1 - Introduction: the China model as a specific socially embedded market economy

Summary

BEYOND MARKET AND STATE: A FRAMEWORK FOR EXAMINING THE CHINA MODEL

“Modern capitalism can no longer work,” warned French president Emmanuel Macron at the virtual World Economic Forum Davos Agenda Meeting on 26 January 2021. He contended that contemporary capitalism and the market economy, which once provided the middle class with opportunities for upward mobility, has resulted in a downward spiral and confronts a profound moral and economic crisis. As a response, he called on global leaders to make efforts to tackle inequality and climate change. Macron's words should be understood against the background of increasing social protests in recent years in Western countries, in particular the severe social conflicts and divisions revealed in the 2020 US presidential election, and the inability of many so-called neoliberal economies in containing the Covid-19 pandemic. One cannot help but ask what is going wrong with “modern capitalism”. Is it a failure of the market, of the state, or of both?

Obviously, calls for more state intervention are resonating around the world. For example, in his recent book People, Power, and Profits (Stiglitz 2020), the Nobel Prize-winner Joseph Stiglitz argues that a society must envisage a role for the state in pursuing sustainable economic development and the orderly operation of a society and the establishment of a balance between market, state and civil society. The role for the state is at least twofold: one is the establishment of the rules and institutions required for the market to operate; the other is state support for and investment in public goods, including research and development, education, health care and basic infrastructure. In this situation a consequential question is: what does more state intervention imply? Does it mean that a different socio-economic system is taking shape? Or does it mean that analytical approaches that treat market and state as antipodes are no longer meaningful?

Indeed, binary distinctions between states and markets and between liberal market capitalism and state capitalism are persistent. The market involves a logic of exchange embedded in private property rights and mediated by monetary relations, and gives rise to greater efficiency, whereas the state is an institutionally ordered domain of governmental practices, mediated by the play of politics and social struggles, and acts as an obstacle (Peck 2021).