (and Russia), far from being bastions of resitance to neoliberal inhumanity, are out at the forefront of it.