Is Decentralization China's Secret Sauce?

Doug Guthrie, dean of The George Washington University School of Business, argues that decentralization is key to China's economic reform. "The core feature of capitalism is not private property, the core feature of capitalism is competition," says Guthrie. He explains how decentralization has stirred economic competition within China.

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Summary
Module 1: Perspectives on Disruption: China's Emergent Luxury Market

DOUG GUTHRIE | Dean, The George Washington University School of Business
"Opportunity in Perspective: Approaching China"

An expert in the fields of management, economic reform in China leadership, and corporate governance, Doug is the Dean of The George Washington University School of Business.

Previously, he served as Professor of Management at NYU Stern School of Business. He also held a joint appointment as Professor of Sociology at NYU's College of Arts and Sciences. Doug has been a trusted adviser of both multinationals and local Chinese companies and a student of China for some 25 years. He is the author of Dragon in a Three-Piece Suit: The Emergence of Capitalism in China, China and Globalization: The Social, Economic and Political Transformation of Chinese Society, and Social Connections in China: Institutions, Culture, and the Changing Nature of Guanxi. He is currently writing China's Radical Transformation: Economic Reform, Global Integration, and Political Change in the World's Largest Nation, which is an in-depth look at how China's government-driven form of capitalism has successfully overcome traditional theories of development and helped China become the economic and political juggernaut it is today.

In addition to NYU Stern, Doug has also taught at Harvard Business School, INSEAD, and the graduate schools of business at Stanford University, Columbia University, and Emory University. He received his B.A. in Chinese Literature from the University of Chicago and a Ph.D. in Organizational Sociology from the UC Berkeley.

[KaitainCPS]

@milesbennettdyson
Although it can be argued that the computer industry was built in part on a foundation that includes state funding for university research (certainly in the UK, a major contributor to CS), especially in abstract fields such as mathematics. Plus, of course, providing other infrastructure, laws, intellectual property rights, limited liability (essentially free insurance for entrepreneurs) etc. So the free market still relies on a solid grid provided by the state.

[MiranUT]

@GtheMVP - As long as you are paying property taxes to the state, you don't have private property. But I agree with your second statement.

[jrm]

No. China's 'secret sauce' is currency manipulation, mercantilism and protectionism. Not to mention a complete disregard for intellectual property. It's not 'decentralization'.

[ddnguyen]

@pulsatingremedy That's your opinion and a rather blanket statement. There are plenty of socialist countries with capitalist markets, heck there is even a "Communist" society with a capitalistic market. Capitalism isn't the same all over the world. Capitalism is at it's core just free flow of capital and competition, but societies have adapted it for their needs. It is not an end into itself. All forms of government / markets concentrate power and abuse of power is not fundamental to capitalism

[kateydog]

@shmiggen

No, our Golden Age began after the Constitutional Convention and ended in 1913 with the creation of the FED, income tax, and the IRS.

[GtheMVP]

@GtheMVP btw, priv property is essential too, we can't let some central body relocated us anytime they deem fit.

Priv property, free trade and the non aggression principle should be at the center of any civilized nation.

[drshlotzkin]

@RegioLunar
You should get a clue... They only created those because they knew the government would bail them out... No sane bank would make risky bets like that if they actually had to account for it. Talk about a clueless comment!

[TylerThrashPeace]

@natritious1 Laissez-faire capitalism, isnt like a plant in its true nature. Its a system of business that isnt told what to do when its telling others what to do. Capitalism is a system of business and production where one man or possibly a small group, dictate what the workers are to work on. Thats not true human nature, nor nature itself. We have the laws of nature but that could be considered the laws of the land or regulations. Without that we could have slavery and many horrible things.

[WorldClimb]

@natritious1 "VERY LOW TAXES?" I believe if you earned more than 2M in 1950 you were taxed 90%. When was Americas heyday in your opinion?

[ddnguyen]

@pulsatingremedy I agree but some "Capitalism" is better than others as shown and IMO Crony Capitalism is one of the worse forms. There are well regulated markets which are highly competitive, which don't suffer from rampant corruption. That's the non-crony kind.

[MrGreeneggsnham]

@pulsatingremedy That's right because lifting masses of poor people out of extreme poverty for the first time in world history = bad.

[TylerThrashPeace]

@pulsatingremedy Well thank you. I hope i do too.