Socialist Scholar

It is time to cease the argument regarding Socialism versus Capitalism and begin the movement towards Peace and Prosperity.

10 years ago, I was at Fuji Bank in the New York headquarters of what was then the largest bank in the world, in charge of corporate finance for the leading companies of that time. With support from the governments of Japan and other Asian countries, we were succeeding in the fight against the Asian financial crisis and rescuing troubled companies. However, we faced strong objections from the USA, and were criticized as having departed from the capitalist free economy competition principle. We were called socialists. The USA requested that Japan reduce government expenses and national debt, allowing the free market to eliminate poorly performing enterprises and punish the responsible executives. As a result, many leading world companies declared bankruptcy and numerous employees lost their jobs. Many CEO’s and other executives committed suicide, or were prosecuted and subsequently sentenced.

Now that a financial crisis has swept the USA, the government has taken completely different actions which included taking control of Fannie Mae and Freddie Mac, taking over AIG, along with Washington Mutual and the top three investment banks, and relatively quickly passed the passed the $700 billion bailout plan.

Those actions prompted criticism from academia along with the media, as demonstrated by the following headlines:

Socialism creates a defining moment in American capitalism,
Socialism for Wall Street, Free Market Capitalism for Everybody Else
We’ve Crossed the Line from Capitalism to Socialism
Bush brings socialism to citadel of capitalism
Socialism, Capitalism, the Free-Market and the Future of America
The world crisis of capitalism and the prospects for socialism
From Capitalism to Socialism to ???: Crossing the Line Et cetera…

However, these accusations were utterly disregarded, resulting in absolutely no influence on the government’s decisions.

It is obvious that when it comes down to it, no one is willing to sacrifice his or her current success and own wellbeing to make a statement in the esoteric war against the hundred-year-old definition of socialism.

In 1980s, the new reforms and open policy developed by Deng Xiaoping’s leadership created a new era in China’s history. During this time, I introduced western economics and explained the workings of capitalism to socialist China, and facilitated China’s top decision-making. When I made a speech to Chinese leaders and scholars in Beijing in 1985, I most particularly emphasized, “Do not struggle – regardless of whether a policy is nominally dubbed Socialism or Capitalism, it must be applied in the race for economic development.” There was a round of applause from the audience.

I criticized the fact that Das Kapital, over 100 years old, still served as the main economics textbook at Chinese universities. Our textbooks dismissed Western countries’ scientific macroeconomic theory, consummation, government management mechanism, the macro-control function, and the extremely strict laws and regulations monitoring system, and still focused on market economy, free economy, and other age-old simple models in order to describe contemporary Western economy.

I indicated, “Economy, information, and society change with each new day, and the financial market is developing. As the result, Marxist Economics and Keynes Economics are difficult to relate to in light of the current economy. They can only serve as great historical milestones, not as modern ideas.”

China’s 30 year’s reform/open policy, which disregarded and dismissed arguments of socialism or capitalism and instead kept pace with the times and scientific developments resulted in great economic achievements.

Instead of pointlessly arguing over how socialist or capitalist something is, we need to focus on key economic issues. Specifically, the funding source and usage for the huge bailout plan. Increasing tax or debt is not an easy route. If we don’t have enough funds, the plan will be only a blank check from politicians to voters during this election year. We need to learn from the similar experience Japan faced in resolving the financial crisis ten years ago.

The concept that socialism is disastrous is outdated and obsolete. This time, the financial crisis has awoken Americans, many of whom did not focus on economic issues prior to this unprecedented situation. We need to cease debating about Socialism versus Capitalism and instead concentrate on moving towards a more peaceful country and safer people. We should take heed the wisdom of Deng Xiaoping’s adage: I don’t care if the cat is white or black, as long as it catches mice.

By: Dr. Fengbo Zhang

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