22 Aug The Chinese Mirror

The legendary Martian landing on Earth might think that the Chinese state is rapidly converging to the Western world’s freedom. It is doing things like boosting its antitrust laws, expanding regulation, and attacking high-tech companies, all of that in the name of competition. It even adopted what is said to be one of the world’s strictest data-privacy laws—. It looks as if Western-style laws and regulations are being introduced in China. These developments invite two related comments.

First, Chinese rulers and apparatchiks obviously do not use the concept of “law” or “constitution” in the theoretical sense it has here or at least in the ideal sense it had in the Western classical liberal tradition. Legal concepts were closely related to the “rule of law,” as a system of general and abstract rules that allowed individuals to interact, trade, and arrange their own affairs without ad hoc bans or orders from the government. The rule of law equally limited the power of governments who, except for coercively levying taxes, were equally bound by the rule of law. Two classic treatments of these issues at the frontier of law and economics are due to Friedrich Hayek: Law, Legislation and Liberty, especially vol. 1: Rules and Order (University of Chicago Press, 1973); and his The Constitution of Liberty (University of Chicago Press, 1960). On the contrary, what they mean by “law” in China is just the form in which the government issues its arbitrary orders and bans.

Second, when the Chinese political authorities imitate Western governments’ interventions, they imitate precisely what has, over a century or so, most undermined the constraints of the rule of law: antitrust laws, attacks on industries that the state doesn’t like (or whose executives it doesn’t like), mercantilism, investment and trade controls, government surveillance, etc. The new privacy laws are constraining private companies, not government agencies.

The legendary Martian would be wrong. China has become a deforming mirror of the West, where the state is using corrupted Western ideals to become a worse Leviathan. It remains to be seen whether the US government and other Western governments will be repulsed by what they see in the Chinese mirror and will rediscover classical-liberal values, or whether they will be led to look more like the deformed image they see in the mirror. Thus far, the latter seems to be happening. Just consider the US government and other governments in the West expanding industrial policy, which has been discovered to be inefficient and been gradually abandoned, but is now rekindled for the illusory purpose of competing with a dirigiste economy under a tyrannical state which does it.

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