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Reading Hayek on the Road to Famine

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Yang Jisheng, a Chinese journalist, is the author of the 2012 book Tombstone, a meticulously researched and definitive history of the Great Chinese Famine engineered by Mao Zedong from 1958 to 1962, during which 36 million Chinese perished from starvation.

In an interview with the Wall StreetJournal Mr Yang now reveals that he was greatly influenced by Friedrich A. Hayek's classic work The Road to Serfdom , a heavily redacted version of which was translated into Chinese in 1997. Indeed Hayek had presciently written in this book, "In a country where the sole employer is the state, opposition means death by slow starvation." Not only did Hayek's book provide Mr. Yang with an explanation of the tragic events of his youth, it also explains the current Chinese system, which he maintains, has been completely misunderstood. The Wall Street Journal summarized Mr. Yang's position as follows:

"China's economy is not what [Party leaders] claim as the 'socialist-market economy,' " he says. "It's a 'power-market' economy."
What does that mean?
"It means the market is controlled by the power. . . . For example, the land: Any permit to enter any sector, to do any business has to be approved by the government. Even local government, down to the county level. So every county operates like an enterprise, a company. The party secretary of the county is the CEO, the president."
Put another way, the conventional notion that the modern Chinese system combines political authoritarianism with economic liberalism is mistaken: A more accurate description of the recipe is dictatorship and cronyism, with the results showing up in rampant corruption, environmental degradation and wide inequalities between the politically well-connected and everyone else. "There are two major forms of hatred" in China today, Mr. Yang explains. "Hatred toward the rich; hatred toward the powerful, the officials." As often as not they are one and the same.

Hmmm, a market economy controlled by power, heavy regulations on new entrepreneurial ventures, arbitrary exercise of political power, economic cronyism, rampant corruption, the close correlation of wealth and political power? Sounds like another so-called market economy we are all familiar with.

Joseph Salerno is academic vice president of the Mises Institute, professor emeritus of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics.

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