Must-Read: Martin Wolf: Too Big, Too Leninist: A China Crisis Is a Matter of Time

Must-Read: Martin Wolf: Too Big, Too Leninist: A China Crisis Is a Matter of Time: As Minxin Pei notes in a brilliant book, China’s Crony Capitalism…

… it is all too easy for a would-be strongman to use the charge of corruption as a cudgel against rivals. Yet it is so effective precisely because it is plausible…. Collusive corruption is pervasive… distorts the economy, degrades administration and robs the party of its social legitimacy…. Yet it did not strike by accident. The explosion of corruption since the early 1990s is the downside of successful reform:

The emergence and entrenchment of crony capitalism in China’s political economy, in retrospect, is the logical outcome of Deng Xiaoping’s authoritarian model of economic modernisation because elites in control of unconstrained power cannot resist using it to loot the wealth generated by economic growth.

Corruption is the progeny of the marriage between the party-state and the market. It spreads by enticement, coercion and imitation. Once corruption becomes normal, the system risks reaching a tipping point…. When control over property is a privilege, not a right, as in China, those with the political power have the ability to make themselves (and those they favour) vastly rich. That is just what they have done….

The question, however, is whether much can be done beyond putting a vast number of people in prison. Mr Xi’s answers seem to be more Leninism and more markets. Yet this is a highly problematic combination…. The Leninist party-state cannot give a solution to the problem of governance. Yet it can offer no solution to the economic problem either. If a market economy is to be combined with reasonably non-corrupt government, economic agents need legal rights protected by independent courts. But that is precisely what a Leninist party-state cannot provide…. Mr Xi has embarked on his present course for good reasons. Whether he has good solutions is quite another matter.