State building key to national prosperity

By By Zhou Wen and Feng Wentao / 01-31-2019 / (Chinese Social Sciences Today)

One of the most notable features of early Chinese history is the emergence of bureaucratic government—that is, of a government of salaried functionaries with distinct roles and privileges who occupy their offices. Photo: FILE


Prior to the great geographical discoveries in the late 15th century, the gap between the world’s rich and poor was not as large. The current wealth gap between countries and regions actually began with the formation of the world market, intensified by the rise of the industrial revolution, and finally settled in the mid- and late 20th century.

In the process of industrialization, the hand of government intervention has played an indispensible role. Thus, we must emphasize the importance of effective state building in order to resolve problems that occur in industrialization and to promote national development.


Concept and terminology
The concept of state building originated from political studies. In 2008, the UK Department for International Development issued a working paper titled “States in Development: Understanding State-building,” defining state building as “the process through which states enhance their ability to function.”

Some domestic scholars, when discussing the reform of the national system and the construction of the modern state, defined state building as the constant adjustment of the state machinery to adapt to the modern socioeconomic life, so as to effectively achieve the national goals and make the national system sustainable.

From a political economy perspective, state building is part of the political superstructure, and the ultimate goal of political progress is to serve economic development. This requires the basic direction of political development to be consistent with that of economic development. Political development will at best form a virtuous circle with economic development, in which politics and the economy promote each other and press ahead together.
This perspective also holds that effective state building is a process

of adapting to the requirements of economic development while perfecting state functions, governance and regulation and while leading development and innovation. That said, state building should adapt to the new environment and conditions, reform the old system that cannot keep up with the practice, and construct a new system that meets the needs of the times. At the same time, it is necessary to constantly strengthen the national governance capacity and improve the efficiency of systems.


Reasons behind national decline
As part of the political superstructure, the effectiveness of state building is closely related to the rise and fall of a country’s national strength, and a significant indicator of national strength is the level of economic development.

For a long time, only less than 20 percent of the world’s population has been living in a small number of developed economies, whereas 80 percent of the population has been living in developing countries, among which only a few have achieved rapid development and the majority have struggled with the middle-income trap, economic stagnation or even having not yet seen any overall economic growth and being stuck in poverty.

In recent years, due to the aftermath of the global economic crisis, most of the Western developed countries have also been troubled by economic stagnation and domestic political turmoil. This paper intends to analyze the underlying reason from the angle of state building.
To start with, the governance crisis of Western countries lies in the stagnation or even retrogression of state building. The destructive power of the financial crisis in 2008 was not limited to the economic level; it further triggered a governance crisis in Western countries and caused social unrest. The crisis has highlighted the insufficient national governance ability of Western countries.

In the early days, the British Empire actively explored and innovated with its system. With its strong national capacity, it took the lead in completing the transformation of capitalist production and then started the industrial revolution. In other words, Britain, who managed state building better at that time, took the lead in achieving the leap of national strength when its original accumulation lagged behind the countries competing with it.

Similarly, after the Great Depression in 1929, Keynesianism advocated for government intervention in the economy, which enhanced the state building in countries where laissez-faire capitalism prevailed. With the aid of such ideology, after World War II, the West experienced a 20-year golden period of economic growth.

However, since the 1980s, the rise of neoliberalism in the Western world replaced the Keynesianism in the economic field and then in the spectrum of politics and ideology. The opposition to government intervention and the advocation of liberalization and deregulation took a toll on Western countries’ state-building progress and caused more damage than the laissez-faire ideology.

The most direct manifestations are a stagnant economy, a widening wealth gap, growing domestic conflicts and social problems. Because these problems have not been effectively addressed for a long time, national governance crises have ensued, and the root cause is the retrogression of the state-building process spurred by neoliberal thought.

Second, middle-income countries fall into the income trap because their state building is not built on their own economic base. A comparative study would show that those countries who have fallen into the middle-income trap and those who had accepted the Washington Consensus overlap.

What these nations have in common is that they have borrowed state building experience from the West and found it incompatible to their national conditions. The mismatch between the foreign-born political superstructure and the local economic foundation has a negative impact on economic development, especially when the contradiction between the two is aggravated to a certain extent. This negative effect can even halt economic development altogether.

The Western-style political and economic system transplanted from the Washington Consensus emphasizes privatization, marketization and liberalization as well as the restriction of government power and the reduction of market regulation.

Under such a system, the state building ability of developing countries is greatly weakened. The weak government is unable to promote reform to meet the needs of domestic economic development, so the contradiction between the foreign-born political superstructure and the domestic economic base is hard to remedy, leaving economic growth at a standstill.

Third, poor countries’ inability to develop their economies is due to their inadequate levels of institutional development. Poor countries do not need a do-it-all state, but they do need a strong and effective one.

However, poor developing countries, influenced by mainstream economics, generally limit the boundaries of government capacity at home and try to leave state affairs to the free market or civil society. Less developed countries almost all have soft governments at home. But free markets and civil societies do not just form spontaneously in such an environment.


Rise of China
In China’s modern history, the West forcefully opened the gates of China with guns and cannons manufactured in industrialized factories. At root, from the perspective of state building, the failure of China cannot be attributed to the defeat of the material production ability of an agricultural society by that of the industrialized countries. Rather, it was indeed the incompetence of Chinese national governance at that time.

Since Emperor Qin Shi Huang united China in 221 BCE, he abolished the old system of enfeoffment (feudalism) and established a new system of administrative districts throughout the country to consolidate his rule.

Emperor Qin Shi Huang divided the empire into 36 Jun (prefectures), under each of which were a number of Xian (counties). Under each county, were a number of Xiang (towns), under each town were a number of Ting, and under such Ting were 10 Li, the smallest rural administrative units. Such a centralized imperial system was more advanced than the ruling of Western countries at that time.

In the Sui and Tang dynasties, the imperial examination system was adopted, through which officials and talent could be chosen to contribute to the state governance, ushering in an era in history when the Chinese economy was ahead of the West for more than 1,000 years.
In this sense, China was the first society to create a rational meritocratic bureaucracy by implementing civil service examinations and appointing outside governors without local tribal ties. This led to a strong and cohesive state.

Historical legacy, cultural tradition, and the experience of socioeconomic development provide valuable lessons for the new China. With the progress of the society, on the basis of historical experience, China has established an efficient national governance system.

Therefore, in less than 70 years after the founding of the People’s Republic of China, the country was able to catch up with the times, leapfrog the industrialization achievements that the West took 250–300 years to complete, and rise again from decline. This great historical event makes China the world’s only nation to have savored the taste of glory in ancient times, to have experienced humiliation in modern times and to have risen up again in the new era.


Zhou Wen and Feng Wentao are from the Institute of Marxism Studies a t Fudan University.

(edited by YANG XUE)