Is there a systemic conflict in our days? Or simply a matter of which is going to be the most dominating theory, of the capitalist system itself?

Whoever believes, that we are going through a systemic conflict in our era, is wrong. The systemic conflict is based upon two different types of the same system, and that is capitalism!

The two different types of capitalism that are present in our socioeconomic culture, are the liberal meritocratic capitalism, that we mostly observe in western Europe and North America and the political capitalism that we mostly witness in Asian countries and ofcourse in China. The liberal meritocratic system, concentrates the vast majority of production in the private sector and gives talent the opportunity to rise. On the other hand, political capitalism means that the government is responsible for controlling the mobility of the capital within the state.

But those two different types, are highly intertwined between them. And that happens, because the Western European States together with North America and the Asian countries and specifically China, are well connected through trade, investments, exchange of ideas, movement of people and transfer of technology.

So what is really important to realize, is that the conflict between China and USA, is not pinpointed only in geopolitical terms, but also in their different forms of the same economic system. And it is this rivalry that will define the characteristics of capitalism and how it will evolve as a system in the current century.

In the past half century, China has been by far the most successful country financially...! This is a fact that places this country, in a position to export its political and economic institutions in other countries. The Belt and Road Initiative, is a very good example of this ambitious project, that tends to create links between different continents, through improved Chinese-financed infrastructure. And here we can observe a very important difference between the east and the west, and the way they use to promote their systemic theory of capitalism in other countries. At the time when the West focuses on creating more institutions, China is trying to build more physical things, such as infrastructures. 

Ofcourse that doesn't mean that China will lose ground on the institutional level. China's huge project is to build an international institution such as the Asian Infrastructure Investment Bank, exactly as the US did after World War II, when they created the International Monetary Fund and the World Bank. But there is also one more asset in favor of China, in this game of exporting its own form of capitalism to other countries, and that is the fact that China is not interested in prevailing in the domestic policies of the recipient nations. It pays attention to an equal treatment between countries. This feature, makes China extremely attractive in smaller countries, as the element of threat that those countries might feel through their interaction with the more "imposing on domestic issues" western countries, is not present in this case.

Although China is a state of politcal capitalism, there have been many changes through the years. For example, during 1978, almost all the economic output of the country derived from the public sector. Nowadays, the means of production are mostly in private hands and most workers, became wage laborers. So in the next years, the challenge inside the Chinese system, will be the ability of the state, to put some "barriers" to the constantly growing power of the capitalist class that arouse, and the most remarkable thing of this class, is the fact that four-fifths of its members, had parents who were farmers.

Another extremely remarkable element of this rivalry between the east and the west, is the fact that during 1970, the West produced 56% of the world's economic output, and Asia produced only 19% of it. In our days, West produces 37% of the total economic output and Asia 43%.  These economic figures, only three generations later, led many analysts to describe the world we live in, as a world of less inequality than that of the past, because incomes have grown globally. But what really happened here, is not less inequality. That is a myth. The figures show a huge economic growth globally, compared to previous years, which is translated as less inequalities between the wealth of the countries. But that does not mean, that inside the countries inequalities have diminished. On the contrary, on states' level, the inequalities among different classes widened. The rising share of capital income in total income, means that capital and capitalists are becoming much more important than workers. 

So even when more equality has been brought, in terms of gender and race, in terms of different classes the gap has broadened. It is a very common argument in the Western European states of the liberal meritocratic capitalist system, that the wealthiest people believe that their status, derives from the virtue of their work, thus paying at all no attention, to the fact that they have been profiting from social trends that make economic mobility between different classes even more harder. So in terms of real figures, inequality deepened, as the ruling class which is highly educated, creates think tanks, and invests in political influence, thus determining the rules of inheritance forever.

So  the key question for the future, seems to be whether the liberal meritocratic capitalism will manage to transform into a more equally distributed income between capital and labor, otherwise it will move toward a convergence with political capitalism.

In other words, the rivalry between China and the US, is much more than a commercial conflict, it has the dynamic of shaping the future into something new, that will determine the balance between states, and the balance inside the countries...

                                            written by Themis Panagiotopoulou, PhD in Political Science