The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website

On China

But let's focus on China for a moment, because that is the economy Americans seem to fear the most. And certainly it is true that China has been the wonder of the world for three decades, growing at an astonishing rate and lifting hundreds of millions of people out of grinding poverty into something approaching a middle-class existence. It's probably no exaggeration to say that this has been one of the most positive events in recent human history.

Indeed, we can say about China precisely what I say abut the former Soviet Union in Chapter 2 “In barely a generation, [Chinese]-style communism transformed a backward, peasant, agrarian society into the second-largest economy in the world.” But it's one thing to convert an agrarian society into an industrial society. A strong and determined (communist) central government can basically decree that it will happen and it will. (Note, on the other hand, that a determined but weak—democratic—central government, as in India, will have a much tougher road.)

But for the Chinese economy to continue to grow at anything like its former glory, that economy can't remain a simple industrial society in which capital²¹ is allocated mainly to create jobs and keep the populace docile. China has to transform itself into a vastly more complex postindustrial economy, where capital is allocated moment by moment to where it is needed most. And that is something that no society has ever achieved using a top-down, command economy approach. The Soviet ...