Jack Ma & China's Capitalist "Regulatory" Regime

There are several ways of looking at the mighty hiccup just suffered by the might Jack Ma’s corporate empire as the Chinese authorities thwart the epic IPO he had scheduled for Ant Financial Services.

1.  One in the eye for Chinese dreams of FinTech domination

Not really.  Theirs is a specialist domestic financial sector, and it doesn’t depend on Ant, or Ma’s other corporate vehicles having free rein.  Word is, the authorities are toying with transition 100% to a virtual currency.  Now that’s the big development to be watching for.  (Can it be done?  Much like Xi’s Social Credit dream: easy to conjure up over a beer, and to recognise the advantages that would accrue to the CCP – if they could make them happen.  The practical difficulties, however, are legion, and they advantages almost certainly not what they think.  Law of Unintended Consequences looms very large.)

2.  See, the Chinese can’t do Due Process

Errr, I think we knew that.  The CCP is quite explicit: it recognises no high authority, in this world or the next.   So (a) there will always be a lot of business China will never get, for this very reason.  

Then again (b) neither can several other countries do Anglo-style Due Process, e.g. Germany! – as we’ve discussed here before.  HOWEVER, no end of western companies “who should know better” kow-tow for Chinese business like there’s no tomorrow (and I chose that simile with precision).  Marxists always scoff at this: the capitalists will sell us the rope with which we will string them up!  Haha.  Yeah, always gets a laugh.

3.  So it’s just like Russia, then?

Sort-of, but slicker.  Yes, after a few nervous years in office, Putin got to the point where his terms for the oligarchs were – remember, мои друзья, you cannot overstep the mark I lay down.  The CCP built the whole of its capitalist regime – or rather, stood back and watched its capitalist regime develop spontaneously under the freedoms they rather prudently granted – on the same clear understanding from the very start.  Mr Ma may have been wondering whether he might just be big enough to think otherwise; but … 

4.  At least no blood was spilled

Now we’re getting closer.  How much more civilised, how virtual (virtuous?) to put a spoke in the wheel of an IPO, than to put a bullet in the back of the head.  (But we do know that’s in the toolkit too.) 

5.  OK, but not a proper capitalist regime at all

Can’t agree.  Capitalism is the human economic activity that thrives whenever and wherever there is space for the ordinary person to profit personally from their own ideas and keep enough of the proceeds to represent personal capital.  No implication whatsoever of unlimited licence.  Works best with Due Process, but works pretty well in less ‘formal’ frameworks, too.  As the Chinese have proved magnificently over the past 30 years.

6.  Any lessons for us?

Not really; because in both the paradigm economies of the Anglo capitalist model (US and UK), private businesses ultimately operate under the possibility of direct governmental intervention, often with very little resemblance to Due Process.  A brief engagement with the history of the nuclear power sector since it was supposedly ‘privatised’ will leave you in no doubt on that one: and very many more examples could be adduced.

Oh, and many folk heartily wish our government would also intervene against Due Process earlier and more often.  When it suits them, naturally …

ND