Maoist economics and politics

Jared Israel: Philip writes Mao off as a "lampoon," calls him a radical nationalist and compares him to Ronald Reagan. In fact Mao solved the basic problem of how to socially transform China - a problem which eluded everyone before him. By doing that he frustrated plans of the US elite to use China as the basis of making this the American century.

Chinese Communist Party's early focus on urban proletariat left it vulnerable to Chiang Kai-shek and Nationalists...Mao's capture of party leadership and reorientation toward peasantry was important step in party's revolutionary potential...but initial line was radical agrarian reform - including land expropriation & organization of collectives - which threatened both upper and middle strata peasantry...his subsequent emphasis on 'winning over all possible allies' involved an appeal to middle strata - usury rates were reduced, progressive land tax implemented, and some large estates were redistributed in areas controlled by communists, but land of most upper stratum peasants was not confiscated...Mao often won over converts by showing captured government soldiers (usually of peasant origins) the positive effects of the agrarian reform and then releasing them with enough money to get back to their own homes and villages...subsequent mass peasant support enabled party to consolidate its position in the villages... at time of its 1949 victory, the Chinese Communist Party was quite representative of Chinese population: about 80% of party members were of peasant origin, of which about 75% were poor peasants and 25% were middle stratum....

revolutionary leaders do not make revolutions, at best, they select means of revolutionary action, determine revolutionary tactics and timing of implementation, and they may move course of movement a bit one way or another, but the movement's ends, strategy, and general direction are mostly beyond their control...Mao's genius - if I may call it that - was in adapting long-range objectives of revolution to immediate demands of masses (this was Lenin's genius as well)...

if Mao is a 'lampoon' (and to be honest, I have no idea what calling him such means), then we can use some more - one, two, three, many lampoons!...

Michael Hoover

On LBO-Talk Rakesh Bhandari wrote: "Has anyone read Stephen Andors' or John Gurley's defenses of Maoist economic strategy? Or Michel Chossudovsky's appraisal? Mark Selden's or Victor Nee's? From an impossible to get edition of Root and Branch: A Libertarian Marxist Journal 8, Bill Russell argues that Maoism was actually the Stalinist crash industrialisation programme adapted to China in which the State confronted the problem not only of seizing agricultural surplus but also producing it."

Other well-known Maoist economist's were Samir Amin and post 60's Joan Robinson (she wrote paeans to the Cultural Revolution and N.Korea after visiting in the late 60's)Maoist economics had a fair amount of prestige in the 60's and 70's even in mainstream development circles. Some of the old undergrad development texts have a section on the Maoist model. Prima facie at an abstract level, Maoist economic strategy in some countries, seems to make good sense. Self-reliance and self-sufficiency (especially in energy--N.Korea is [was?]self-sufficient in energy)could only help poor, dependent and heavily indebted countries in the southern hemisphere [Mao was very strongly against the accumulation of foreign debt] To lessen the gap, or as Maoists would say "resolve the contradictions" between the city and the country would lessen conflict and help raise co-operation and thus productivity. This did happen in Maoist China, though it was equality of poverty. However, since the advent of the township village enterprises, co-operation between villages has declined even though the TVA's have been successful on a micro level. The Chinese government has ,inadvertently re-introduced class struggle back into the countryside. Kolko in his latest book on Vietnam argues this is occurring in Vietnam too where the tensions are even stronger because the gov't there has reintroduced private ownership of land through a predictably corrupt process. No doubt class struggle will be re-introduced into the countryside in N.Korea too, when it finally takes the capitalist road. The Maoists confronted economic bottlenecks with mass collective action. The problem was that it was enforced and not voluntary which led to low productivity and efficiency. Mao was correct that mass collective action could accomplish enormous goals but only when done voluntarily. Even the scribes of Beijing and P'yongyang could not motivate everyone to overcome the free-rider problem. Think of the few examples of collective action in Capitalist countries: the response to natural disasters. The Mexico D.F. earthquake of 1985 was what galvanized the popular movement there. It is hard to tell how the Chinese economy performed during the Maoist years because the Chinese gov't, like all AES countries, did not use the usual, bourgeois if you will, macro-economic accounting measures(GNP, GDP etc.) Official stats show Maoist economic performance to be fair(given the size of pop.) with an average GSP (Gross Social Product) growth rate of 6% through the years 1949-76. The economy was subject to great fluctuations due to what was happening in the political realm. Some analysts call this a political cycle theory of the economy " Before 1979, the growth rate of industrial output fluctuated widely within a range of -38.2% (in 1961) to 54.8%(in 1958). That of heavy industry ranged from -46.5% to 78.8%. In general, China's industrial fluctuations have been triggered by political cycles and/or by intense sectoral disproportions arising from abrupt upsurge in the proportion of the industrial sector, especially heavy industry at the expense of agriculture and other non-industrial sectors, and/or by intensified inflation pressure and by the interaction of all three." Tien-tung Hsueh and Tun-oy Woo *The Economics of Industrial Development in the People's Republic of China* Chinese University of Hong Kong Press, 1991.

The authors go on to argue that at first the initiators of the mass movements see the good economic performance and proceed to accelerate reforms through the whole economy which spin of control and destroy the gains that have been made. The system then reverts back to its original practice. This problem was familiar in all centrally planned economies where enterprise managers did not want to fulfill the plan too well or the planners would up output and productivity expectations in the next plan. " During the Great Leap Forward (1958-60) the annual growth rates of the industrial sector were as high as 34% in GOV(gross output value) and 31.9% in NOV(net output value) and those of heavy industry 50.9% in GOV and 45.7% in NOV which resulted immediately in a great leap backward -27.4% in GOV and -28.6% in NOV for the industrial sector as a whole and -34.6% in GOV and -31.6% in NOV for heavy industry in 1961-2" Ibid p 11.

The real effects of the Great Leap Forward weren't felt until 1961-5... The authors argue that the primary problem in the Maoist years was poor efficiency and poor planning leading to, amongst other things, a very high capital/output ratio and low growth in productivity. According to official Chinese stats, the labor productivity growth rate was the same in 1991 as it was in 1958. " If the quality of the plan is low, the costs become very high. The lack of autonomy and the alienation from direct participation in decision making impair initiatives, creativity and the sense of self-responsobilty of enterprises and workers, all vital to improve dynamic efficiency" Ibid. p 81

Mao and especially Kim Il Sung were very much into spectacle (where are the PoMo theorists?). Just the sheer spectacle of having thousands if not millions acting together towards some common goal. Actually, the way Bruce Cumings describes it, N. Korea sounds like an interesting place (to visit!) that does or did have quite a bit going for it despite the people's seemingly bottomless ability for idolatry. Cumings argues that the idolatry of N.Korean leaders is rooted in Korean history and that N.Korea most resembles a Neo-Confucian kingdom. See his *excellent* books -Korea's Place in the Sun- , -War and Television- and the -The Origins of the Korean War-. Cumings is a great writer-- check out his take on the movie Chinatown: "Despotism, water control, nepotism, incest: its the Asiatic Mode of Production in our backyard." Cumings argues that the 3rd world countries the U.S. has gone to war against are portrayed in the mass media the same way chinatown is portrayed in "Chinatown". Instead of "Forget it Jake, its Chinatown" we have,

"Forget it Dick, its Vietnam" or "Forget it George, its Iraq" or "Forget it Bill, its Yugoslavia"

Anyway, this has been interesting but has gone on far too long. One more: describing the Pentagon's behavior vis a vis the media in the Gulf War "even gung ho Soldier of Fortune scribblers complained about being stuck in briefing rooms with a 'bunch of boobs and dorks'" Cumings, War and Television, p 110.

Sam Pawlett

Much has been made of the purge of Marshal Peng De-huai at the Lushan Plenum in 1959 over his crticism of Mao regarding the Great Leap Forward. As summary of Peng life may shed some light.

Born in 1896, Peng Dehuai was reported to be an unfilial, "angry young man," who received little education before he ran away from his stepmother at the age of nine. When he was nineteen, he led starving local people in robbing a rice granary. Peng joined a local warlord at an early age and enlisted in Tang Shengchih's Hunan Army as a private in 1914, two years after the 1911 Sun Yatsen bourgeois democratic revolution. Peng received training in Tang's indoctrination Battalion, and graduated to become a junior officer. His service to his warlord, including an unsuccessful effort in 1923 to assassinate the Governor of Hunan, led to his promotion as a battalion commander. In that role, he participated in the Nationalists' Northern Expedition under Chiang Kaishek. Peng fought against the Communists during the Autumn Harvest Uprising of 1927. Two months later, he fought against Sun Yastsen's Naking Government for his warlord. In April, 1928, when Peng commanded a Hunan regiment, one of his Communist batalion commanders, Huang Kung -lueh, persuaded him to join the CCP. Instead of following order to suppress local Communist guerrillas, Peng staged the Pingchiang Uprising of July 22, 1928. It was not until December 1928 that Peng led the rennants of his Red 5th Corps to Chingkangshan, the Communist base at the end of the Long March.

Peng had little experience with the peasant military tradition of guerrilla warfare before he join Mao. His personality, like several of his colleagues, was hot temper, outspoken, profane and well-versed in peasant invective. His experience and his later behavior reflected an understanding of, and an apparent preference for, the warlord military ethic and style. He understood the need for seizing cities. His attitude towards uneducated peasants, roving peasants bands, and guerrilla tactics was disdainful - a common and prevalent attitude among professional military men (including Chiang Kaishek and his generals) who consider peasant irregulars and local bandit-like guerrillas to be rabble, incapable of standing up to a disciplined modern army. Peng was essentially an anti-intellectual, regarding political commissars as interfering busybodies where military affairs are concerned. Peng's disdain for the Chinese peasant has been attributed by a hostile source as a curious form of self criticism that derived from an acute sensitivity to own own limited education. Yet Peng could communicate well with his troops. Indeed, Peng basked in praise from Mao who likened him to a historic hero general - Chanf Fei, crude, victorious and loyal. After November 1931, as vice chairman of the Central Soviet Revolutionary Military Council, Peng was at the core of leadership and was second in command to Marshal Chu De, father of the PLA, all through the War against Japan.

The death of Stalin in March 1953, the subsequent purge of Beria, and the Soviet decision to pursue a less aggressive Asia policy contributed to Chinese interest in negotiating the truth at Panmunjom in July 1953. Chinese losses of manpower and materiel in Korea had demonstrated the need for of modernization. The Korea War had changed the PLA markedly. Returned officers were sent to the new Advanced Military Institute in Nanjing where Marshal Liu Po-cheng taught them the lessons leared from Korea that had little relation Mao's doctrine of "peoples war." A golden era of Sino-soviet military cooperation renewed itself. Zhekov's zealous search for Soviet professional excellence encouraged a similar trend in China, which was heartily endorsed by Peng. Peng returned from Korea to a hero's welcome and become Defense Minister in September 1954 and began a vast program to regularize and professionalize the arm forces. While Party leaders were preoccupied with economic and political rationalization of the nation's development, the military was left alone to pursue its own course for six years, and it became isolated from national political issues. Peng represented a trend toward professional ethics and style, with its blend of Russian and warlord features, over Mao's peasant model of military ethics and style. Moreover, Peng's rise represented a trend toward an erosion of the authority of the traditional "center." Peng was opposed to virtually all aspects of the Maoist military philosophy. After July 1953, Peng made a major assault on the institutional foundation of the Maoist military line by ordering a 10-30% reduction in the militia. He abandoned all major elements of the Mao line in favor of the Soviet model. He set about abolishing the political commissar system, the Party committee system within the PLA and the doctrine of "people's war." He introduced ranks and hierarchies and Soviet organization, strategic and tactical doctrines, and eplaced the militia with the reserve division. Peng began to develop a personal friendship with Krushchev who was encouraging China to turn from Mao doctrines. Peng's opposition to the Great Leap Forward at Lushan in August 1959 was viewed by the Party as an effort to subvert Mao's authority in non military matters. By 1959, Peng's drive to modernized the PLA had antagonized the military commissars who rally to Mao's defense. Peng was denounced as holding the view point of property classes, warlordism, feudalism, and a simplistic military mentality. The party's control of the military had to be re-established. Lin Biao replaced Peng as Minister of Defense and reorganized the PLA General Political Department. The Mao military line was given new emphasis and Sino Soviet relations deteriorated. The USSR began a troop build up on China's northern borders.

The GLF was not the cause but the vehicle of Peng's purge.

Henry C.K. Liu

Some Policy Options for China

By Henry C.K. Liu

Much has been accomplished in the two decades since China’s historic opening to foreign trade and investment, and its domestic reform toward a socialist market economy.

China’s economic reform began at a time when the world economy was undergoing two fundamental changes:

1) a shift from industrial to financial capitalism, and

2) a rapid process of globalization engineered by US neo-liberalism.

These global changes are marked by the unregulated increase of a cross-border flow of funds and the spectacular growth of financial derivatives on currency exchange rates and arbitrage on interest rate parity. The underlying asset of these derivatives (notional value) rose from a negligible level in 1988 to US$37 trillion in 1998, almost 5 times the US’s GDP, by unbundling financial risks in global markets for buyers who will pay the highest price for specific protection. These unregulated trades, independent of national borders and unregulated by national or international regulations, are handled by only a dozen or so Western private institutions, mostly American. Repeatedly, these manipulated transactions resulted in massive transfers of wealth from the emerging economies to the advanced economies.

Emerging in 1978 from 3 decades of isolation, China has since pursued Mercantilist trade policies within the context of industrial capitalism to insure an export surplus to accumulate needed foreign exchange reserves to back its currency for trade purposes. Data suggest that this policy has fallen far short of its intended goal of letting China catch up economically with the developed economies.

China's GDP grew from US$149 billion in 1976 to US$935 billion in 1997, a 6.3 times increase.

Chinese GDP was 0.08% of US GDP (US$1,771 billion) in 1976, and in 1997, it was 0.12% of US GDP (US$7,746 billion). In 2 decades, the GDP gap between China and the US narrowed by only 0.04%.

At this rate, China will catch up with the US in GDP in a little more than two centuries.

Because Chinese population growth (1.1% of 1.23 billion) is higher than that of the U.S. (1% of 267 million), the per capita GDP gap is actually widening.

Moreover, the technological gap between the two economies is also widening as a result of the uneven division of labor, China being left with low tech, labor intensive manufacturing while the US concentrates on high tech industries.

For two decades, the U.S. has been leading the rest of the world in transforming its economy from industrial capitalism to financial capitalism, through deregulation, strategic mergers and acquisitions, innovation in structured finance and globalization of markets. Market access has taken on new critical importance in global financial capitalism. This is evidence in the astronomical rise in share value of new loss-making "internet companies" with strong future market potentials but no cash flow records.

In addition to new markets created by technological breakthroughs, the US has been actively pushing for the opening of global markets, particularly in the financial services sectors. For capital-starved emerging economies, control of access to their domestic markets is the only defense against wholesale foreign takeover of their indigenous industries and their future competitiveness. Leaders of developing economies are beginning to reject the myth, promoted by US neo-liberalism, that external capital is indispensable for domestic development. Under this doctrine, developing economies have no option but to become victims of a new wave of economic and financial imperialism as a natural result of scientific theory rather than by Western design. In fact, this myth is false and the formula it subscribes is not necessary for the development of a large, self-sufficient economy such as China’s.

American globalization, based on the theory of market fundamentalism, favors players who process the existing attributes of the American economy. These attributes are: abundance of excess capital, a technologically skilled labor force, an advanced and sophisticated financial infrastructure and information technology and a saturated domestic market where grow can continue only through overseas expansion and technological breakthroughs. This American globalization regime puts all developing economies at a structural competitive disadvantage and locks them into an unfair international division of labor and mal-distribution of profits (surplus value), and reduces them permanently into semi-colonial status.

Even if China manages to continue to expand its foreign trade, the export sector cannot realistically be expected to contribute more than 15% of its GDP.

Thus 85% of the Chinese economy must depend on domestic development. Further global market penetration by low cost Chinese goods can increase only at a declining rate from here on. All the easy markets have been saturated.

The policy of using foreign capital has very limited range. To fully develop the Chinese economy of 1.25 billion people, the entire supply of surplus capital of the global economy would be insufficient.

Capital is stored purchasing power while credit is borrowed purchasing power. The global economy is increasingly financed by debt rather than capital. In any expanding economy, debt financing is inherently more efficient than equity financing.

China now has excess production capacity and enormous latent demand, but the Chinese economy has insufficient purchasing power to fully benefit from this idle capacity. Some economic planners have mistakenly identified inefficiency in the SOEs (state owned enterprises) as the cause of this bottleneck. In reality, the profitability problem of the SOEs in a weak purchasing power environment is the result of this bottleneck and not its cause. No enterprise, no matter how well managed, can survive without a ready paying market for its products. Restructuring the SOEs through privatization and mergers with massive layoff of workers will only exacerbate the bottleneck, by reducing purchasing power further through increases in unemployment. Unemployment, in addition to further weakening purchasing power, will also lead quickly to social unrest.

China does not need foreign capital for developing its domestic economy.

China can create its own capital by monetizing its frozen assets and its latent consumer demand.

Take housing as an example. The nation’s 1.25 billion people are currently housed in 250 million housing units at an average of 5 persons per household. This real estate asset, current owned by the state, is mostly kept passively frozen economically and kept off the Chinese economy. I propose that the government adopts immediately a policy to grant ownership of all housing units to their current occupants. A built-in social fairness is inherent in the existing distribution pattern, since the location and quality of the housing allotment already reflect the occupants’ past and current contribution to the nation. Since private ownership is now constitutional, the State Council can announce by executive order that in recognition of contributions made hitherto by the population, ownership of their respective homes is granted to them free and clear immediately, to be used at will by the new owners.

This will immediately create in the housing sector a mortgage market for China’s banks, which will in turn provide an immediate supply of capital for investment in existing and new ventures, and a boost in purchasing power for both consumer and capital goods. The public will have money to buy goods and services produced by the SOEs and newly formed private companies.

Assuming a national average market value of homes at RMB 400,000 yuan each, with urban units commanding much higher values, a total market value of 100 trillion yuan will be immediately created in the economy. At current exchange rate, that amounts to US$12.5 trillion, over two times the US GDP.

At a conservative mortgage ceiling of 50% of market value, the Chinese economy will immediately have a cash pool of 50 trillion yuan for investment and consumption.

The Chinese banking system will suddenly be the largest and strongest in the world.

Each individual family will have a cash windfall ranging from several hundred thousand yuan to several million yuan, with which to invest, to start new businesses, and to buy goods and services of all kind. The real estate mortgage payments will cost around 6-10% on a 30-year mortgage, while the investment income for each family from the mortgage proceeds will conservatively exceed 16%, providing a comfortable cushion for savings and growth.

The Chinese economy will suddenly be vibrant and demand driven. In addition, real estate tax revenue for local governments will be substantial on a housing inventory with a market value of 100 trillion yuan. At a conservative tax rate of 1% of market value, the annual tax revenue will be 1 trillion yuan. If this approach is applied also to the industrial sector, the impact will be enormous.

Thus it is clear that China does not need foreign capital, which at any rate is not available in necessary amounts and at a cost that China would be willing to pay.

Unemployment is not a cure for economic inefficiency. The fallacy of NAIRU (Non Accelerating Inflation Rate of Unemployment), as promoted by American supply-side economists, is well known even for capitalist systems. In a socialist society, full employment must be a policy goal. The entire economic system exists to support full employment. Unemployment cannot be used as a tool to support a faulty economic system.

China’s policy in recent years of allowing unemployment to increase is counter-productive and dangerous. Jobless worker have no money to buy the goods produced by factories, thus leading to more unemployment and further shrinking of the economy- a downward spiral.

Chinese economic planners have been misled in the last two decades by fixated Western economists and ignorant Hong Kong tycoons. China has adopted a Western neo-liberal model of economic development, modified by Hong Kong compradore mentality. Within this model, unemployment is necessary to keep wages low and labor demand weak. The open to the outside/reform policies by now have a history of two decades. It is interesting to compare this record with the record of Germany during the period from 1933 to 1937. In 4 short years, Hitler's Germany was able turn a Germany ravaged by defeat in war and by the liberal policies of the Weimar Republic, with heavy foreign debt and the total unavailability of foreign capital, into the strongest economy and military power in Europe.

How did Germany do it? The centerpiece was the Germany's Work Creation Program of 1933-1936, which preceded its rearmament program. German economic policies between 1930 and 1932 were brutally deflationary, and in 1933, Hitler was elected Chancellor out of the chaos.

The financing of Nazi economic recovery programs drew upon credit creation techniques already developed prior to Hitler's appointment as chancellor. What changed after 1933 was the government's willingness to create massive short term credit and the government's firm commitment to retire the debt created by that credit.

Hitler told German industrialists in May 1933 that economic recovery required action by both the state and the private sector. The government's role was limited to encouraging private sector investment, mainly through tax incentives. He expressed willingness to provide significant public funding only for highway projects. Investment was unlikely if consumer refused to spend their money, and Hitler understood that potential consumers need income to make purchases. To combat traditional German fear of the social consequences of appearing better off than their neighbors, Nazi propaganda would psychologically stimulate the economy and develop a lust for life among consumers. Hitler stressed on May 31. 1933 that the Reich budget must be balanced. A balanced budget meant reducing expenditures on social programs, because Hitler intended to reduce business taxes to promote needed investment. A large work program without deficit spending had to be financed outside of the Reich budget. Hitler resorted to "prefinancing" (Vorfinanzierung) by means of "work creation bills" (Arbeitsbeschaffungswechseln).

Under the scheme of "prefinancing" with work creation bills (WCBs), the Reich Finance Ministry distributed WCBs (3 months, renewable up to 5 years) to participating credit institutions and public agencies. Contractors and suppliers who required cash in order to participate in work creation projects drew bills against the agency ordering the work or the appropriate credit institutions. These credit institutions then accepted (assumed liability for payment of) the bills, which, now treated as commercial paper, could rediscount the bills at the Reichsbank (central bank). The entire process of drawing, accepting, and discounting WCBs provided the cash necessary to pay the contractors and suppliers. The Reich Treasury undertook to redeem these bills, one-fifth of the total every year, between 1934 and 1938, as the economy and tax receipts recovered. As security for the bills, the Reich Treasury deposited with the credit institutions a corresponding amount of tax vouchers (Steuergutscheine) or other securities. As the Treasury redeemed WCBs, the tax vouchers were to be returned to the Treasury. Nazi Party economic experts believed that credit creation for purposes of job creation posed no inflationary threat and that it would be a far more responsible policy than the more conservative approach of tax increases and balanced budgets. Redeeming WCBs would burden the 1934-39 Reich budget, but the decline in Reich expenditure for welfare support and other subsidies would more than off-set the redemption payments. The surplus would be used to reduce public debt and reduce taxes. There were legal, political and institutional restrictions unique to Germany on the scope of the Reichbank that virtually dictated resource to WCBs as a means of putting 6 million unemployed Germans back to work. But the principle of WCBs can be applied to China to combat unemployment.

During 1933, Hitler sought to reassure Germany's business leadership that Nazi rule was consistent with the preservation of the free market system, because he needed the support of the industrialists. He could buy that support by keeping wages down during the recovery, but any rigorous effort to curb prices and profits would alienate the business community and slow down economic recovery. Hitler sought to restore profitability to German business through reduced unit cost achieved by increasing output and sales volume, rather than through a general increase in prices (Mengenkonjunktur, niche Preiskonjunktur- output boom, not price boom).

Adoption of "performance wage" (Leistungslohn- payment on a price-rate basis) increased labor productivity, thereby driving costs down and profit up. Some upward price movements were permitted to adjust price relationships between agricultural and manufactured products and between goods with elastic and inelastic demands, also to prevent price war and below-cost dumping. These principles of "output boom, not price boom" and "performance wage" will also work for China.

Hitler saved the German farmers from their heavy debt burden through relief programs and through rising farm prices. This policy increased farm income at the expenses of the middlemen institutions and provided price subsidy for the consumers.

Hitler sought price stability only in sectors critical to the national economy and to the goal of rearmament. Germany had no price policy until the 1936 Four Year Plan which concentrated economic authority in the hands of Goring and put finally an end to free market policy. Business managers generally make investment and employment decisions based on their judgment of the prospect for new orders. The difference between Germany's economic recovery under Hitler and America's relative stagnation under Roosevelt in the early 1930s, was the relative probability of new orders for goods. Hitler made it clear that in the near future after 1936, a major rearmament program would make heavy demand on the nation's durable goods and capital goods industries. With that assurance German industry could expand with confidence. Roosevelt was unable to provide such "confidence" to industry and had to rely on anemic market forces.

The Chinese economy has two ready conditions for full employment:

1) a pent-up domestic demand waiting to be released by the monetization of frozen assets and

2) a needed armament program to sustain industrial demand, even if China continues to adhere to a purely defensive strategy.

China does not need foreign capital.

All China needs is liberation from bad Western advice.

China has indicated in recent days that more interest rate cuts are likely in order to stimulate economic growth. New statistics released showed slowing retail sales, sagging investment and a declining prices.

China's retail sales last month grew by just 5.3 per cent to 236.4 billion yuan, the slowest growth for five years. Investment in new plant and equipment by SOEs (state-owned enterprises) in May totaled 475 billion yuan, a rise of 17.6 per cent on the May 1998 figure, also indicating a slowing down.

The retail price index for May showed a fall of 3.5 per cent, the 19th consecutive month of decline and an indication that Chinese consumers are reluctant to spend.

Last week, China cut its interest and deposit rates for the seventh time since May 1996. The fact that deposit rates were slashed by 1 per cent or more while lending interest rates were trimmed by an average 0.75 per cent was a signal that the government is keen to promote spending.

The government has also been trying to promote a stock market rally to show confidence in the economy and encourage spending.

Although China is aiming for a growth rate of 7 per cent that would be considered high by current Asian standards, the economy has many structural problems.

Some of the bloated state-owned enterprises are preparing to get rid of up to 30 to 40 per cent of their workers in efforts to stay competitive. Other reforms will increase prices for basic goods like housing, education and medical care and also will depress spending.

China's exports have also been sluggish and slowing and it was possible China would provide bigger tax rebates to boost exports in the context of an over-valued RMB.

Economists expect that more aggressive cuts in interest rates will be an essential part of new stimulatory measures, which will also have to include a looser monetary policy, aggressive macroeconomic expansion and probably a fiscal stimulus. As Japan has found, and it is hard to encourage people dismayed by job cuts to spend by lowering interest rates alone.

Japan has cut interest rates to its lowest levels ever and bank deposits offer effective negative interest rates, but consumer confidence has been remained stubbornly depressed.

Ironically, structural reform programs are deflationary contradiction reflation needs. The policy contradiction between maintaining a fixed exchange rate and boosting economic growth is exacerbated by worsening balance of payments (BOP).

State sector reform has increased job security and loss of income to many. The scrapped social welfare system is helpless to help displaced workers, causing consumers to become ultra cautious. Net saving deposits are growing at a rate of 18%, despite low deposit interest rates. China has no consumer credit market, thus households cannot accelerate or defer spending as interest rates change. Overcapcity caused deflation validates consumer belief that delaying purchases is sound wisdom. The non-state sector, accounting for 50% of total fixed asset investment, plagued by over-capacity and falling prices, cannot absorb or attract new investment, while real interest rate remains high. Too much reform will put pressure to devalue the RMB. If the People's Banks of China (PBOC), the central bank, fall into payment deficits sharply either through trade current account deterioration, or a fall in net FDI inflow, the PBOC, to compensate for a rise in the supply of RMB in the international market, would have to tighten domestic money supply (the flip side of draining foreign reserves), thus neutralizing reflation measures.

The aim of reform is to shift economic fundamentals. A fixed exchange rate is basically inconsistent with this policy objective. An over-valued FER will transfer wealth from efficient exporters to inefficient domestic enterprises. Reform aims at export switching from sunset to sunrise industries to enhance external competitiveness. A market set FER can help absorb external trade shock. So a overvalued FER is a fact in tax on exports and a subsidy for foreign debt ridden domestic borrowers. There are conflicts with China's three economic objectives: a high growth rate, fast paced reform and a FER.

That is the reason there are persistent speculation of the RMB devaluing.

Henry C.K. Liu

This post is long, for which I apologize, but it deals with a very complex subject. Some of the material have been posted on other lists, though not on the Marxism list.

In dynastic China, both guizu (the aristocracy) and dizhu (the landed bourgeoisie) exploited the subjugation of the laboring masses for their own separate benefits. Their differences rested only on their separate socio-economic relationships to the laboring masses. The aristocracy based its privileged relationship to the laboring masses on hereditary political legitimacy while the land-owning bourgeoisie based its on economic meritocracy, an early form of economic Darwinism. Each group felt its own separate social role to be natural and moral.

The aristocrats, or at least their illustrious ancestors, had earned their privileges by providing protection to the masses, and by maintaining peace, stability and social order, without which the laboring masses could not become productive. They performed a needed social function as the governing elite, at least until government was taken over by the administrative shidafus (literati-ministers) who were professional bureaucrats. Unfortunately, during times when central authority was weak or absent, regional lords fought among themselves. Thus they often failed to fulfill their fundamental function in providing peace and order. They needed a strong huangdi (emperor) to mediate disputes peacefully.

The land-owning bourgeoisie, on the other hand, provided needed capital, opened new markets and generated new employment through its individual member's business acumen, hard work, personal sacrifice and willingness to take risk. They felt that their contribution to the expanding economy had disproportionately enriched the undeserving aristocrats whose warrior role in society had long been replaced by professional soldiers and whose administrative role in government had been replaced by the shidafu class under central authority. And the landed bourgeoisie looked to the huangdi to redress the imbalance.

Conflicts between corresponding interests of each of these two competing socio-economic groups fed a complex and protracted political struggle for dominance. And it is in a dynamic environment of power struggle between these two groups that the political career of all sovereigns would take shape. The transfer of landownership, via an open if not totally free market, to the politically-disfranchised bourgeoisie had gradually brought forth a new socio-political struggle. It is a struggle between two competing social orders: entrenched political feudalism with local autonomy verses rising agricultural capitalism under a centralized government. The entrenched order was defended by members of guizu (the aristocracy), while the emerging order was claimed by huangdi (the emperor) supported by members of dizhu (the land-owning bourgeoisie).

Each of these two opposing social orders seeks to justify its own separate claim of righteous validity from different philosophical anchors. The entrenched political feudal order relies on the philosophical concepts of Confucianism (Ru Jia). The rising agricultural capitalistic order draws on the ideology of Legalism (Fa Jia). These two philosophical postures: Confucianism and Legalism, in turn construct alternative and opposing moral contexts, each providing rationalization for the ultimate triumph of its respective sponsoring social order.

The struggle between these two competing social orders has been going on, with alternating periods of triumph for each side, for more than 21 centuries, since the Legalist Qin dynasty first united China in 221 B.C. The effect of this struggle would still be visible in the politics of modern China, particularly during the Great Proletariat Cultural Revolution of 1966-78 when the Gang of Four would promote Legalist concepts to attack the existing order, accusing it as being Confucian in philosophy and counterrevolutionary in ideology. To the extent that "Left" and "Right" convey meaningful images in modern political nomenclature, Daoism (Dao Jia) would be to the left of Confucianism (Ru Jia) as Legalism (Fa Jia) would be to the right. Modern Legalists in China, such as the so-called Gang of Four, would be the New Left, whose totalitarian zeal to promote social justice would converge, in style if not in essence, with the New Right of the West in its reliance on authoritarian zeal to defend individualism.

The flowering of Chinese philosophy in fifth century B.C. had not been accidental. By that time, after the political disintegration of the ancient Xi Zhou dynasty (Western Zhou 1027-771 B.C.), Chinese society was at a crossroad in its historical development. Thus an eager market emerged for various rival philosophical underpinnings to rationalize a wide range of different, competing social systems. The likes of Confucius (551-479 B.C.) were crisscrossing the fragmented political landscape of petty independent kingdoms, seeking fame and fortune by hawking their moral precepts and political programs to ambitious and opportunistic monarchies.

Traditionally, members of Chinese guizu (the aristocracy) were descendants of hero warriors who provided meritorious service to the founder of a dynasty. Relatives of huangdi (the emperor), provided they remained in political good grace, also became aristocrats by birthright, although technically they were members of huangzu (the imperial clan). The emperor lived in constant fear of this guizu class, more than he feared the peasants, for guizu members had the means and political ambition for successful coups. Peasant uprisings in Chinese history have been rare, only seven uprisings in four thousand years of recorded history up to modern time. Moreover, these uprisings have tended to aim at local abuse of power rather than at central authority. Aristocratic coups, on the other hand, have been countless and frequent. In four millennia, Chinese history recorded 559 emperors. Approximately one third of them suffered violent deaths from aristocratic plots, while none had been executed by rebelling peasants.

The political function of the emperor (huangdi) is to keep peace and order among contentious nobles and to protect peasants from aristocratic abuse. An emperor without the loyal support of peasants, euphemistically referred to as the Mandate of Heaven (Tianming), would soon find himself victim of a palace coup or aristocratic revolt.

Confucianism is the most effective philosophical device for keeping the troublesome aristocracy in check. It instills in otherwise-disorderly aristocrats an instinctive repugnance against immoral rebelliousness through a duti-bound observance of the Code of Rites. The Code of Rites (Liji), the ritual compendium as defined by Confucius (551-479 B.C.), circumscribes acceptable personal behavior for all in a hierarchical society. It establishes rules of appropriate socio-political conduct required in a feudal civilization.

Unfortunately, ingrained conditioning by conservative Confucian teaching inevitably causes members of the aristocratic class to degenerate in time from truly superior stock into mediocre and decadent seekers of unearned privileges. Such degeneration is brought about by the nature of their privileged life and the false security derived from a Confucian superiority complex. Although the process might sometimes take centuries to take shape, some dynasties would crumble within decades through the unchecked excesses of their ruling classes.

Confucianism (Ru Jia), by promoting unquestioning loyalty toward authority, encourages the powerful to abuse its power, despite Confucianism's reliance on ritual morality as a mandate for power. Confucianism is therefore inescapably the victim of its own success, as Daoists are fond of pointing out.

The Code of Rites is a non-violent means of socio-political control. Without an universally-observed Code of Rites, conflicts can only be resolved through violent confrontation rather than by moral persuasion.

Generally, those who feel they can achieve their political objectives without violence would support the Code of Rites (Liji), the ritual compendium as defined by Confucius (551-479 B.C.). While those whose political objectives are beyond the reach of non-violent, moral persuasion would dismiss it as a tool of oppression. Often, those who attacked the Code of Rites during their rise to power would find it expedient to promote, after achieving power, the very Code of Rites they belittled before, since they would soon realize that the Code of Rites is the most effective governing tool for a sitting ruler.

The Chinese economy has always been dependent on the ambitious and energetic working elite: farmers, artisans, merchants. Through diligent efforts, creative scheming and upward-mobile aspiration, this meritorious elite eventually achieves land-owning status and its associated wealth and social respectability. It is the diligence of members of the self-made landlord class, not the rule of the hereditary local aristocrats, that keep the laboring peasants productive. The emperor would protect the legitimate interests of this land-owning class and defend the justly-earned rights of its members. In addition, the civil examination system, introduced experimentally in the Sui dynasty in 613, has provided a much-needed conduit for fresh talent into government. An eager meritocracy has emerged whose elite members are the literati that staff the bureaucracy that runs the government. This professional literati have replaced the local aristocrats in their role as local administrators. The civil examination system has the dual purpose of infusing new blood into the establishment as well as co-opting the talent and leadership of the able and restless underprivileged. This examination system would be expanded and institutionalized to serve the political purpose of the imperial dragon throne. It would be based on a curriculum of moral studies drawn from an approved syllabus of Confucian classics.

Confucian ethics is designed to buttress the terms of traditional social contract. It aims to reduce potential for violent conflict between the arrived and the arriving. It aims to channel the powerful energy of the arriving into a constructive force for social renewal. Confucian ethics aims to forge in perpetuity a continuing non-violent dialectic eclecticism, to borrow a Hegelian term. The violent overthrow of the government, a criminal offense in the United States, is a moral sin in Confucian ethics. It is therefore natural that budding revolutionaries should attack Confucian ethics as reactionary. And those already in power should tirelessly promote Confucian ethics as the only proper code of behavior for a self-renewing, civilized socio-political order.

Order, according to Legalist concepts, is created not by moral persuasion but by authoritarian demand for obedience to law. The law should be applied equally to all.

Buddhists, because of their rejection of secular concerns, have not developed any formal political theory. So they often borrow Legalist concepts to oppose hostility leveled on them at court regularly in the name of Confucianism (Ru Jia), even though Buddhist emphasis on mercy represents the very antithesis of merciless Legalist thinking. The Qin dynasty (221-207 B.C.), ending 26 years of domestic war to become the first unifying regime in Chinese history, had governed with Legalist principles. Qin was the very regime that had persecuted Confucianism ruthlessly by publicly burning Confucian classics and by live-burial of unrepenting Confucians. The dynasty lasted only 14 years. After the fall of the Qin dynasty in 207 B.C., Legalism (Fa Jia), despite periodic revival, has experienced continuous decline, eclipsed mostly by the rising dominance of Confucianism.

While Legalist ideas advocated by serious thinkers have at times intruded into the general consciousness, there is no organized Legalist political party during Tang time (618-907). In general, Legalism is often viewed as extremist, particularly by Confucians who subscribe to the Path of Golden Mean (Zhongyong zhi Dao) as the proper approach to life.

In Chinese politics, Confucianism (Ru Jia) is based on a theory of rule by self-restraint. It advocates the sacredness of hierarchy and the virtue of loyalty. It is opposed by Legalism (Fa Jia) which subscribes to a theory of rule by universal law and impartial enforcement.

Although Buddhists have their own disagreements with Legalist concepts, particularly on the issue of mercy which they value as a virtue while Legalists detest as the root of corruption, such disagreements are muted by Buddhist appreciation of Legalist opposition to both Confucianism and Daoism, nemeses of Buddhism. Above all, Buddhists need for their own protection Legalism's opposition to selective religious persecution. Legalism, enemy of Buddhism's enemies, is selected by Buddhists as a convenient ally.

Legalism places importance on three aspects. The first is shi (influence) which is based on the legitimacy of the ruler and the doctrinal orthodoxy of his policies. The second is shu (skill) in manipulative exercise of power. The third is fa (law) which, once publicly proclaimed, should govern universally without exceptions. These three aspects Legalists consider as three pillars of a well-governed society.

Unlike Confucians who claim man to be good in character but has fallen from his natural grace, Legalists believe that man's temperament is basically inclined towards evil and that human nature must be curbed through strict laws. The essential political function of all subjects is to serve the emperor who is the sole legitimate personification of the political order and sovereign of the political realm. While all powers emanate by rite from the Son of Heaven, the proper execution of these powers can take place only within an impartial system of law. While people should be taught their ritual responsibilities, they should at the same time be held responsible by law not only for each person's individual acts but also for one another's conducts, as an extensive form of social control within a good community. Therefore, punishment should be meted out to not only the culprit, but also to his relatives, friends, associates and neighbors, for negligence of their ritual duties in constraining the culprit. Efficiency of government and equal justice for all are cardinal rules of good politics. Legalists believe that administration of the state should be entrusted to officials appointed according to merit, rather than to hereditary nobles or literati with irrelevant scholarship.

Even granting validity to the extravagant Daoist claim that ideas, however radical, are inherently civilized and noble, Legalists insist that when ideas are transformed into unbridled action, terror, evil, vulgarity and destruction emerge. Freedom of thought must be balanced by rule of law to restrain the corruption of ideas by action.

Whereas being well-versed in Confucianism (Ru Jia) binds shidafus (literati-bureaucrats) culturally as faithful captives to the imperial system, such rigid mentality unfortunately also renders its subscribers indifferent to objective problem-solving. Thus Confucianism, by its very nature, would ensure eventual breakdown of the established order, at which point Legalism (Fa Jia) would gain ascendancy for a period, to put in place new policies and laws that would be more responsive to objective conditions.

But Confucians take comfort in the fact that, in time, the new establishment that Legalists put in charge would discover the utilitarian advantage of Confucianism to the ruling elite. And the cycle of conservative consolidation would start once again. Generally, periods of stability and steady decay would last longer than intervals of violent renewal through Legalist reform, so that Confucianism would become more ingrained after each cycle. This perpetual, cyclical development proves to the Daoist mind that indeed "life goes in circles". It is an astute observation made by the ancient sage, Laozi, father of Daoism (Dao Jia) who lived during sixth century B.C.

The so-called Gang of Four would promote Legalist politics in China in the 1970's. They would use Marxist orthodox doctrine, reinforced by Maoist personality cult, as shi (influence), Communist party discipline as shu (skill) for exercising power, and dictatorial rule as fa (laws) to be obeyed with no exceptions allowed for tradition, ancient customs or special relationships and with little regard for human conditions. Legalists yearn for a perfectly administered state, even if the price is the unhappiness of its citizens. They seek an inviolable system of impartial justice, without extenuating allowances, even at the expense of the innocent.

Confucius (551-479 B.C.), quintessential conservative, the most influential philosopher in Chinese culture, admired the idealized society of the ancient Xi Zhou dynasty (Western Zhou 1027-771 B.C.) when men purportedly lived in harmony under sage rulers. The fact that the Zhou dynasty had been a feudal society based on slavery did not concern Confucius. To the idealist Confucius, hierarchical stations in human society are natural and symbiotic. If everyone would contentedly do his duty according to his particular station in society, and with an accepting state of mind known as anfen, then all men would benefit as social life meliorates toward an ideal state of high civilization. To Confucius, the lot of a slave in a good society is preferable to that of a lord in a society marked by chaos and uncivilized immorality. Violent social changes would only create chaos which would bring decay and destruction to all, lords and slaves alike. Such violent changes would kill the patient in the process of fighting the disease. Confucius apparently never sought the opinion of any slave on this matter. Like Plato, Confucius conceived a world in which the timeless ideal of morality constitutes the perfect reality, of which the material world is but a flawed reflection. The Zhou people, according to Confucius, in stark contrast to historical fact, aspired to be truthful, wise, good and righteous. They allegedly observed meticulously their social ritual obligation (li) and with clear understanding of the moral content of such rites. Confucius never explained why the Zhou people failed so miserably in their noble aspirations and the cause of their eventual fall from civilized grace.

The Zhou people that Confucius (551-479 B.C.) idolized, traced their ancestry to the mythical deity, Houji, god of agriculture. This genealogical claim had no factual basis in history. Rather, it had been invented by the Zhou people to mask their barbaric origin as compared to the superior culture of the preceding Shang dynasty (1600-1028 B.C.) which they had conquered and appropriated, just as the Romans invented Aeneas, mythical Trojan hero, son of Anchises and Venus, as father of their lineage to give themselves an ancestor as cultured and ancient as those of the more sophisticated Greeks. The Tang imperial house has been at least humble enough to co-opt only Laozi, a real historical figure rather than a god.

Zhougong (Duke of Zhou) was credited with having established feudalism as a socio-political order during his short regency of only seven years. He institutionalized it with an elaborate system of Five Rites (Wuli) which has survived the passage of time. The Five Rites are: 1) rites governing social relationships; 2) rites governing behavioral codes; 3) rites governing codes of dress; 4) rites governing marriage and 5) rites governing burial practices. He also established Six Categories of Music (Liuluo) for all ritual occasions, giving formal ceremonial expression to social hierarchy. Confucius (551-479 B.C.) revered Zhougong (Duke of Zhou) as the father of formal Chinese feudal culture.

According to Confucius, to rule an empire, the ruler must set an example by being personally virtuous. Clinton beware.

The essential idea underlying the political thinking in Confucian philosophy is that fallen men require the control of repressive institutions to restore their innate potential for goodness. According to Confucius (551-479 B.C.), civilization is the inherent purpose of human life. To advance civilization is the responsibility of the wise and the cultured, both individually and collectively. Enlightened individuals should teach ignorant individuals. Cultured nations should bring civilization to savage tribes. A superior ruler should cultivate qualities of a virtuous man. His virtue would then influence his ministers around him. They in turn would be examples to others of lower rank, until all men in the realm are permeated with noble, moral aptitude. The same principle of trickle-down morality would apply to relations between strong and weak nations and between advanced and developing cultures and economies.

Rudyard Kipling's notion of "the white man's burden" would be Confucian in principle, provided that one agrees with his interpretation of the "superiority" of the white man's culture. Modern Confucians would consider Kipling (1865-1936) as having confused Western material progress with moral superiority, as measured by a standard based on virtue. Kipling's romantic portrayal of the model Englishman as brave, honorable, conscientious and self-reliant, while popularly accepted in the English-speaking West, would be generally rejected in the East by those with direct exposure to the breed. The idealized image would be recognized as being a wishful manifestation based on Kipling's apologetic colonial mentality toward his social betters in his home society. It is also a compensation of his own inferiority complex derived from his love-hate relationship with the richness of Indian culture, to which he would be attracted but of which he would be unable to fully appreciate because of his deep-rooted racial prejudice. The universal acceptance of democracy, that most-cherished contribution to civilization by Greek culture, together with modern scientific attitude, gift of the Enlightenment, are perhaps more apt paradigms of Confucian principles of positive cultural influence from the West. Some evil concepts, among which racism is perhaps the most destructive, with Christian evangelistic insistence on monopolistic spiritual salvation ranking a close second, would also be among the direct legacies of the white man's intellectual ascendancy.

Confucius (551-479 B.C.) would have thoroughly approved of the ideas put forth by Plato (427-347 B.C.) in the Republic, in which a philosopher king rules an ideal kingdom where all classes happily go about performing their prescribed separate socio-economic functions. Daoists would comment that if only life were so neat and simple, there would be no need for philosophy. Confucian ideas have aspects that are similar to Christian beliefs, only upside down. Christ taught the pleasure-seeking and power-craving Greco-Roman world to love the weak and imitate the poor whose souls were proclaimed as pure. Confucius taught the materialistic Chinese to admire the virtuous and respect the highly-placed whose characters were presumed to be moral.

The word: ren, a Chinese term for human virtue, means proper human relationship. Without exact equivalent in English, the word ren is composed by combining the ideogram man with the numeral two, a concept necessitated by the plurality of mankind and the quest for proper interpersonal relationship. It is comparable to the Greek concept of humanity and the Christian notion of divine love, the very foundation of Christianity. Confucius' well-known admonition: "Do not unto others that which you not wish to have done to yourself" has been frequently compared with Christ's teaching: "Love thy neighbor as thyself". Both lead to the same end, but from opposite directions. Confucius (551-479 B.C.) was less intrusively interfering, but of course, unlike Christ, he had the benefit of having met Laozi, founder of Daoism (Dao Jia) and consummate proponent of benign non-interference. A close parallel was proclaimed by Hillel (B.C. 30-10 A.D.), celebrated Jewish scholar and president of the Sanhedrin, in his famous maxim: "Do not unto others that which is hateful unto thee."

The ideal society as envisioned by Confucius requires its members to properly observe rites governing Five Relationships. By observing rites of Five Relationships, each individual would clearly understand his social role, and each would voluntarily behave according to proper observance of rites which meticulously define such relationships.

The Five Relationships (Wulun) governed by Confucian rites are those of:

1) sovereign to subject, 2) parent to child, 3) elder to younger brother, 4) husband to wife and 5) friend to friend. These relationships form the basic social structure of Chinese society. Each component in the relationships assumes ritual obligations and responsibility to the others at the same time he or she enjoys privileges and due consideration accorded by the other components.

Confucius (551-479 B.C.) would consider heretical the ideas of Jean Jacques Rousseau (1721-1728), who would assert two millennia after Confucius that man is good by nature but is corrupted by civilization. Confucius would argue that without a Code of Rites (Liji) for governing human behavior, as embedded in the ritual compendium defined by him based on the ideas of Zhougong (Duke of Zhou), human beings would be no better than animals which Confucius regarded with contempt. Love of animals, a Buddhist notion, is an alien concept to Confucians, who proudly display their species prejudice. Confucius acknowledged man to be benign by nature, but in opposition to Rousseau, he saw man's goodness only as an innate potential and not as an inevitable characteristic. To Confucius, man's destiny lies in his effort to elevate himself from savagery toward civilization in order to fulfill his potential for good.

The ideal state rests on a stable society over which a virtuous and benevolent emperor rules by moral persuasion based on a Code of Rites rather than by law. Justice would emerge from a timeless morality that governs social behavior. Man would be orderly out of self-respect for his own moral character rather than from fear of punishment prescribed by law. A competent and loyal literati-bureaucracy faithful to a just political order would run the government according to moral principles rather than following rigid legalistic rules devoid of moral content.

Nostalgic of the idealized feudal system that purportedly had existed before the Spring and Autumn period (Chunqiu 770-481 B.C.) in which he lived, Confucius (551-479 B.C.) yearned for the restoration of the ancient Zhou socio-political culture that existed two and a half centuries before his time. He dismissed the objectively different contemporary social realities of his own time as merely symptoms of chaotic degeneration. Confucius abhorred social atrophy and political anarchy. He strived incessantly to fit the real and imperfect world into the straitjacket of his idealized moral image.

Confucianism (Ru Jia), by placing blind faith on a causal connection between virtue and power, would remain the main cultural obstacle to modern China's attempt to evolve from a society governed by men into a society governed by law. The danger of Confucianism lies not in its aim to endow the virtuous with power, but in its tendency to label the powerful as virtuous.

Mencius claimed that the Mandate of Heaven is conditioned on virtuous rule. Mencius (371-288 B.C.), prolific apologist for Confucius (551-479 B.C.), the equivalent embodiment of St Paul and Thomas Aquinas in Confucianism (Ru Jia), though not venerated until eleventh century A.D. during the Song dynasty (960-1279), greatly contributed to the survival and acceptance of the ideas of Confucius. But Mencius went further. He argued that a ruler's authority is derived from the Mandate of Heaven (Tianming), that such mandate is not perpetual or automatic and that it depends on good governance worthy of a virtuous sovereign.

The concept of a Mandate of Heaven as proposed by Mencius is in fact a challenge to the concept of the divine right of absolute monarches. The Mandate of Heaven can be lost through the immoral behavior of the ruler, or failings in his responsibility for the welfare of the people, in which case Heaven will grant another, more moral individual a new mandate to found a new dynasty. Loyalty will inspire loyalty. Betrayal will beget betrayal. A king unworthy of his subjects will be rejected by them. Such is the will of Heaven (Tian).

Arthurian legend in medieval lore derived from Celtic myths a Western version of the Chinese Mandate of Heaven (Tianming). Arthur, illegitimate son of Uther Pendragon, king of Britain, having been raised in cognito, was proclaimed king after successfully withdrawing Excalibar, a magic sword imbedded in stone allegedly removable only by a true king. Arthur ruled a happy kingdom as a noble king and fair warrior by reigning over a round table of knights in his court at Camelot. But his kingdom lapsed into famine and calamity when he became morally wounded by his abuse of kingly powers. To cure Arhtur's festering moral wound, his knights embarked on a quest for the Holy Grail, identified by Christians as the chalice of the Last Supper brought to England by St. Joseph of Arimatheahen. Much of US foreign policy is infested with the Arthurian complex to degernerate into moral imperialism.

Mencius' political outlook of imperative heavenly mandate profoundly influences Chinese historiography, the art of official historical recording. It tends to equate ephemeral reigns with immorality. And it associates protracted reigns with good government. It is a hypothesis which, in reality, is neither true nor inevitable. Necessary to point out that Mencius did not condone revolutions, however justified by immorality of the ruling political authority or injustice in the contemporary social system. He merely used threat of replacement of one ruler with another more enlightened, to curb behavioral excesses of despotism. To Mencius, political immorality is always incidental but never structural. As such, he was a reformist rather than a revolutionary.

Machiavelli, in 1512, 18 centuries after Mencius, would write The Prince which would pioneer modern political thought by making medieval disputes of legitimacy irrelevant. He would detach politics from all pretensions of theology and morality, firmly establishing it as a purely secular activity and opening the door for modern political science. Religious thinkers and moral philosophers would charge that Machiavelli glorified evil and legitimized despotism.

Legalists of the Qin Dynasty (221-207 B.C.), who preceded publication of The Prince by seventeen centuries, would have celebrated Machiavelli as a champion of truth. Mencius, an apologist for Confucian ethics, was Machiavellian in his political strategy by that he deduced a virtuous reign as the most effective form of power politics. He advocated an utilitarian theory of morality in politics.

A similar view to that of Mensius would be advocated by Thomas Hobbes almost two millennia after Mensius. Hobbes would set down the logic of modern absolutism in his book: Leviathan (1651). It would be published two years after the execution of Charles I who would be found royally guilty of the high crime of treason by Oliver Cromwell's regicidal Rump Parliament in commonwealth England. Hobbes, while denying all subjects any moral right to resist the sovereign, would subscribe the fall of a sovereign as the utilitarian result of the sovereign's own failure in his prescribed royal obligations. Revolts are immoral and illegal, unless they are successful revolutions in which case the legitimacy of the new regime becomes unquestionable. In other words, God is the successful devil; or conversely the devil is a fallen god. It is pure Confucian-Mencian logic. As Daoists have pointed out, there are many Confucians who would evade the debate on the existence of God, but it is hard to find one that does not find the devil everywhere, particularly in politics.

Similarly, John Locke in 1680 would write Two Treaties of Government which would not be published until ten years later, after the Glorious Revolution of 1688, as a justification of a triumphant revolution. According to Locke, men contract to form political regimes to better protect individual rights of life, liberty and estate. Civil power to make laws and police power to adequately execute such laws are granted to government by the governed for the public good. Only when government betrays society's trust that the governed may legitimately refuse obedience to government, namely when government invades the inviolable rights of individuals and their civil institutions and degenerates from a government of law to despotism. An unjust king provides the justification for his own overthrow. Locke, like Mencius two millennia before him, would identify passive consent of the governed as a prerequisite of legitimacy for the sovereign. Confucius would insist that consent of the governed is inherent in the Mandate of Heaven (Tianming) for a virtuous sovereign, a divine right conditioned by virtue. In that respect, it differs from unconditional divine right claimed by Louis XIV of France. However, the concept of a Mandate of Heaven has one similarity with the concept of divine right. According to Confucius, just rule is required as a ritual requisite for a moral ruler, rather than a calculated requirement for political survival. Similarly, the Sun King would view good kingship as a character of greatness rather than as a compromise for winning popular support.

Both Hobbes and Locke would base their empiricist notions of political legitimacy not on theological or historical arguments, but on inductive theories of human nature and rational rules of social contract. Confucius based his moralist notion of political legitimacy on historical idealism derived from an idealized view of a perfect, hierarchical human society governed by rites.

For Daoists, followers of Laozi, man-made order is arbitrary by definition, and therefore it is always oppressive. Self-governing anarchy would be the preferred ideal society. The only effective way to fight the inevitably-oppressive establishment would be to refuse to participate on its terms, thus depriving the establishment of its strategic advantage. Mao Zedong (1893-1976), towering giant in modern Chinese history, with apt insights on Daoist doctrines, would advocate a strategy for defeating a corrupt enemy of superior military strength through guerrilla warfare. The strategy is summed up by the following pronouncement: "You fight yours (Ni-da ni-de); I fight mine (Wo-da wo-de)." The strategy ordains that, to be effective, guerrilla forces should avoid frontal engagement with stronger and better equipped government regular army. Instead, they should employ unconventional strategies that would exploit advantages inherent in smaller, weaker irregular guerrilla forces, such as ease of movement, invisibility and flexible logistics. Such strategies would include ambushes and harassment raids that would challenge the prestige and undermine the morale of regular forces of the corrupt government. Such actions would expose to popular perception the helplessness of the immoral establishment, despite its superficial massive power, the paper tiger as Mao would call it. Thus such strategies would weaken the materially-stronger but morally-weaker enemy for an eventual coup de grace by popular forces of good. Depriving an immoral enemy's regular army of offensive targets is the first step in a strategy of wearing down a corrupt enemy of superior force. It is classic Daoist roushu (flexible methods).

Informed of conceptual differences of key schools of Chinese philosophy, one can understand why historiographers in China have always been Confucian. Despite repeat, periodic Draconian measures undertaken by Legalist reformers, ranging from the unifying Qin dynasty (221-207 B.C.) during whose reign Confucian scholars were persecuted by being buried alive and their books burned publicly, and up to the Legalist period of the so-called Gang of Four in modern time when Confucian ideas would be vilified and suppressed, Confucianism (Ru Jia) survives and flourishes, often resurrected by its former attackers from both the left and the right, for the victor's own purposes, once power has been secured. There is an ironic Chinese proverb: "Those who succeed become kings; those who fail become bandits." To this one should add: "Those who succeed with Confucianism are hailed by history; those who succeed by other philosophical schools are ignored as deviants."

Mao's relations with classical Chinese intellectual traditions is at once derivative and antagonistic. My view is that Mao, like most modern Chinese, was intellectually anti-Confucian yet inescapably conditioned by Confucianism culturally. A strong case can be built to support the thesis that Mao is a modern Daoist, though the paradox is that he was unquestionably a materialist. But paradoxes are the specialties of Daoism. For example, gunpowder had been invented around the fourth century by Daoist alchemist Ko Hong while seeking an elixir for immortality. It represents the height of Daoist irony that the search for an elixir for immortality only yields a substance that ends life abruptly. Gunpowder would not be used in warfare in China until the tenth century, first in incendiary rockets called feihuo (flying fire). Explosive grenades would first be employed by armies of the Song dynasty in 1161 against Jurchens (Nuzhen), ancestors of modern-day Manchurians.

In Chinese dynastic culture, the use of firearms in war is considered cowardly and therefore not exploited by honorable warriors of self-respect. Firearms would not develop in dynastic China, not because of the absence of know-how, but because its use had been culturally circumscribed as not being appropriate for true warriors. It is interesting to compare this attitude with the American decision to use atomic bombs on Japan. It says as much about the nature of Americans as it does about their technological prowess.

In the history of human progress, willful rejection of many technological inventions is traceable to cultural preference. The oldest picture in the world of a gun and a grenade would come from a painted silk banner found at Dunhuang, dating to mid tenth century, that would come to be in the possession of Musee Guimet in Paris in modern time. The museum at Place d'Iena would be founded by Emile Guimet, a nineteenth-century Asian art collector from Lyon. In the silk banner, demons of Mara the Temptress, evil goddess, are shown trying to harm the meditating Buddha and to distract him from his pursuit of enlightenment, with a proto-gun in the form of a fire lance and a proto-grenade in the form of a palm-size fire bomb. The fact that these weapons are shown to be used only by evil demons illustrates the distasteful attitude of the ancient Chinese towards firearms.

In ancient Chinese warfare, the code of honorable martial conduct requires that combat be personal, bodily and frontal. Combatants are organized according to rank, as per all other social activities in a class-conscious and rigidly-hierarchical society. Zhangjuns (generals) are pit against zhangjuns, captains against captains and foot soldiers against foot soldiers. Social segregation is reflected in the proverb: "Earthenware does not deserve collision with porcelain". Expertise in corporeal martial skill is so highly prized that zhangjuns are frequently expected to personally engage in one-on-one combat with their opposing counterparts. Battles are sometimes won or lost depending on outcome of high-ranking personal duels under the watchful eyes of troops on each side.

By Tang time in the 7th centruy, however, the cult of martial chivalry in which individual valor determines the outcome of battles already has become only a legend of the past. Firepower is still considered cowardly. And its use are not accepted by proud warriors who are respectable members of the social elite. Until influenced in modern time by popular Hollywood films on the American wild West, Chinese children playing war would prefer sword fights to gun fights.

Gunpowder would remain unknown in the West until late tenth century. However, Europeans would abandon outmoded rules of chivalry after the Middle Ages and enthusiastically incorporate firearms and artillery into the lexicon of their military arts beginning after late fifteenth century. In contrast, due to Confucian aversion towards technological progress, Chinese military planners would not modernize their martial code. They would continue to suppress development of firearms as immoral and dishonorable, up to the nineteenth century, much to their own misfortune. As a result, European armies would arrive in China in the nineteenth century with superior modern firearms. They would consistently and repeatedly score decisive victories with their small but better-armed expeditionary forces over the numerically superior yet technologically backward, sword-wielding Chinese army of the decrepit Qing dynasty (1636-1911).

Mao Zedong, China's most influential revolutionary, would proclaim in modern time his famous dictum: "Power comes from the barrel of a gun." He would in fact be condemning the obsolete values of Confucianism (Ru Jia) as much as stating a truism in modern realpolitik.

Confucian ethics notwithstanding, morality and honor would fail to save China from Western imperialism. The Boxers Uprising of 1900, the Chinese name for which is Yiwuotuan (Righteous Harmony Brigade), would be an extremist xenophobic movement. It would be encouraged as a chauvinistic instrument for domestic politics by the decrepit court of the Qing dynasty (1636-1911), dominated by the self-indulging, reactionary Dowager Empress (Cixi Taihou 1838-1908). The Boxers Uprising would be used by the Dowager Empress as a populist counterweight to abort the budding "100 Days" reform movement of 1869, led

by conservative reformist Kang Youwei (1658-1927) around the young monarch, the weak Emperor Guangxu (r. 1875-1898), belatedly advocating modernization for China. The members of Yiwuotuan, in a burst of chauvinistic frenzy, would reject the use of modern and therefore foreign firearms in favor of traditional broadswords. They would rely on protection against enemy bullets from Daoist amulets, their faith in which would remain unshaken in the face of undeniable empirical evidence provided by hundred of thousands of falling comrades shot by Western gunfire. The term Boxer would be coined by bewildered Europeans whose modern pragmatism would fill them with a superficial superiority complex, justified on narrow grounds, over an ancient culture which stubbornly clung to the irrational power of faith, in defiance of reason.

Non-Marxist historians often trace the source of national predicaments to particular decisions taken by leaders based on personal character, rather than to structural conditions of institutions. This convenient emphasis on personal political errors at the expense of deterministic institutional structure tend to nurture speculations that with wiser decisions, a socio-economic-political order trapped inside an obsolete institutional system would not necessarily be doomed to collapse under the strain of its own contradictions. Such speculations are hard to verify, since it can be argued that bad political decisions by faulty leaders are not independent of a nation's institutional defects.

Ironically, the Boxers Uprising would so discredit the public image of the stubbornly reactionary Qing court that, within a decade after its outbreak, the democratic revolution of Dr. Sun Yat-sen would succeed in 1911 in overthrowing the three-century-old Qing dynasty, despite the effective reactionary suppression of progressive monarchist reform efforts in the dynasty's last phase, or perhaps because of it. Extremist reactionaries, in their eagerness to be grave diggers for progressive reformers, usually becomes instead unwitting midwives for revolutionary radicals. The Daoist concept of the curative potential of even deadly poison would again be demonstrated by the pathetic phenomenon of the Boxers Uprising. This theme repeats itself many time in the writing of Mao.

All self respecting political leaders in Chinese history, up to modern time, find it imperative to engage in poetry writing. Mao was a clear modern example. The reason for this is inherent in the verbal nature of Chinese culture. The Chinese concept of civilization is centered on ideas, and the most important ideas are those concerning the affairs of man, namely politics. Power and glory are ephemeral, while ideas are perpetual. The Selected Biographies (Lie zhuan) section of the Old Book on Tang (Jiu Tang Shu), compiled in 945, over 10 centuries before Mao, would contain two chapters entitled: Literary Garden (Wenyuan), listing one hundred and five biographical entries of celebrated literati.

Ideas are prisoners of language. That which cannot be spoken, or written as recorded speech, does not assume an external form of existence outside the mind. Language, rooted in the word: tongue, is the medium of communication, while ideas are the content. Yet some may even argue that man thinks only through speech and that without speech, there can be no intelligent thought. Even the visual and audio arts are not exempt from dependence on languages of their own for expressing visual images and musical ideas. Not being able to hear oneself think due to excessive noise is indeed a very profound epistemological statement. That there can be no thinking without speech is analogous to the axiom that there can be no music without sound. No musical expression can take place in a vacuum because the air necessary to conduct sound waves is missing. Learning to think without speech is like learning to swim without water. Furthermore, writing music requires the adoption of musical scales of pitch and rhythm, just as the visual arts require principles of spatial organization, color and light. Similarly, language is the prisoner of rhetoric which constitutes the rules and principles of speech, a convention through which thoughts are communicated among humans.

The problem of rhetoric is that it tends to degenerate into expressions of coded messages that obscure true meaning and stifle creative expression. He whose thinking is trapped by rhetoric is also condemned to conventional wisdom. Such a person would deprive himself of creativity, unable to entertain original thoughts because the medium for original expression is, by definition, wanting in rhetoric.

Confucian classics are all written in the most rigid form of rhetoric. Being well versed in Confucian classics is to run the danger of emphasizing form over substance or emphasizing style over essence. It is not much different from trying to learn creative writing from the excessively flowery language of the school-book Latin of Cicero (106-43 B.C.), the great Roman orator whose famous First Oration Against Catiline skillfully condemned Catiline as a conspirator based on hearsay testimony obtained from Catiline's mistress. Cicero, despite his rhetorical eloquence, remained unable to substantiate his legal authority to execute Catiline's five associates, thus subjecting himself to exile subsequently for having put to death Roman citizens without due process of law.

Escape from verbal imprisonment by rhetoric is possible only through poetry, the grammar of which begins beyond the bounds of the established rules of rhetoric. Poetry invents new grammar and syntax for expressing new ideas indescribable by rhetoric. Notwithstanding the claim of romantics, poetry creates truth of which beauty is but a function. Poetic ideas and their prerequisite unconventional expressions are generally the rhetoric of the future, when the once innovative syntax and original concepts would have become unthinkingly commonplace through excessive use.

From ancient emperors to Mao Zedong, all Chinese political leaders who fashion themselves as original thinkers, write poetry. If one examines Mao's writings, the style is purposely colloquial and the logic anti-academic. Yet his poetry is highly literary. Although some would succeed better than others, all self-styled thinkers in Chinese politics would attempt heroic poem writing. Even Marshal Chu De, the burly founder of the Chinese Red Army, whom few would list being cultured as one of his many virtues, would publish two poems in his twilight years to express his disenchantment with the protracted and relentless post-revolution ideological struggle promoted by Mao Zedong. Poetry is the medium for speaking the unspeakable and for thinking the unthinkable. Emphasizing poetry and creative literary composition in place of Confucian classics has been the foundation of revolutionary thought in China.

Contrary to misinterpretation in some American quarters, Mao never advocated terror, although, as Napoleon would observe: "there is a general rule that there can be no revolution without terror." As sad a commentary as that fatalistic observation is on the nature of human affairs, its validity would be repeatedly borne out by history. Every revolution is by its nature a revolt which success and the passage of time legitimize, but in which terror is one of its inevitable phases. Mao was Confucian in the sense that he believe that all people are good and what needed to change was the social system, and that one strand of Confucian social theory conforms closely to socialism (see below on Da'tong).

A revolution is like a volcanic eruption. It can neither be started prematurely nor stopped before it has run its full course. Like a volcano, when it erupts, its burning lava runs in all directions, destroying indiscriminately the decayed as well as the healthy. Mao Zedong would insightfully point out that a revolution is not a dinner party. It is not a parlor game of the liberal rich or academic intellectuals. A revolution is a momentous event of gigantic dimensions where powerful historical forces clash. Millions of people die for it and generations are affected by it afterwards. Its occurrence is caused by irresistible social forces against unyielding established resistance. It creates general disruption and massive destruction. Its molten lava, however, produces rich minerals for future generations when it finally cools and a solid platform on which to build.

In the name of saving the revolution, a reign of terror will strike at both the radical left and the reactionary right in order to hold the center against counterrevolutionary slippage. Paradoxically, while a reign of terror is the ultimate weapon against the counterrevolution, popular reaction against terror inevitably heralds the ultimate triumph of the counterrevolution. For terror, like all emotions of intensity, cannot be maintained permanently. It is the most agonizing affliction of the metabolism of revolutions.

All political systems dislike dissidents. The degree to which a government tolerates dissidents is a function of its perceived security. A revolutionary government, insecure by nature, generally takes no political prisoners, frequently resorting to political terror. A few word about revolutionary political terror.

A political terror in early Tang history had been staged by the secret police (kushi) which, like roaches, normally infesting only the subterraneous world, flourished into an open epidemic, fed by the apprehension of a court haunted by the mentality of a garrison state. At first, the victims of political terror are bona fide seditious reactionaries and other deserving criminals whose downfall delights the public, particularly the representatives of the emerging social forces. Later, the complexity of revolutionary politics gives rise to ideological polemics and esoteric sophistry that can be twisted at will to implicate anyone not popular with the secret police. Innocent men are then persecuted at the mirth of their political enemies and the frightened acquiescence of their friends. Finally, indiscriminate arrests becomes commonplace. As has been wisely said, all it takes for evil to triumph is for enough good men to keep silent.

Typically, a reign of terror begins as a temporary political necessity. In time it inevitably degenerates into a dark age of arbitrary mass arrests amid an atmosphere of witch hunt. As the social destructiveness of the terror intensifies, the political purpose of the terror would become diffused and unfocused, while unbridled personal ambition and runaway greed of the secret policemen become its main driving forces. The reigns of terror follow the same predictable pattern across cultural and political borders.

Chinese political ideology has a history of protracted contest between the vision of Da'tong (General Harmony) and the pragmatism of Xiao'kang (Individual Contentment). In contemporary political terms, it is a struggle between the noble grandeur of communal socialist vision and the utilitarian efficiency of individual private enterprise. Mao's political rise had been predicated on his ability to skillfully manipulate the contention between these two ideologies for the benefit of an evolving new social order, and his posthumous fall was related to his failure to balance the same in a changing social-economic post-revolution context. Deng Xiaoping's ideology is officially based on xiao'kang. When Mao accused Deng of being a capitalist roader, he was not wrong.

Chinese feudalism had evolved long before the advent of modern mass communication technology. The appearance of pamphlets and newspapers, the first form of mass communication resulting from the invention o printing, would make public opinion important in political disputes and eventually win a (small) measure of freedom of the press from direct political control of the rulers. Freedom of speech, amplified by mass circulation in print form, would since render popular support an increasingly critical prerequisite for political power. Prior to the era of prerequisite popular support in liberal politics, feudalism had evolved from the logic of moral philosophy and the calculus of power politics. Its immediate local authority had been imposed from the top down, resting on the local strongman's ability to maintain law and order necessary for local stability and his promise of protection against external threat. The agrarian peasants under the local lord's rule had needed both for a productive life. As the agrarian economy expanded, the provision of security and order, under the nomadic tribal rules of primitive kinship loyalty and clannish vendetta, had gradually been institutionalized by an evolving hierarchical feudal order, buttressed by agrarian societal values of morality and justice. Free men no longer enjoyed the freedom of movement inherent in a nomadic life because their agrarian livelihood was tied to immobile land. They then bartered away their own individual freedom and labor rights, as well as those of their descendants, often willingly but at times under coercion, in exchange for protection from their local lords and the lords' heirs. The local lords in turn offered loyalty and obedience to the Emperor and his heirs in return for more powerful imperial protection against other neighboring local lords.

The Emperor's authority had been derived from its ready recognition by the collegiate regional lords and, to a less direct but more fundamental degree, from peasant expectation of him as a higher authority to whom the peasantry could appeal for justice against the frequent abuses of the local lords. The Emperor's role under feudalism was twofold: to arbitrate the disputes among local lords; and to protect the peasants from the oppressive aristocrats. In feudal politics, a wise Emperor was, by definition, a liberal Emperor.

Economic prosperity naturally resulted from peaceful stability and established social hierarchy. Material prosperity in turn provided a pragmatic validation for feudalism. Direct popular support through universal suffrage had been immaterial and impractical before the advent of the age of individual freedom of speech and mass communication. But while universal suffrage did not exist, it does not follow that popular support had been unnecessary as a mandate of political power under the feudal political system. Confucianism understands well the link between popular support and political power.

Until the 20th century, whenever widespread political unrest should occur in China, it would generally be against an abusive ruling monarch and sometimes his morally bankrupt dynastic house, rather than the feudal system itself.

The fall of feudal monarchies over the course of scores of centuries were the result of palace coups and political rebellions rather that social revolutions, the few exceptions being minor social upheavals in times of widespread economic turmoil. The flowering of liberal democracy in the West would usher in a rising expectation around the modern world on respect for human rights and for the concept of political equality for all individuals, regardless of social rank and class affinity. The consent of the governed as expressed through universal suffrage would become a modern global prerequisite for a mandate to govern. Since then, 3 competing political systems: socialism, fascism and capitalistic democracy, would dominate the unfolding of modern history. China has not been exempted from this historical development.

Socialism would attract popular support by promising the masses that the welfare of the people is the responsibility of the state, while fascism would demand power over the people by asserting that the welfare of the state is the duty of each individual. Both socialism and fascism would exact from the people total obedience to state control as the price for fulfilling each of their separate and opposing social philosophies and political visions. However, the difference in ideology would not prevent a similarity in methodology. Both political systems would be required by their internal logic to be similarly authoritarian and totalitarian, as a moral justification and as an operational necessity, though toward opposite ends. Both socialism and fascism, in the quest for guaranteed material welfare for the people, would strip them of their individual will, and in the process rob them of their creativity and initiative. Unfortunately, material welfare, even if absolutely guaranteed, is always a poor compensation for loss of individuality. Fascism, because of its contempt for equality as an ideal, would not hesitate to enslave the masses to create an efficient state that would deliver glory to the nation and an improved living standard to the dutiful masses. Socialism, on the other hand, by its belief in the myth of equality, would willingly suffer inefficiency in wealth-creating processes, even if it should result in less income either for use by the state or for fair distribution among the people. In practice, albeit history to date would only permit imperfect models, the history of radical socialism would be frothed with examples of attempts to achieve equality by making the rich as poor as the poor. Yet socialism, with all its difficulties, wins hands down on the basis of its moral superiority.

Capitalistic democracy would base its mandate on the individual's acceptance of responsibility for his own welfare through the exercise of private property rights. Since it would promise only equal opportunity to a good life rather than a good life itself, its ideology would require neither authoritarian moralization nor totalitarian control, because individual failures would not imply dysfunction of the system. Rather, such failures would be deemed necessary in the selection process to keep the system healthy, the concept of the survival of the fittest being the foundation of capitalistic social Darwinism. Social welfare safety nets would be tolerated in capitalistic democracies merely as humanitarian compromises, a decadent liberal concession from the theoretical sanctity of market efficiency. For the true believer of capitalism, economic efficiency should ideally be maintained with social euthanasia of the economically unfit. Charity is bad economics, except when charity contributes in the short term to reducing other high costs of preserving law and order, of preventing crimes of the poor (not on the poor), social unrest or revolution. The most efficient method of eliminating poverty is to let the poor die with natural obsolescence. It is the fear of poverty that provide the psychological fuel for economic initiative. Making poverty sufferable through social welfare programs would erode the vitality of the economic system, so market capitalists argue.

The power of the state in a modern capitalistic democracy would be restricted to that of maintaining national security, preserving basic human rights as defined in the liberal tradition of the Enlightenment, which would not include the right of individual economic security (except the value of money; thus when wages increase, its called inflation, but when share value rises, its called growth), of protecting the sacredness of private property rights in order to insure the efficient functioning of the market mechanism and upholding the principle of return on capital as the driving force in human society. Within the rules of market economy, the individual in a capitalist democracy would enjoy broad freedom as long as the exercise of which is consistent with the security interest of the state, compatible with the preservation of capitalism and compliant with the traditional moral standards of its local community. The trouble is that truly free markets, like absolute equality, is a myth. Markets in a complex global economy in modern time would in reality be shaped by factors external to national borders and functional industry boundaries. The so-called unseen hand of the market would constantly require national governmental policies and regulations to prevent it from sub-optimization and to protect it from manipulation by powerful special interests domestically, by policies of other national governments and by business strategies of transnational, multinational and international enterprises. Capitalistic democracy would appear to be materialistically efficient due largely to its shedding of the costly burden of social responsibilities. It would operate with clear purpose, because material gains are stimulated by material incentives, relatively unencumbered by metaphysical morals. Capitalism is paradoxically tied to the perpetuation of poverty, because it needs the fear of poverty as an negative incentive for the individual to work. Even if capitalism should succeed in eliminating material poverty, it would do so only at the price of a poverty of the spirit.

It is when questions of responsibility to one's fellow men and the higher purposes of life are asked that the purpose of economic efficiency in a capitalistic democracy faces it's most serious challenge. While an ample supply of bread may prevent political revolutions, it is necessary to remember, as Christ pointed out: "Man lives not by bread alone." Nevertheless, it is an issue better considered with a full stomach.

Feudalism in China has aspects of what modern political science would label as fascist, socialist and democratic. As a socio-political system, feudalism is inherently authoritarian and totalitarian. However, since feudal cultural ideals have always been meticulously nurtured by Confucianism to be congruent with the political regime, social control, while pervasive, is seldom consciously felt as oppressive by the public. Or more accurately, social oppression, both vertical, such as sovereign to subject, and horizontal, such as gender prejudice, is considered natural for lack of an accepted alternative vision. Concepts such as equality, individuality, privacy, personal freedom and democracy, are deemed anti-social, and only longed for by the derange-of-mind, such as radical Daoists. This would be true in large measure up to modern time when radical Daoists would be replaced by other radical political and cultural dissidents. (Here a distinction needs to be made between genuine indigenous dissents from those merely playing opportunistically for foreign cash). The imperial system in China took the form of a centralized federalism of autonomous local lords in which the authority of the sovereign is symbiotically bound to, but clearly separated from, the authority of the local lords. Unless the local lords abused their local authority, the Emperor's authority over them, while all inclusive in theory, would not extend beyond federal matters in practice, particularly if the Emperor's rule is to remain moral within its ritual bounds. This tradition continues to the modern time. This condition is easily understandable for Americans whose Federal government is relatively progressive on certain issues of national standard with regard to community standard in backward sections of the union. Confucianism (Ru Jia), through the code of rites (li), seeks to govern the behavior and obligation of each person, each social class and each socio-political unit in society. Its purpose is to facilitate the smooth functioning and the perpetuation of the feudal system. Therefore, the power of the Emperor, though politically absolute, is not free from the constraints of behavior deemed proper by Confucian values for a moral sovereign, just as the authority of the local lords is similarly constrained. Issues of constitutionality in the U.S. political milieu become issues of proper rites and befitting morality in Chinese dynastic politics. To a large extent, this continues to the modern Chinese polity.

Confucianism (Ru Jia) is in fact a secular, anti-religious force, at least in its philosophical constitution. It downgrades other-worldly metaphysics while it cherishes secular utility. It equates holiness with virtue rather than with divinity. According to Confucius, man's salvation lies in his morality rather than his piety. Confucian precepts assert that man's incentive for moral behavior is rooted in his quest for respect from his peers rather than for love from God. This morality abstraction finds its behavioral manifestation through a Code of Rites (Liji), which defines the proper roles and obligations of each individual within a rigidly hierarchical social structure. Confucians are guided by a spiritual satisfaction derived from winning immortal respect from posterity rather than by the promise of everlasting paradise after God's judgment. They put their faith in meticulous observance of secular rites, as opposed to Buddhists who worship through divine rituals of faith. Confucians tolerate God only if belief in his existence would strengthen man's morality. Without denying the existence of the supernatural, Confucians assert its irrelevance in this secular world. Since the existence of God is predicated on its belief by man, Confucianism, in advocating man's reliance of his own morality, indirectly denies the existence of God by denying its necessity. To preserve social order, Confucianism instead places emphasis on prescribed human behavior within the context of rigid social relationships through the observance of rituals. As righteousness precludes tolerance and morality permits no mercy, therein lay the oppressive roots of Confucianism. Most religions instill in their adherents fear of a God who is nevertheless forgiving, but Confucianism, by denying the necessity of God, denies the virtue of forgiveness. Faults are not forgiven until they are corrected, making forgiving an empty gesture.

Confucianism (Ru Jia) places faith in rule by men, albeit moral and virtuous men, based on rigid observation of rites in an anti-institutional context, in opposition to Legalism (Fa Jia) which places faith in institutions and law. There are Leninist aspects o this attitude in that Leninists believe in revolutionaries more than they do in revolution which they suspect to be susceptible to revisionism. The danger of Confucianism lies not in its aim to endow the virtuous with power, but in its tendency to label the powerful as virtuous. Confucianism, more a socio-political philosophy than a religion, distinguishes itself by preaching the required observation of an inviolable Code of Rites, the secular ritual compendium as defined by Confucius, in which tolerance is considered as decadence and mercy as weakness. Whereas Legalism (Fa Jia) advocates equality under the law without mercy or exception, Confucianism, though equally merciless, allows varying standards of social behavior in accordance with varying ritual stations. However, such ritual allowances are not to be construed as tolerance for human frailty, for which Confucianism has little use. St Augustine (354-430), who was born 905 years after Confucius, in systematizing Christian thought, defended the doctrines of original sin and the fall of man. He thus reaffirmed the necessity of God's grace for man's salvation, and further formulated the Church's authority as the sole guarantee of Christian faith.

The importance of Augustine's contribution to cognition by Europeans of their need for Christianity and to their acceptance of the orthodoxy of the Catholic Church can be appreciated by contrasting his affirmative theological ideas to the anti-religious precepts of Confucius (551-479 B.C.). Immanuel Kant (1724-1804), who would be born 2,275 years after Confucius, would develop the theme of "Transcendental Dialectic" in his Critic of Pure Reason (1781). Kant would assert that all theoretical attempts to know things inherently, which he would call "nounena", beyond observable "phenomena", are bound to fail. Kant would show that the three great problems of metaphysics: God, free will and immortality, are insoluble by speculative thought, and their existence can neither be confirmed nor denied on theoretical grounds, nor can it be rationally demonstrated. In this respect, Kantian rationalism lies parallel to Confucian spiritual utilitarianism, though each proceeds from opposite premises. Confucius allowed belief in God only as a morality tool. Rationally, Kant would declare that the limits of reason only render proof elusive, they do not necessarily negate belief in the existence of God. Kant would go on to claim in his moral philosophy of categorical imperative that existence of morality requires belief in existence of God, free will and immortality, in contrast to the agnostic claims of Confucius. Buddhism (Fo Jiao), in its emphasis on a next life through rebirth after God's judgment, resurrects the necessity of God to the Chinese people. Mercy is all in Buddhist doctrine. Buddhist influence puts a human face on an otherwise austere Confucian culture. At the same time, Buddhist mercy tends to invite lawlessness in secular society, while Buddhist insistence on God's judgment on a person's secular behavior encroaches on the emperor's claim of totalitarian authority.

Even Legalism is not free from Confucian influence. The Chinese term for law is fa-lu. The word fa means method. The word lu means standard. In other words, law is a methodical standard for behavior in society. A musical instrument with resonant tubes which form the basis of musical scales is also called lu, the Chinese equivalent of the tuning fork. In law, the word lu implies a standard scale for measuring social behavior of civilized men. The first comprehensive code of law in China had been compiled by the Origin Qin Emperor (Qin Shihuangdi r. 246-210 B.C.), unifier of China. Mao admired the Qin dynasty as Confucius admired the ancient Zhou dynasty. Known as Qin Code (Qin Lu), it was a political instrument as well as a legal one. It was the legislative manifestation of a Legalist political vision. It aimed at instituting uniform rules for prescribing appropriate social behavior in a newly-unified social order. It sought to substitute fragmented traditional local practices, left from the ancient regime of privileged aristocratic lineages. It tried to dismantle Confucian exemptions accorded to special relationships based on social hierarchies and clan connections. The pervasive growth of new institutions in the unifying Qin dynasty (221-207 B.C.) had been the result of objective needs of a rising civilization. Among these new institutions was a unified legal system of impartial rewards and punishments according to well-promulgated and clearly defined codes of prescribed behavior. The law was enforced through the practice of lianzuo (linked seats), a form of social control by imposing criminal liability on the perpetrator's clan members, associates and friends. Qin culture heralded the emergence of a professional shidafu (literati-bureaucracy) based on meritocracy. It also introduced an uniform system of weights, measures, monetary instruments and it established standard trade practices for the smooth operation of an unified economic system for the whole empire. The effect of Qin Legalist governance on Chinese political culture had been profound and comprehensive. Chinese civilization during Qin time took a great step forward toward forging an unified nation and culture, but in the process lost much of the richness of its ancient, local traditions and rendered much details of its fragmented past incomprehensible to posterity. Universality and standardization, ingredients of progress, are mortal enemies of particularity and variety, components of tradition.

In the first half of Han dynasty (B.C. 206-220 A.D.), the Han imperial government adopted the Legalist policies of the Qin dynasty (221-207 B.C.) it had replaced. It systemically expanded its power over tribal guizus (aristocrats) by wholesale adaptation of Legalist political structure from the brief (fifteen years) but consequential reign of the preceding Qin dynasty. Gradually, with persistent advice from Confucian ministers, in obsessive quest for dependable political loyalty to the Han dynastic house, Legalist policies of equal justice for all were abandoned in favor of Confucian tendencies of formalized exemptions from law, cemented with special relationships (guanxi) based on social positions and kinship. The Tang Code (Tanglu) promulgated in 624 institutionalized this corrupt Confucian trend by codifying it. It would lay the foundation for a heirarchal social structure that would generate a political culture that even in modern time would resist the proposition that all men are created equal. Elaborately varied degrees of punishment are accorded by the Tang Code to the same crime committed by persons of different social positions, just as Confucian rites ascribe varying lengths of mourning periods to the survivors of the deceased of various social ranks. According to Confucian logic, if the treatment for death, the most universal of fates, is not socially equal, why should it be for the treatment for crime? William Blake (1757-1827), born twenty-three centuries after Confucius (551-479 B.C.), would epitomize the problem of legal fairness in search for true justice, by his famous pronouncement: "One law for the lion and the ox is oppression."

Confucian values, because they have been designed to preserve the existing feudal system, unavoidably would run into conflict with contemporary ideas reflective of new emerging social conditions. It is in the context of its inherent hostility toward progress and its penchant for obsolete nostalgia that Confucian values, rather than feudalism itself, become culturally oppressive and socially damaging. When Chinese revolutionaries throughout history, and particularly in the late 18th and early 19th century, rebelled against the cultural oppression of reactionary Confucianism, they would simplistically and conveniently link it synonymously with political feudalism. These revolutionaries would succeed in dismantling the formal governmental structure of political feudalism because it was the more visible target. Their success had been due also to the terminal decadence of the decrepit governmental machinery of dying dynasties, such as the ruling house of the 3-century-old, dying Qing dynasty (1583-1911). Unfortunately, these triumphant revolutionaries would remain largely ineffective in re-molding Confucian dominance in feudal culture, even among the progressive intelligentsia. Almost a century after the fall of the feudal Qing dynasty house in 1911, after countless movements of reform and revolution, ranging from moderate democratic liberalism to extremist Bolshevik radicalism, China would have yet to find an workable alternative to the feudal political culture that would be intrinsically sympathetic to its social traditions. Chinese revolutions, including the modern revolution that would begin in 1911, through its various metamorphosis over the span of almost 4 millennia, in overthrowing successive political regimes of transplanted feudalism, would repeatedly kill successive infected patients in the form of virulent governments. But they would fail repeatedly to sterilize the infectious virus of Confucianism (Ru Jia) in its feudal political culture. The modern destruction of political feudalism would produce administrative chaos and social instability in China until the founding of the People's Republic in 1949. But Confucianism (Ru Jia) would still appear alive and well as cultural feudalism, even under Communist rule, and within the Communist Party!. It would continue to instill its victims with an instinctive hostility towards new ideas, especially if they are of foreign origin. Confucianism would adhere to an ideological rigidity that would amount to blindness to objective problem-solving. Almost a century of recurring cycles of modernization movements, either Nationalist or Marxist, would not manage even a slight dent in the all-controlling precepts of Confucianism in the Chinese mind.

In fact, in 1928, when the Chinese Communist Party would attempt to introduce a soviet system of government by elected councils in areas of northern China under its control, many peasants earnestly thought a new "Soviet" dynasty was being founded by a new Emperor by the name of "So Viet". During the Great Proletariat Cultural Revolution of 1966, the debate between Confucianism (Ru Jia) and Legalism (Fa Jia) would be resurrected as allegorical dialogue for contemporary political struggle. Legalist concepts such as equal justice under law for all and no man being above the law, are considered by Confucians as aberrations of social morals and as corruption of good governance. On the eve of the 21st century, Confucianism would remain alive and well under both governments on Chinese soil on either side of the Taiwan Straits, regardless of political/economic ideology. Modern China would still be a society in search of an emperor figure and a country governed by feudal relationships, but devoid of a compatible political vehicle that would turn these tenacious, traditional social instincts towards constructive purposes, instead of allowing them to manifest themselves as practices of corruption. General Douglas MacArthur would present post-war Japan, which has been seminally influenced by Chinese culture for 14 centuries, with the greatest gift a victor in war has ever presented the vanquished: the retention of her secularized Emperor, despite the Japanese Emperor's less-than-benign role in planning the war and in condoning war crimes. Thus General MacArthur, in preserving a traditional cultural milieu in which democratic political processes could be adopted without the danger of a socio-cultural vacuum, would lay the socio-political foundation for Japan as a post-war economic power. Of the 3 great revolutions in modern history: the French, the Chinese and the Russian, each would overthrow feudal monarchial systems to introduce idealized democratic alternatives that would have difficulty holding the country together without periods of terror. The French and Russian Revolutions would both make the fundamental and tragic error of revolutionary regicide and would suffer decades of social and political dislocation as a result, with little if any socio-political benefit in return. In France, it would not even prevent eventual restoration imposed externally by foreign victors. The Chinese revolution in 1911 would not be plagued by regicide, but it would prematurely dismantle political feudalism before it would have a chance to develop a workable alternative, plunging the country into decades of warlordism. Worse still, it would leave largely undisturbed a Confucian culture while it would demolish its political vehicle. The result would be that 8 decades after the fall the last dynastic house, the culture-bound nation would still be groping for an appropriate and workable political system, regardless of ideology. Mao Zedong would understand this problem and would try to combat it by launching the Great Proletariat Cultural Revolution in 1966. But, even after a decade of enormous social upheaval, tragic personal sufferings, fundamental economic dislocation and unparalleled diplomatic isolation, the Cultural Revolution would achieve little except serious damage to the nation's physical and socio-economic infrastructure, to the prestige of the Party, not to mention the loss of popular support, and total bankruptcy of revolutionary zeal among even loyal party cadres.

It would be unrealistic and undesirable to expect the revival of imperial monarchy in modern China. Once a political institution is overthrown, all the king's men cannot put it together again. Nor would it be desirable. Yet, the modern political system in China, despite its revolutionary clothing and radical rhetoric, would be still fundamentally feudal, both in the manner in which power is distributed and in its administrative structure. When it comes to succession politics, a process more orderly than heriditary feudal tradition of primogeniture would have yet to be developed in the Chinese political system in modern time. There is now a Marxist feudalism in China, if not in name, surely in practice.

For Mao and his revolutionary comrades, victory over the decrepit Nationalist regime, though it came only after protracted struggle, caught them unprepared to run a vast nation. The CPC's entire experience had been limited to the rural world and to guerrilla action, exemplified by the heroic "Long March". It inherited a destituted China, infested with Confucian poison and facing a hostile embargo and containment by the most powerful economic/military machine in the world. The only tools available to the revolutionary leaders were their faith in socialism and the ability to organized mass movements. The first official statement Mao proclaimed after declaring the founding of the People's Republic of China (PRC) on October 1, 1949 was: "the Chinese people have stood up." The first task was setting up a government. The CPC despite deserving sole control of the nation, attempted to cooperate with non-communist forces and political figures along the principles established in Mao's essay of 1945, "On Coalition Government". In 1950, People's Representative Conferences were convened in villages and counties. Since 1952, representative had been elected in open elections until interrupted by the Cultural Revolution and its reinstitution last year was hailed by the Western press. The Constitution of 1954, decalred the PRC as a "people's democratic state led by the proletariat and based upon the alliance of workers and peasants" and the National People's Congress (NPC) as the highest organ of supreme state power. Representing the people, all powers originate from the NPC. It elects the Head of State and the Prime Minister, and the People's Supreme Court. Marxist and Leninist principles were applies in the organization of the national economy, i.e., the people own the means of production and that political theories, parties, state organs, laws, morals, art, philosophy all should reflect the socialist "basis". Mao in a essay, New Democracy, set out the principle of united dictatorship of several revolutionary classes. To advance towards the road toward a socialist society, Mao developed specific methods out of Leninist conceptions which henceforth determined the special character of Chinese Communism. These methods are based on mass movements, stressing the change of consciousness, that is the creation of new men and women for a new society, more than the change of reality, i.e. the mode of production. The mass line theory requires the party cadres to be close to the people, that they be continuously informed about the will of the people and transform it into concrete action. "From the masses - to the masses". Land reform was accomplished from 1950-53 with struggle rallies against landlordism, successfully redistributed land nationally to peasants, but it failed to solve China's agricultural problem or fulfill its needs. Marriage reform during 1950-52 liberated feudal oppression on women. The campaign against counter-revolutionaries, including a purge of intellectuals, was followed by the Five Anti Movement - directed against tax evasion, fraud, bribery, espionage, theft of state property, was carried out against the national bourgeoisie. >From June to September, 1953 Mao, to initiate the next phase of the revolutionary process: the transformation to proletariat socialist revolution, the guidelines of the impending political turning points were discussed in two national work conferences on economic and organizational questions which resulted in Mao's announcement of the new General Line of Socialist Transformation on October 1, 1953, toward collectivization and state ownership. At the fourth plenum of the seventh Central Committee in February 1954, Liu Xiaoqi declared the commencement of the struggle for socialist transformation, launching Agricultural Production Cooperatives (APC). The key to the success of the transformation campaign was "thought reform", popularly referred to as "brain washing" of reactionary confucian attitudes. In 1956, Mao launched the slogan "Let a Hundred Flowers Bloom, Let A Hundred Schools of Though Contend". Mao had underestimated the explosive potential of an alliance between Confucian reactionary mentality and Western liberalism against the new socialist order. To save the revolution he responded with the Anti-Rightist campaign of 1957-58.

Within the CPC, there developed a dispute over the New General Line in which Mao prevailed with the launching of the Three Red Banners: the General Line for Building Socialism; a Great Leap Forward (GLF) and the People's Communes. An intricate issue of ideological and pragmatic considerations had urged on the Party leadership this turn to the left. The CPC now considered Moscow as more determined to neglect global revolution, to avoid international tension caused by the interest of its socialist Third World brothers, and to regard the USSR as a socialist state with only slow further transformation in order to strengthen its national economy and to increase it economic and military power to compete with the US. Mao aimed to create rapidly a communist social order in China to lead the international Communist movement abandoned by a revisionist USSR. The General Line provided a strong use of traditional techniques in handicrafts and agriculture and agriculture was to supplement modern technology in order to expand production. Small local industries were to meet the needs of the villages for simple tools outside of the framework of central planning and administration and not burden the state industrial sector. Agricultural labor was mobilized to construct roads, water conservancy and irrigation projects on which 90 million workers volunteered. This approach was generally successful and was responsible for much of the basic foundation for the building of the Chinese economy in later stages. The GLF was not a stand alone program. Its error was trying to do too much with too little in the wrong sector (steel). But while its achievement fell far short of its goals, and the damage to central planning and party unity was more significant than actual material loss. The failure of the People's Communes was more serious. But it was caused by bad luck in the weather cycle and Confucian resistance. If the weather had cooperated, Confucian resistance might not have been as strong. Alas, one cannot argue with bad harvest, even if they were caused by floods and droughts. Still, the ensuing famine might have been avoided by imported grain bought with sovereign credit from Australian and Canada, if such sales were not opposed by US embargo. By 1962, revisionist tendencies were mounting in Chinese economic policy which forced Mao to launch to Cultural Revolution. Typical of Chinese politics, the struggle began with a literary dispute over a historical play written by Wu Han. To combat the new right, Mao in 1966 mobilized the youths of China, by forming the Red Guards to combat the part bureaucrats and cadres. The runaway fervor of the young Red Guards lasted a whole decade, did little in eradicating confucianism, but provide much propaganda material for anti-communists. Yet, it is not an exaggeration to say that the Red Guard saved the revolution. Mao's opening to the US was highly complex. Aside from geopolitical concern over a US/USSR condominium against China and the Third World, Mao was concerned that after his impending death, the revisionist would join hand the Soviet revisionists. After Mao's death, Deng Xiaoping turned toward the US, a policy that leftists in China continue to oppose.

The revolution in China continues. Many more twisted and turns will occur and mistakes will be made as China moves toward socialism, a path on which both China and historical socialism have to evolve to accommodate each other.

Henry C.K. Liu

Reading the China People's Daily correctly

There is definitely a cultural and language gap between Western and Chinese mentality, expression, logic and emotion. This is not a new problem. There was a communication problem between the Qing dynasty Emperor and Queen Victoria. The Chinese Emperor used to sent messages to the Queen that began with "Listen, Tremble and Obey...", standard imperial edict language, which, needless to say, upset the proud monarch of a rising Western (not European) power. The first British Ambassador to China created a diplomatic crisis by refusing to kneel on both knees (insisting instead a bow and finally agreeing to kneeling on one single knee) during his first imperial audience. The protocol negotiation took close to one year to resolve.

Yet front page articles in the People's Daily are not comparable to those in the Wall Street Journal. Their purpose is not to convince but to inform. It is not meant to be a debate but an announcement of official policy. China scholars and seasoned diplomats know how to read these articles, as do Chinese bureaucrats. These articles, being policy statements, are full of rhetoric that are code terms that diplomats understand. Chinese diplomats reading State Department or Whitehall statements or press releases have the same understanding. But they have great difficulty understanding the popular Western press. There are other unofficial Chinese papers for general public consumption that are more lively and pervasive. Still, any Westerner reading them will be unable to avoid misunderstanding the nuances of the message. Westerners have this habit of concluding others must be intellectually inferior if they act or think or sound different than they do. It is not always true. Of course, Chinese are not exactly the most liberal people on earth either. But since they have been victims for almost two centuries, allowances are reasonable. Much the causes of the Japanese-US conflict leading to Pear Harbor in fact were attributable to language difficulties. That is why peace cannot come from understanding, only from tolerance.

Henry Liu