Contrary to popular cultural tropes, America and China today are not caught in the “clash of civilizations”. Rather, as I earlier underscored in Foreign Affairs in July 2021, we’re witnessing a curious form of great power competition: the clash of two Gilded Ages. Both the U.S. and China confront sharp inequality, corruption or capture of state power by economic elites, and persistent financial risks to common people who have no way to indemnify themselves. Both are struggling to reconcile the tensions between capitalism and their respective political systems, albeit with greater intensity in China’s nominally communist system. Both U.S. President Biden and Chinese President Xi have staked their legacy on ending the excesses of capitalism, except under different banners. Whereas Biden pledges to “build back better”, Xi dubs his campaign “common prosperity”.
Robber barons like Stanford publicly championed free-market principles while privately benefiting from state-supplied privileges and protection. And yet, American capitalism boomed for reasons similar to China’s: a particular type of corruption came to dominate the economy. I call it access money, the purchase of privileges by capitalists from those in power. This transactional form of corruption must be distinguished from extractive corruption such as embezzlement, extortion and petty bribery. The latter existed during the early stages of capitalism in both America and China, but they were steadily brought under control through administrative reforms and increased state capacity. Access money, on the other hand, exploded.
Yuen Yuen Ang
Interesting perspective on the similar internal challenges that the US and Chinese societies are facing (among them, a certain breed of ‘new money’ taking over government structures and manipulating them for their own benefits) at a time many stress their overt differences. As some have noted, the ‘winner’ in this East vs. West competition will ultimately be the country who best manages internal struggles and builds up its domestic strength for the long haul. The danger though is that one – or both – of the rivals, failing to properly address internal woes, would conjure up fears of the other power to manufacture a sense of shared threat for the public and keep them distracted, thereby leading to increased economic and possibly military conflicts.
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