The Rise of China and the Demise of the Capitalist World Economy (review)

Minqi Li's book, The Rise of China and the Demise of the Capitalist World Economy (2009), unlike many recent books written about China's economic and political rise, is primarily concerned with the coming demise of the capitalist world economy. Li's bold claim is that China's adoption of capitalism will in fact hasten the demise of capitalism around the world. Li contends that China's integration into the global economy exacerbates looming environmental, financial, and political crises and will thus result in the downfall of the capitalist world economy. In sum, Li's book takes on nothing less than the future of humanity.

Imprisoned for two years in China in the early 1990s, Li spent his prison time reading socialist tracts, and ultimately changed his intellectual framework from free-market liberal to Marxist-Leninist Maoist. In The Rise, Li uses Immanuel Wallerstein's world systems theory and works by Giovanni Arrighi to assess the trajectory of capitalism in the twentieth and twenty-first centuries. Li's Wallersteinian analysis and style of writing will appeal to socialists and critics of globalization. For a broader audience, Li raises important questions, whether or not one agrees with his framework, assumptions, and conclusions.

Li's argues that global economic development trends are not ecologically and financially sustainable, even within the next generation. More speculatively, Li forecasts a crisis of capitalism that will likely result in a new worldwide socialist order. While the rise of China plays a role in this impending cataclysm, his argument is not that China's current mix of economic practices differs from and will eventually supplant Western-style capitalism. Rather, he argues that China's acceptance of and integration with Western-style capitalism will accelerate the demise of global capitalism by exhausting the remaining exploitable resources and labor required for capitalistic profit accumulation and by greatly expanding the number of urbanized and industrialized workers. Li believes that this expanded body of workers (in China, India, and around the world) will ultimately organize against the capitalist class, resulting in some form of socialist order.

Li's thesis arises in large part from his use of Wallerstein's framework of "core, semi-periphery and periphery" nations. This framework holds that core (developed) nations have historically exploited periphery (developing) nations by extracting surplus value (that is, profit) from the periphery's labor and resources. Capitalists in core nations share part of this financial surplus with semiperiphery nations, and thus citizens of core and semiperiphery nations enjoy higher wages, social services, and political participation. Thus, the capitalist class in core and semiperiphery nations essentially buys political support from their middle and working classes by offering these benefits.

Li sees China and India as the final "strategic reserves" of the capitalist world economy. As China and India are incorporated into the global economy and advance from the periphery to semiperiphery, the capitalists will no longer have large unexploited regions to extract profits. Yet, the greatly expanded global working and middle classes will have become accustomed to high wages, social services, and political rights, and the capitalists will no longer be able to meet these financial demands. With China and India fully integrated, capitalists will also not be able to counter wage and service demands with the threat of accessing lower costs in the periphery. In this scenario, Li believes that the working and middle classes will challenge (and ultimately depose) the world's capitalist class (p. 103). Wages and taxes will have become incompatible with profit, and thus capitalism will meet its demise. Li offers macroeconomic analyses for these arguments, using reputable Chinese and U.S. sources. For example, he analyzes regional trends in contributions to world economic growth, corporate profits, individual income indices, energy use, and class structures. Li devotes his final chapter to weighing post-capitalism outcomes, concluding "it is quite conceivable that by the mid 21^st century various...