age.24 Singapore’s longtime premier, Lee Kwan Yew, has urged the Chinese regime to adopt Confucianism as a defining feature of Asian capitalism.25
Even in the West, the values that drove the development of the modern world—such as confidence in progress and the benefits of economic growth for the general well-being—have come under challenge. In the 1960s, the environmental movement expressed a growing, and understandable, concern over the devastation of the natural world by the modern industrial economy. An ideal of low or even negative economic and demographic growth was popularized by E. F. Schumacher, with his “small is beautiful” philosophy, which would prove particularly consequential in California in the 1970s.26
As in the nineteenth-century reactions against industrialization, environmental concerns raise nostalgia for a bygone age. Like a medieval millenarian, Prince Charles of Britain asserts that we are running out of time to save the world. Charles has emerged as perhaps the premier “feudal critic of capitalism,” as one socialist publication put it. He views free-market capitalism as a scourge upon the earth, and promotes a new kind of noblesse oblige centered on concern for the natural world and for social harmony.27
Environmentalism has even led to a revival of the notion of poverty as a virtue. In the Middle Ages, poverty was regarded as the inescapable condition of life for most people, while monks adopted voluntary poverty as beneficial to spiritual growth; today, poverty sometimes appears to be considered good for the environment. Even the swelling slums of the developing world have been viewed as something to celebrate more than a cause for alarm, in large part because of the slum-dwellers’ low consumption of energy and other resources. Michael Kimmelman, an urbanist writing for the New York Times, called slums “not just a blight but a potential template for organic urbanism.”28
Many intellectuals, architects, and planners have promoted values reminiscent of the medieval past as being in better harmony with human nature.29 Some conservative thinkers, such as the late Roger Scruton, have been critical of the disorderly modern urban world and especially of the suburban culture created by liberal capitalism. Scruton favored a return to a geography of densely populated cities surrounded by a protected countryside, without the middle landscape of suburbs—the places where the property-owning middle classes overwhelmingly live today. Likewise, some leading architects, including Britain’s Richard Rogers, seek a return to something like the medieval city with its public market squares, which they consider a more livable alternative to the modern suburban sprawl.30
Such backward-looking ideas have been offered as remedies for the weaknesses and failings of modern society. But they might also provide a rationale to discourage upward mobility for the many and to concentrate property in fewer hands.
CHAPTER 3
The Rise and Decline of Liberal Capitalism
Liberal capitalism weakened and dissolved the feudal order, allowing a robust middle class to rise. More efficient agricultural practices brought growth into the static economies that had mostly benefited rentiers and inheritors, gradually lifting small property owners such as the English yeomanry. Commercial growth empowered the innovative, aggressive, risk-taking entrepreneurs. New technology, expanding trade, new ideas, and developing institutions transformed feudal society beyond recognition. Where class privilege remained in place over a shifting base, particularly in France, the Third Estate rose up in a violent assault on the last vestiges of feudalism.1
The entrepreneurs who chipped away at the feudal order did not generally come from the nobility, who in some cases were prohibited or socially discouraged from engaging in commerce.2 Aristocratic elites did sometimes give valuable funding and sponsorship to entrepreneurs, many of whom were from groups that had long been persecuted, including itinerant workers and dissenting Protestants, as well as Jews.3 These commercial risk takers played a major part in creating our modern world, as their technological improvements, opening of trade routes, and building of cities ushered in an era of unprecedented economic growth.4
Liberal capitalism laid the basis for Western economic hegemony. In the year 1000, the gross product of China and of India each easily exceeded that of all western Europe combined, and the same was true of the Islamic empire. China remained ahead of Europe in technology until around 1450, according to Joseph Needham. For example, Chinese junks were the world’s most advanced ships in the thirteenth and fourteenth centuries, spreading the Middle Kingdom’s influence throughout Southeast Asia and beyond. As late as the seventeenth century, India and China were not only more populous than Europe but enjoyed an industrial infrastructure that was equal, at the very least.5
The rise of liberal capitalism first in Europe and then in North America dramatically altered the picture. From 1500 to 1913, Europe’s share of global GDP rose from 17.8 to 33 percent, while China’s share dropped from 25 to 8 percent. By 1913, Western Europe’s per capita GDP was roughly seven times that of China or India, while the per capita GDP of the United States surpassed that of these large and venerable nations by a factor of nine.6 In the later twentieth century, the benefits of liberal capitalism spread to East Asia as well, fueling the success of Japan and South Korea, Taiwan, and Hong Kong.
China Challenges the Liberal Model
The recent ascent of China presents a serious challenge to liberal capitalism as the model for the global future. China’s share of the world’s economic output has grown dramatically, from 4 percent in 1990 to a projected 21 percent in 2022.7 Even if this progress slows due to demographic, environmental, and other factors, Chinese is likely to reshape much of the world’s economic future with its model of state-directed capitalism, or “socialism with Chinese characteristics.”
China’s rise is occurring outside the realm of normative Western capitalist values. Unlike Japan in the late twentieth century, China never accepted the primary lodestars of liberal civilization, such as individual political and property rights. Instead, it has developed an alternative to liberal capitalism, and its principles are not only being inculcated in its own population but also being exported to universities and governments around the world.8
China’s new model of capitalism has profoundly antiliberal aspects, including a distinct sense of social hierarchy, an autocratic central state, an enforced ideology and thought control. Despite a formal adherence to Marxist and Maoist egalitarianism, China today is nurturing a stratified class order, as powerful business elites and their allies in the government construct a system of permanent caste privilege.9 The state employs ever more intrusive technology to impose strict censorship, with few protections of privacy.10 “If the U.S. has long sought to make the world safe for democracy,” suggests one analyst, “China’s leaders crave a world that is safe for authoritarianism.”11
China’s blending of capitalism with authoritarianism is emerging as a persuasive model for economic development. The Chinese model is spreading its influence around East Asia and farther afield, not only in Central Asia but also in South America, parts of Europe, and especially Africa, where there are now an estimated one million Chinese residents. Many people in these countries take inspiration not from the example of New York or London or even Tokyo, but instead from the “Beijing consensus.”12 Most residents of India, the world’s largest democracy, believe that China will replace the United States as the world’s dominant country within twenty years. At the same time, India’s political leadership is adopting illiberal views and policies, including ethnic nationalism, suppression of free speech, and Hindu dogmatism expressed in public policy.13
Back to Stagnation
As China’s power has waxed, the economies in most advanced countries have stagnated. After a period of rapid expansion, economic growth in the large advanced countries, with the occasional exception of the United States, has slowed to a rate no more than half that of a generation ago.14 Gains in productivity in the last decade were barely half those in the previous decade and barely one-fourth