By Daniel Berninger, founder, New Architecture Foundation
It also should be said — looking at the two great powers, the United States and China — we know China doesn’t threaten the territory of the United States; I think you know the United States has no territorial designs on China. We know China doesn’t want to dominate the United States. We believe you too realize the United States doesn’t want to dominate the world. Also — maybe you don’t believe this, but I do — neither China nor the United States, both great nations, want to dominate the world. Because our attitudes are the same on these two issues, we don’t threaten each others’ territories.From the declassified transcript of President Nixon speaking to Chairman Mao in Beijing on February 21, 1972
The 50th anniversary of Nixon’s trip to China arrives next month with detente in a perilous state. The common ground underlying detente — neither China nor the United States want to dominate the world — no longer exists. The arrival of Xi Jinping as President ended the domestic focus of initiatives, Hong Kong self-rule, and the two-term transition of power in favor of Belt and Road projects in 138 countries, a nine-dash line claim to 90% of the South China Sea, and economic retaliation against countries that complain. The 100-mile breadth of the Strait of Taiwan operates as a tripwire for world war. President Xi promises the attempt to preserve the independence of Taiwan leads to “heads bashed bloody“. Capitalism serves as a co-conspirator with communism in delivering the planet to the brink of world war. The presence of United States passport carrying Americans on both sides of the great power contest reveals capitalism as a suicide pact. The fact of conventional economic theory as a weapon of mass destruction makes George Gilder’s call for a new theory of economics an urgent matter of self-preservation.
Discovering a suicide pact underlying a human activity does not represent something new. The human death wish accounts for religion, philosophy, ethics, and theories of governance and politics. The list notably lacks economics, science, and technology, although the dismal science and the other domains of the atheist faith remain subject to a survival instinct. The tendency of capitalism toward self-destruction represents a primary theme of “The Communist Manifesto”. The left-right struggle Karl Marx invents energizes politics in the West and serves as the basis for President Xi’s call for China “national rejuvenation” 175 years later. The 33% of actively managed capital that is already moving to Environmental, Social, and Governance investing reflects the same recognition. The sentiment accounts for the tedious repetition of movies depicting the end of humanity through a zombie apocalypse or other cataclysm. An answer for the tendency of humanity toward self-destruction remains elusive despite effort across the millennia.
The arrival at rock bottom associated with the controlling theories of economics threatens the same planetary annihilation as the escalation of violence leading to nuclear weapons. An admission of a problem only gets humanity to step zero of a recovery process that usually involves 12-steps. The next steps require recognizing claims of oppression through class struggle or otherwise are irrelevant. The example of the Titanic illustrates the fact that a collision with an iceberg puts the oppressors in the water with the oppressed. A debate between two iconic champions of capitalism Ayn Rand and George Gilder offers a way forward toward a new theory of economics.
George Gilder reports Ayn Rand devoted her last speech to a critique of the declaration in “Wealth and Poverty” altruism serves as the engine of capitalism. Ayn Rand’s Objectivism calls for capitalism based on the “concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute”. George Gilder’s accolades include status as Ronald Reagan’s most quoted living author. Ayn Rand stood at Alan Greenspan’s side at his 1974 swearing-in as Chair of the Council of Economic Advisers. Greenspan’s subsequent twenty-year tenure as Federal Reserve Chairman serves as testimony to the appeal of self-interest as a moral imperative. A better understanding of the context of the tension between capitalism as self-interest and altruism provides a way out of the suicide pact.
The coup d’état by Bolshevik Party leader Vladimir Lenin and leftist revolutionaries in 1917 pushed 12-year old Ayn Rand into poverty. The Bolshevik secret police confiscated the family’s prosperous pharmacy as a part of the Red Terror “Death to the Bourgeoisie and its lapdogs”. Rand’s self-interest as moral imperative answers the claims by the mass murderers Lenin, Stalin, and Mao that collectivist economics serve an egalitarian — all people are equal — virtue. Rand’s self-interest stratagem missed the nature that autocracy permits an exercise of self-interest far exceeding a democracy. The arrival of the Chinese Capitalist Party merely confirms the survival instinct trumps ideology. Gilder frames capitalism as altruism to answer the ability of the Machiavellian leaders in the West to claim support for the same egalitarian virtue against decades of evidence to the contrary. Ethics teaches and anyone with life experience recognizes self-interest and communitarian values converge over time. The application of Randian self-interest with no regard to ethics, experience, or time makes capitalism an engine of human suffering, and, eventually, planetary doom.
The present crisis of economics owes to the same steady advance of technology associated with nuclear weapons and the Cold War. The benefits of expanding the technology of violence end at the point where everyone dies. The enthusiasm for money and instant gratification as the purpose of capitalism (hopefully) ends before everyone dies. The survival of humanity requires admitting the limits of Randian capitalism in favor of planetary embrace of the Gilderian version of capitalism. Gilder’s altruism already accounts for the many happy endings associated with capitalism and humanity surviving the industrial revolution. The arrival of the Internet and networks as the most important economic, social, and military sphere gives the self-interest — altruism tension a planetary reach. The Special Economic Zone (SEZ) associated with capitalism in China illustrates how self-interest succeeds in the short term by externalizing consequences.
The China that Nixon visited 50-years after the arrival of communism boasted an annual per capita income of $178. Fully 90% of the population still pursued the same mode of subsistence farming in place for 5000 years. The memory of the 45 million deaths to famine, chaos, and murder associated with Chairman Mao’s Great Leap Forward and Cultural Revolution remained fresh. The United States still held a 50-fold GDP advantage when President Xi Jinping’s father, Xi Zhongxun, convinced Deng Xiaoping to designate Shenzhen and three other cities Special (Capitalist) Economic Zones in 1980. The SEZ works through the irresistible (and immoral) arbitrage of the conditions of employment and regulatory burden in China and the United States. The SEZ attracted more than a trillion dollars of foreign direct investment from the United States. The subsequent outsourcing of United States manufacturing to China generated an additional $4 trillion of trade surplus. The population of Shenzhen exploded from 300,000 to 3 million as the manufacturing sector essential for national security withered in the United States.
The United States still sends $500 billion to China each year and remains the primary benefactor of the CCP’s autocratic ambitions. Absent Nixon’s trip and the transfer of United States technology (legitimate and illicit) China remains as isolated and backward as North Korea. A post mortem will find the same United States capitalist economic miracle machine in China as in the case of the Marshall Plan for Germany and Europe as well as Japan, South Korea, Singapore, Hong Kong, and Taiwan. The outcome serves as a testament to the powers of capitalism albeit in the service of advancing autocracy, not democracy.
George Gilder promises to lay out a new theory of economics based on capitalism as altruism in his next book “Life After Capitalism”. Ayn Rand’s life work advocates for the heroic individual in the same sense George Gilder advocates for entrepreneurs. The problem comes when the individualist hero assertion gets made based on “reason as the only absolute”. Human beings view planet reality through a lens of self-interest. Anyone claiming access to an experience beyond self-interest is both lying and claiming the powers of a god. The ambition for deification represents the problem, not self-interest.
President Xi seeks to assume the Mandate of Heaven from Mao Zedong in a process making China the location of five of the the top 10 wars in human history ranked by fatalities. The cause of “common prosperity” through a Social Credit System and the CCP’s “historic mission and an unshakable commitment” regarding Taiwan seem unlikely to end happily. The lack of a mechanism to transfer power means the Chinese suffer permanent civil war and over 500 different emperors over the years. Gilder’s COSM: Information Theory of Economics arrives at a tipping point in history nearly identical to “Wealth and Power” in 1981. The 2021 Bulletin of Atomic Scientists moved the Doomsday Clock closer to midnight than at the peak of the Cold War. The update for 2022 in a couple weeks seems unlikely to show increasing optimism, but the hope the people and leaders of the United States make the right choice remains alive.