Teaching Comparative Government and Politics

Tuesday, September 03, 2013

Capitalism and rule of law

Few make the case for the relationships between capitalism and rule of law better than Simon Denyer, writing in The Washington Post.

Chinese entrepreneurs, unsettled, speak out for reform
When Chinese property magnate Zeng Chengjie was executed for fraud in July, it sent a chill through the business community here. Zeng’s real misstep, according to associates and supporters, was not the crime he was charged with — defaulting on loans from ordinary citizens — but backing the wrong political horse: When his patron, a provincial governor, was jailed for corruption, Zeng found himself stranded, they say, a victim of China’s shifting political sands.

If the country’s economic miracle is to be sustained, its private entrepreneurs will have to do more to foster growth and innovation. But many business leaders say the economic playing field is tilted sharply against them and in favor of the country’s mammoth state-owned enterprises, while the political climate remains treacherous. Although many are undoubtedly still making huge amounts of money, some have begun to complain that they survive only at the whim of a distrustful Communist Party…

Within China, most business leaders try to keep their heads down, concentrating on maximizing returns to shareholders and investors. A small but growing group, however, says the time has come to speak out for political reform, for the rule of law and a judiciary independent of the Communist Party, and for the protection of private property and civil rights…

Liu Chuanzhi
Wang Ying had formed a reading group with about 100… members to discuss “Robert’s Rules of Order,” a 19th-century American handbook of parliamentary procedure, but was indirectly admonished last month when Liu Chuanzhi, founder of the enormous and politically well-connected computer maker Lenovo, told members they should stay out of politics and talk only about business.

That, say Wang Ying and others, is simply impossible in modern China, where every business needs a political patron and to demand that people not talk about politics is itself to take a political position…

Among the problems facing private entrepreneurs in China is the Party’s stranglehold on the nation’s vast household savings and the way it funnels those savings in the form of cheap credit through the nation’s banking system to state-owned enterprises. That leaves private-sector businesses often short of the loans they need to expand, or driven to break the law by borrowing directly from ordinary people, as Zeng did. Many owners also say they are forced to bribe local Party officials to gain patronage and political protection…

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