Oliver Sacks on the nineteenth century’s love of facts

Oliver Sacks’ posthumously published essay collection The River of Consciousness is a surprise and a delight. While it has some pieces in his familiar style of reflections on neurological casework, the highlights are the truly wonderful essays on the history of science. Who knew that Darwin discovered the pollination of flowers by insects? Or that Freud did foundational research on the structure and role of nerve cells?

Informing these essays is Sacks’ deep affection for and engagement with the work of nineteenth-century scientists, particularly Darwin and Freud, but also many more obscure toilers. At one point, when investigating some of the peculiar visual hallucinations experienced by his migraine patients, he can find no help in twentieth-century psychiatric literature, so he looks further back:

When I searched the current literature, I could find no mention of these [phenomena]. Puzzled, I decided to look at nineteenth-century accounts, which tend to be much fuller, much more vivid, much richer in description, than modern ones.

Sacks found that those nineteenth-century writers, while often lacking a theoretical framework to interpret their observations, were meticulous recorders of what they observed. Twentieth-century psychiatry had a more developed theoretical system, but had little time for phenomena that did not easily fit into that system, and so ignored them. There is perhaps a parallel for this in anthropology, where the extremely detailed accounts of early fieldworkers can still be usefully mined for insights for decades afterward–something it is difficult to imagine happening with many contemporary works with a much more elaborate theoretical apparatus. A mindset that places value on facts is itself something of value.

In the nineteenth century, an era of naturalistic description and phenomenological passion for detail, a concrete habit of mind seemed highly appropriate, and an abstract or ratiocinating one was suspect—an attitude beautifully brought out by William James in his famous essay on Louis Agassiz, the eminent biologist and natural historian: “The only man he really loved and had use for was the man who could bring him facts.”

The nineteenth-century genius for, or mania for, the collection and description of facts is definitely one of the most distinctive traits of the epoch. Jürgen Osterhammel’s The Transformation of the World: A Global History of the Nineteenth Century, one of my favorite history books, describes this very well, though with more attention to the social than the natural sciences:

The novelty in nineteenth-century Europe was that, over and above a normative political and social theory, branches of knowledge arose with the aim of describing the contemporary world and grasping the patterns and regularities beneath the surface of phenomena. …

“Factual investigation”—which Joseph A. Schumpeter contrasted to “theory” in his great history of economic thought—acquired new scope and significance in the nineteenth century, when Europeans produced incomparably more self-observational and self-descriptive material than they had in previous centuries.

For the most important analysts of political and social reality—one thinks of Thomas Robert Malthus, Georg Wilhelm Friedrich Hegel, Alexis de Tocqueville, John Stuart Mill, Karl Marx, Alfred Marshall, and the chief figures in the German “Historical School” of economics, including the early Max Weber—factual investigation was closely bound up with the theoretical quest for connections and correlations.

Indeed, Schumpeter’s History of Economic Analysis has a lot of praise for “factual investigation,” and he particularly liked works that defied the stereotype of economics being excessively theoretical:

Of particular interest to us is the type of analysis that combines presentation and explanation of facts in such a way that the two cease to be distinct tasks and mutually condition one another at every step: the type of analysis that arrives at its results by means of discussing individual situations. … It is hardly possible to overlook the factual complement in the Wealth of Nations—though some critics seem to have accomplished even this feat.

A lot of those massive, fact-filled nineteenth-century tomes are certainly impossible to read today, but the greats of the era were able to integrate voluminous facts with theorizing and strong arguments. Such a style of analysis was precisely what Sacks enjoyed about Darwin’s later botanical works. These are little known compared to the Origin of Species, and yet Darwin spent decades of his life on them.

Darwin spoke of the Origin as “one long argument.” His botanical books, by contrast, were more personal and lyrical, less systematic in form, and they secured their effects by demonstration, not argument. …

Botany was not a mere avocation or hobby for Darwin, as it was for so many in the Victorian age; the study of plants was always infused for him with theoretical purpose, and the theoretical purpose had to do with evolution and natural selection. It was, as his son Francis wrote, “as though he were charged with theorising power ready to flow into any channel on the slightest disturbance, so that no fact, however small, could avoid releasing a stream of theory.”

Sachs accepts that the twentieth-century transformation of botany and zoology from sciences founded in descriptive natural history to more theoretical enterprises led to tremendous progress, but “it was clear that something was being lost, too.” With economics also having taken an empirical turn over the past couple of decades, perhaps there will be a swing back to appreciating some of those nineteenth-century virtues.

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The Dave Hutchinson view of Europe grows increasingly plausible

It’s always dangerous to take a fictional character’s utterances as a stand-in for the author’s views, but this passage from Dave Hutchinson’s Europe in Winter does at least seem like a clear statement of the premise of the book:

Kaunas took a moment to gather his thoughts. “Europe is inherently unstable. It’s been in flux for centuries; countries have risen and fallen, borders have ebbed and flowed, governments have come and gone. The Schengen era was just an historical blip, an affectation.”

Hutchinson’s book, and its two predecessors, are thrillers set in a future world where Europe has fractured into a number of microstates and “polities,” coexisting with recognizable nation-states, the remnants of the European Union, and miscellaneous other transnational actors. It’s a festival of borders and bureaucracy, with lots of convincing detail (for instance, how after the UK dissolves, the spymasters of England spend a lot of time worrying about territorial threats from Scotland and Wales).

This is maybe not too surprising a vision for a novel published in 2016, the year of the Brexit vote. But Europe in Winter is the third book in a series; the first, Europe in Autumn (and still the best I think), was published in January 2014. Hutchinson should, I think, get credit for seeing before many others that the centrifugal theme in European history was not quite played out. And most would agree that evidence in favor of the hypothesis “Europe is inherently unstable” has increased since he wrote those words.

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The underrated role of fear in economic development

William Overholt’s book China’s Crisis of Success covers a lot of different topics, but one theme that he keeps coming back to is fear.

A lot of what drove China’s daring early economic reforms was fear of falling back into the chaos of the Cultural Revolution. Fear can motivate political leaders to do things that are out of the ordinary, and motivate the population at large to accept them. It is not a coincidence, in Overholt’s view, that the miracles of economic growth in Asia followed national catastrophes:

The societies that have been able to implement the required policies [for rapid economic growth] are all ones that have experienced excruciating trauma and intense fear: Japan after losing World War II; South Korea after the Korean War; Taiwan after the Chinese Civil War; Singapore after its traumatic separation from Malaya (which meant facing two much larger powers, Indonesia and Malaysia); Vietnam after wars with France, the United States and China; and China after a century of foreign humiliation and tens of millions of deaths from domestic strife. …

The policies required for rapid growth entail enormous social dislocations, and political leaders who consider imposing such dislocations reasonably fear for their jobs. They only try when they are terrified of the alternative, and when a population fearful of collapse accepts otherwise unacceptable stresses. These are the political prerequisites of miracle-level growth.

I think there is something to this, even if it’s not the kind of insight that seems particularly easy to run regressions on (parts of Europe after the second world war probably also belong on the list).

Overholt calls China’s current situation a “crisis of success” because it has in fact succeeded in dispelling fear of national collapse. But without that fear, it is harder for political leaders to make disruptive changes to the system, and it is harder to convince interest groups to accept such changes.

One of China’s current problems is that shared national fear of collapse has given way to complacency and some hubris. …

As fear segues into confidence, the willingness of the population to endure terrible stresses dissipates and so does the motivation of the leaders to take great risks.

For this reason he thinks it is becoming difficult for China to continue liberalization that would reduce the role of government intervention and state-owned enterprises in the economy (the book, which came out at end-2017, is somewhat equivocal about this, but in person Overholt nowadays is more decisively pessimistic).

In recent years, advocacy for continued economic liberalization in China has been organized around the idea of the “middle-income trap”: if China does not do XYZ reforms, the argument goes, it will fall into this trap and not realize its full potential. But the middle-income trap is not a disaster or national catastrophe; it’s just things being not as good as they perhaps could be:

The stakes are different now – not war, not chaos, not financial collapse, just slower growth.

Since China’s growth is going to slow anyway, no one can honestly promise China that, if they do XYZ reforms, growth will not slow down. All they can argue is that growth might not slow down as much as it otherwise would. Which is not that compelling of an argument. So fear of the middle-income trap may not be enough to motivate the Communist Party to make politically difficult changes that reduce its ability to direct economic activity.

Fear does seem to be a stronger motivator in environmental policy: families rightfully fear for the health of their children, and political leaders rightfully fear the anger of families. The “fear model” thus suggests China could continue to make progress in reducing pollution, even if future economic liberalization is limited.

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How plausible is the China in Kim Stanley Robinson’s *Red Moon*?

The premise of Kim Stanley Robinson’s new novel Red Moon is that China has taken the lead in colonizing the moon, leaving America far behind. I am a Robinson fan, and since the theme of China overtaking the US is very much in the air these days, I was interested to pick up the book to get his take on it.

Here is how one character describes China’s decision to establish a lunar base:

At the Twentieth People’s Congress, in 2022, the Chinese Communist Party and its Great Leader President Xi Jinping decided that the moon should be a place for Chinese development, as one part of the Chinese Dream. In the twenty-five years since that resolution was made, much has been accomplished in China’s lunar development.

Later a character explains:

In China, if the Party chooses to do something, then the whole country can be rallied to that cause. One out of every six humans alive, in other words, devoted to the project of establishing a base on the moon. This was far more than needed to do the job! Not every Chinese person was involved, and only a small percentage of China’s capital reserves had to be directed up here, even though it was a pretty big project. But it wasn’t that big, and in the end it was just more infrastructure.

This is not bad! For China to treat a lunar base as an extension of the Belt and Road Initiative, and “just more infrastructure,” is a fairly straightforward extrapolation of recent trends in Chinese political economy. And it has a ripped-from-the-headlines feel, given that in January, China became the first country to land a spacecraft on the far side of the moon. With India and Israel also planning lunar missions, lunar exploration is in fact a good reflection of the shift from bipolar or unipolar world to a multipolar one.

But sharp-eyed readers will have noticed that in the above Robinson says “People’s Congress” when he really means “Party Congress.” Annoying errors like this abound. Even more troubling are the names of the many Chinese characters, which often seem to be invented randomly without reference to the actual Chinese language. The president of China in 2047, for instance, is supposedly named Shanzhai Yifan. Not only is shanzhai not even a Chinese surname, it is (as anyone who uses the internet should know) a slang term meaning something like “cheap knockoff.” So did one of Robinson’s sources play an elaborate joke on him? Or is this just sloppiness?

Being fuzzy about the details of foreign languages and political systems is not a criminal offense for a writer of speculative fiction, who after all is supposed to be speculating rather reporting. But it seems that apparently neither Robinson nor his publisher could be bothered to run the manuscript by an actual Chinese-speaking person before publication. I’m not even a native speaker, and I could have fixed most of these minor issues in a couple hours of work. As a result, the book is something that no Chinese-speaking person could ever take seriously.

The more fundamental problem with the future China in this book is that it’s not really a future China: it’s just today’s China with some of the names changed. And sometimes not even that: in 2047 Chinese people are apparently still sending each other messages on WeChat on their mobile phones, and complaining about the Great Firewall. There’s a whole subplot about a social revolution unfolding in China, in which people’s grievances seem to have been lifted from dated magazine articles: the “breaking of the iron rice bowl” and the hukou system. That subplot is very thinly sketched and happens mostly offstage, and as a result is not even convincing as narrative, even aside from the details.

Red Moon has generally received mixed reviews, as it has other narrative weaknesses besides the poor portrayal of China. I think we’re still waiting for a work of fiction that gets to the heart of how America deals with a rising China — admittedly a pretty demanding task.

For better recent Robinson, I would recommend Aurora, and also Shaman, which I think is underrated, and features some of his best nature writing.

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On atheism and the objective understanding of society

Atheism, says Tim Whitmarsh, is a “tradition that is comparable in its antiquity to Judaism (and considerably older than Christianity or Islam).” In his fascinating book Battling the Gods: Atheism in the Ancient World, he conducts what he calls an “archaeology of religious skepticism,” digging out evidence of atheism in ancient Greece and Rome from hints and scraps in various sources.

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He is not trying to argue that the classical world was some kind of freethinkers’ paradise, or a hotbed of religious skepticism. Greek and Roman polytheism frowned on those who denied the reality of the gods, and often repressed them. The philosopher Socrates was famously charged with committing the crime of “not recognizing the gods the state recognizes,” and when found guilty chose to drink poison rather than accept exile. But Whitmarsh does think that atheism was tolerated much more than it would be in later centuries:

There were no social mechanisms whose jobs were to create consensus in the matter of religion, and in any case society as a whole invested little in defining the nature of divinity precisely. This meant that for much of Greek antiquity atheism was not treated as a heretical position, the “other” of true belief; it was seen rather as one of the many possible stances one could take on the question of the gods (albeit an extreme one). It was only in Christian late antiquity that atheism began to be constructed in systematically antithetical terms, as the inverse of proper religion, a threat to the very foundations of human civilization.

In Whitmarsh’s view, this relative tolerance–or to put it more precisely, the fact that the power of the state was generally not used to enforce religious orthodoxy–had important intellectual consequences. The speculations of the pre-Socratic philosophers are often seen as precursors to modern science because they tried to explain natural phenomena in terms of its physical properties rather than the actions of the gods. History and social science–which explain events and institutions in terms of human rather than divine actions–were also products of this intellectual climate:

According to his ancient biographer, Thucydides studied philosophy with the pre-Socratic materialist Anaxagoras and “as a result was whispered to be an atheist.” Some modern scholars have agreed with the latter assessment. We will of course never know about the personal beliefs of the historical Thucydides who wrote the words, but his History of the Peloponnesian War … is the culmination of the fifth-century tendency toward the exclusion of divine explanation. Not only does he refuse to admit non-naturalistic causality, but he cynically skewers any attempts on the part of the actors in his story to invoke the gods. Whatever his own personal beliefs were, the History can reasonably be claimed to be the earliest surviving atheist narrative of human history.

One of the many fascinating fragments that Whitmarsh quotes is a speech from a drama attributed to Critias, Plato’s uncle, which gives a cynical account of the origins of religion. More elaborate version of this type of cynicism–religion is the “opiate of the masses,” or a tool of oppression–should be quite familiar to us today:

Here was a time when humans’ life was unordered,
Bestial and subservient to violence;
When there was no reward for the noble
Or chastisement for the base.
And then, it seems to me, humans set up
Laws, so that justice should be tyrant
And hold aggression enslaved.
Anyone who erred was punished.
Then, when laws prevented them
From performing open acts of force,
They started performing them in secret; and then, it seems to me,
Some shrewd man, wise in his counsel,
Discovered for mortals fear of the gods, so that
The base should have fear, if even in secret
They should do or say or think anything.
So he thereupon introduced religion

The fact that such views can once again be openly discussed in the modern world is, in Whitmarsh’s account, a return to the historical norm after the millennium-long diversion of Catholic Christianity. If there is a villain to his story, it is the Roman emperor Theodosius, who in 380 AD declared Christianity the official religion of the empire and required all subjects to follow it. Traditional Roman polytheism was banned, and heresy became a crime against the state (as it also was for Socrates, but this time with a much more effective and aggressive state).  This “alliance between absolute power and religious absolutism” essentially made objective inquiry into the functioning of human society illegal.

There is reason, then, to think that the toleration of atheism is part of the intellectual framework necessary for the objective understanding of human society, and thus for the practice of social science and economics. If social institutions are the creation of divinity and cannot be questioned, neither can they be analyzed or changed. Many of the founding figures of European social science in the nineteenth century were in fact militant atheists.

Yet the cynical atheist’s take on religion–that it is “just” an invention of the powerful, or the cloaking of baser realities in high-flown language–itself is hard to sustain under objective scrutiny. The complexity and richness of religion as a human institution can only be reduced to such simple terms by doing violence to the facts.

Timothy Larsen’s excellent book The Slain God: Anthropologists and the Christian Faith shows that some of the greatest analysts of religion as a human institution were themselves strongly religious. (Thanks to Tyler Cowen for alerting me to the existence of this book). The early anthropologists Edward Tylor and James Frazer were skeptics who viewed Christianity and “primitive” religions as equally wrong, and their writings functioned more as polemics against belief than as plausible accounts of religion. Their work has, quite justly, been largely forgotten.

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By contrast, three of the greatest anthropologists of the twentieth century–E.E. Evans-Pritchard, Mary Douglas, and Victor Turner–whose work very much has endured, were themselves believers. All were aware that this separated them from the majority of their colleagues. Another prominent British anthropologist, Edmund Leach, once even called Mary Douglas’ work “Roman Catholic propaganda.”

Yet it seems clear that these anthropologists achieved a depth of understanding and insight that escaped many others, in part because they had sympathy with the religious believers they studied. Larsen says that Evans-Pritchard thought Christian theology to be “sophisticated, insightful, and true”–and that the theology of the Nuer people he worked among was no less so. This sympathy was not simple credulity. In Evans-Pritchard’s classic Witchcraft, Oracles, and Magic among the Azande, he writes that “witches, as the Azande conceive them, clearly cannot exist.” But he was not preoccupied with demonstrating the falseness of their belief in witchcraft, but in understanding how it worked and why it made sense.

Atheism thus seems like a necessary but not sufficient condition for the understanding of human social institutions, including religion. A society in which belief cannot be questioned will not produce accurate histories of those beliefs. But a religious skeptic is also not necessarily the person best equipped to enter into the thought-world of religious believers. Producing convincing accounts of religion seems to require a peculiar combination of objectivity and sympathy, which itself is rather difficult to explain.

It seems that neither religiosity nor skepticism on their own will always prove reliable guides to understanding. The anthropological approach is not to privilege either one, but to see both religiosity and skepticism as normal social phenomena that themselves can be explained. Mary Douglas, who was perhaps the most brilliant of the figures in Larsen’s book, attempted to do just this in her book Natural Symbols.

But since the back-and-forth between religiosity and skepticism itself has such a long history, it should also not be surprising that she was not the first to make this intellectual move. The early American anthropologist Paul Radin, whose 1927 book Primitive Man As Philosopher was a recent and surprising choice for reissue by New York Review Books, argued passionately that a diversity of beliefs and attitudes is the norm for all human societies:

It is a matter of common experience that in any randomly selected group of individuals we may expect to find, on the whole, the same distribution of temperament and ability. Such a view, I know, has certain terrors because of national and class prejudices but I do not think it can be really seriously questioned. Primitive peoples are, we have seen, quite as logical as ourselves and have perhaps an even truer sense of reality. …

I feel quite convinced that the idealist and the materialist, the dreamer and the realist, the introspective and the non-introspective man have always been with us. And the same would hold for the different grades of religious temperament, the devoutly religious, the intermittently, the indifferently religious man. If individuals with specific temperaments, for instance the religious-aesthetic, have always existed we should expect to find them expressing themselves in much the same way at all times. And this, it seems to me, is exactly what we do find.

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A preview of Nick Lardy’s new book *The State Strikes Back*

A new Nick Lardy book comes along regularly every few years, and each one is an event for the China-watching community. Anyone who cares about the Chinese economy will find The State Strikes Back: The End of Economic Reform in China? interesting and provocative. This is a preview, not a review, since the book is not officially out until next week and so my Kindle pre-order hasn’t downloaded yet. But I saw his book talk in Seattle last night, where he gave a characteristically clear and concise summary of the argument (he also has an op-ed in the FT.)

The new book has to be understood in the context of Lardy’s previous book from 2014, Markets Over Mao: The Rise of Private Business in China. In that book he argued that it was the rise of increasingly efficient and productive private-sector companies that has driven China’s economic growth over the last four decades, not state-owned enterprises, government planning and industrial policy. In contrast to the view in some quarters that China remains a fundamentally state-controlled economy, he laid out all the ways in which markets have been liberalized and competition increased since 1978.

A lot of the key changes in the relationship between the state and private sector happened in the 1980s and 1990s, and are well explained in that book. But Lardy also engaged with the argument that, as he put it, “state-owned firms returned to prominence of the decade of leadership of President Hu Jintao and Premier Wen Jiabao (2003-12)”.

While acknowledging that the Hu-Wen government wanted to make state enterprises and industrial planning play a a bigger role in the economy, he argued that the data showed they had not succeeded. In fact, the private sector’s share of economic aggregates had continued to increase, not because of continued privatization but because private firms are more efficient and grow faster than SOEs. This process was aided by a substantial increase in private firms’ access to bank credit.

The main point of Lardy’s new book, based on his slides and talk, is that the positive trends he had emphasized in his last book are now going in reverse. The data now show that private firms’ access to bank credit has sharply declined, and that their share of various economic aggregates is also falling. He puts particular emphasis on the drop in lending to private firms:

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(Note: Lardy has a chart like this in his slides, but this is my chart not his. It is based on the same underlying data but my estimates come out slightly different.)

The big decline in bank lending to the private sector (the absolute volume of new loans to private companies shrank, not just the share) had major consequences. It forced private firms to rely even more on shadow finance. But in 2016 the government also decided (correctly) that the rapid expansion of shadow finance posed systemic risks. The tightening of regulation led to an outright decline of shadow financing in 2018, putting many private firms into dire financial straits. The financial pressure on private firms has allowed their state competitors to expand at their expense: SOEs in industry are growing faster than their private competitors. Lardy said this is the first time this has happened since 1978.

iva-soe-private

(Again, this is a re-creation of one of Lardy’s charts using public data.)

Lardy thinks all this is bad for China. He is right! He also puts most of the blame on the policies of Xi Jinping–tolerating SOE inefficiency, encouraging the creation of larger SOEs, tightening Party control over private firms–since these trends in the data did not show up until a few years into his administration.

Essentially, both of Lardy’s recent books are about the use of economic data to support a narrative about the direction of reform in China. In Markets Over Mao, he argued that the data did not support a narrative of the resurgence of the state sector, and in fact supported a narrative of the rise of the private sector to new heights. I think it is fair to say that a number of people felt that Lardy in that book was too forceful in downplaying trends that were in fact important, but perhaps were difficult to tease out in the aggregate economic data. Now, Lardy is arguing that the data support a narrative that the state is resurgent and the private sector is losing out. Since this is a recent reversal of a positive long-term trend, he thinks that if China changes course it could significantly boost its economic growth rate, by as much as 2 percentage points.

My own view is more that economic policy under Xi Jinping represents an intensification of trends that were already playing out under Hu Jintao. I think this is pretty clear if you pay attention to China’s official rhetoric and try to understand the underlying political economy. Since I think the problems go back further than 2015, I am less optimistic than Lardy about China’s longer-term growth prospects (thanks to Greg Ip of the WSJ for including a summary of my views in his latest piece).

I also think that it is tricky to tell a clear story about the rise or fall of the state sector using the official economic data–having spent a lot of time and effort trying to do that myself. As someone who very much appreciates Lardy’s careful work with Chinese data, let me offer a couple of caveats to the charts above, in the spirit of seeking truth from facts.

First, on the bank lending data. Lardy is right to highlight the sharp downturn in lending to private companies in 2015-16. But it is not clear to me that this is a result of government policy to favor SOEs. Recall that there was a pretty serious economic downturn in 2014-15. It would make sense for banks to respond to that by trying to reduce the risk in their loan books, and one obvious way to do that would be to curtail lending to smaller and riskier companies, i.e. private ones. (The fact that SOEs are seen as less risky than private companies is a structural problem, but it’s nonetheless true that banks are correct to make this judgment given the realities of China’s political economy.) In other words, the change may have been more cyclical than structural.

There is some preliminary evidence that supports this interpretation. The data that Lardy and I use to calculate lending to state and private firms is released with a long lag, and recent figures aren’t out yet. But banking officials disclosed last year that lending to private firms totaled 30.4 trillion renminbi as of September 2018. This is equivalent to 38% of outstanding corporate loans–which is roughly the same level as in 2013, and a big increase from the 32% in 2016 (again, this is the share of outstanding loans; the chart above is the share of new loans made each year). This suggests that new loans to private firms rebounded in 2017-18 (probably more in 2017) as the economy recovered.

Second, on the industrial data. The fact that industrial SOEs are increasing their value-added faster than private companies is certainly notable. But SOEs and private companies tend to operate in different industries, so it can be hard to tease out the difference between sector effects and ownership effects. Industrial SOEs are concentrated in upstream, commodity-producing sectors, while private firms are more in downstream manufacturing sectors. It seems quite likely to me that the big decline in SOE value-added in 2015-16, and its rebound in 2017-18, have the same source: swings in commodity prices that had big effects on their profitability (value-added is basically profits plus labor compensation). The chart below uses monthly rather than year-to-date data, and we can see that the growth in SOE value-added has recently fallen back below that of private firms as steel and oil prices have come down.

iva-ppi

Lardy is right that the fact that in these charts the red line (SOEs) is above the blue line (private firms) is significant and concerning. But if this year or next the blue line moves back above the red line, will that mean China’s private sector is out of the woods, and all is fine? I suspect not.

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Xi vs. Stalin: What drives the reversal of economic reforms?

In the parlor game of finding historical analogies for present leaders, Chinese leader Xi Jinping is often compared to Mao Zedong. This is not very apt: Xi is an organization man, whose overriding desire for order is quite different from Mao’s love of chaos. After spending some time with Stephen Kotkin’s Stalin biography, StalinParadoxes of Power 1878-1928, I am surprised more people do not compare Xi to Stalin (though of course some have). Both men rose in an authoritarian system formally run by a collective leadership, and shifted it in the direction of more personalized rule for themselves and tighter political controls on everyone else.

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Stalin, of course, also unleashed a historic economic catastrophe upon the Soviet Union, when he abandoned the market-tolerating New Economic Policy and embarked on a crash course of agricultural collectivization and forced industrialization. Xi has not done that! His endorsement of industrial policy and favoring of state enterprises has disappointed many liberal economists. He wants a strong state, has re-emphasized Marxist ideology and clamped down on public policy debate. But it is also worth remembering that he has allowed technocrats to liberalize the exchange-rate regime and tighten up financial regulation, two long-needed reforms.

Nonetheless, the slowing economy has recently led to more public discontent with Xi’s policies. Xiang Songzuo, the former chief economist of Agricultural Bank of China, is one of those arguing that there is a connection between Xi’s aggressively Marxist rhetoric and weaker growth: he thinks a loss of confidence and fear of expropriation among private entrepreneurs is aggravating problems caused by the buildup of debt and misallocation of investment (see this translation of a speech he gave in December). Some foreign commentators are also warning that there is a “big danger that China will re-nationalize much of its economy.”

So it seems worth posing this question: what caused Stalin to abandon pro-market policies, and could similar factors be at play in Xi’s China?

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