STEVE JOBS AND XI JINPING

WHAT DO THEY HAVE IN COMMON? MORE THAN YOU MIGHT EXPECT

 

What could Xi Jinping and Steve Jobs have in common? To liken them is surely a stretch?

Maybe not. It’s not just the personal psychologies of two alpha males driven to tightly control all aspects of their mighty enterprises. There are plenty of men who are control freaks, few of whom achieve total command of anything as big.

What these two do share is an extraordinary will to conquer all obstacles, to create new realities, invent new human needs and then establish elaborate processes for meeting needs people didn’t know they had.

Steve Jobs was famous, for as long as he lived, for creating realities, not only getting away with behaviour that in others would be deemed reprehensible or even criminal, but making it a virtue. Only after his death has it become apparent that he would stop at nothing in his quest for a machine that met needs others hadn’t even imagined. Only now is it coming to light that he struck collusive deals with competitors to avoid hiring each other’s staff,  creating an “orderly” labour market in which skilled employees lost their bargaining power. What seemed at the time to be light-bending magic now turns out to be obsessive ruthlessness. http://www.scribd.com/doc/201651711/October-24-2013-Class-Cert-Order 

Xi Jinping has likewise made a seamless whole out of a mess of contradictions, and now offers his customers –the Chinese people- an exemplary model of all that is modern, advanced, civilised, and successful, the fulfilment of the China Dream. He has concentrated power in his hands personally, in order to revitalise a flagging brand, rooting out endemic corruption with a relentlessness that has surprised everyone. At the same time he has persecuted and gaoled competitors, community activists and lawyers, writers and intellectuals who had exposed corruption and rot it causes. Xi Jinping has made it clear that the only corruption that will be exposed and stopped is the corruption he and his inner party attack dogs expose.

Like a new CEO helming a failing corporate conglomerate, he wields the razor in his purge of the boyars, the fiefs and chiefs whose rackets had been untouchable. His weapon in doing so has nothing to do with the law; the courts and the law are at best an afterthought, after his own inner-party Discipline Inspection troops have detained, interrogated and obtained confessions from their targets and those who surrounded them.

The world now looks on, and marvels, as is did for Steve Jobs when Apple could do no wrong, as Xi Jinping cuts away at those who could have stood in the way of his ultimate goal of re-legitimating the Chinese Communist Party by major economic reform. Like Ivan the Awesome (or Terrible as the English say) in a Russia emerging from its Mongol servitude, the enemies close to you are the worst, and first to be purged. Ivan slaughtered the nobility and Xi is on the heels of the new nobility, the princelings of red chip stock who control the huge state owned enterprises (SOEs) that dominate the economy, monopolise the capital market, rely on subsidies, distort prices and exclude competition.

Xi Jinping, like Steve Jobs, is a master of creative destruction, of the core dynamic of capitalism that must destroy as well as create in order to be ready to catch the next great wave. Xi fully understands that China’s basic business model has reached its use-by date. China no longer has an endless supply of cheap labour as its outstanding comparative advantage. Nor can China for much longer finance extraordinary rates of growth by massive capital expenditure on infrastructure by a state that  favours its’ own, the big crony SOEs bulked up by fiat as China’s national champions. That is financed by borrowing from future generations, through the bond market.

Xi understands that China’s global reach for raw materials, and markets for the manufactures of the world’s factory, also means greater scrutiny. Some of the deals that enabled China to not only source oil and other energy supplies but also to own oil fields, for example off the Angola coast, are now being exposed as collaborations between China’s intelligence agencies and its biggest SOEs.[1] Many more such revelations seem likely.

Xi Jinping and Steve Jobs both understood that the time to prepare for the future is now, especially in good times when there are plenty of cash reserves to draw on, rather than wait for the crisis, because then it is too late. China is now post-revolutionary, post-communist and, with the looming curtailment of SOE power, China will become post-socialist; at a time when Xi Jinping has simultaneously revitalised Marxism as a compulsory learning for party cadres, and is purging the Chinese Academy of Social Sciences to ensure strict adherence to Marxist orthodoxy. Only a clear head and strong will can keep this together.

We are witnessing the construction of a new reality. In Chinese, the communist party is literally the public ownership party, and now the party, to preserve its institutionalised power, proposes loosening that direct ownership of the SOE means of production, so private enterprise can dominate. Seldom has a ruling party, deeply entrenched at all levels in power, been so able to renew itself after six decades in power, and maintain its ability to set the dominant discourse. This requires a helmsman who sees beyond the horizon.

Steve Jobs was close to fanatical about Apple, as a corporation, and persuaded investors to stay on for the ride, even when it seemed the company was going nowhere. A major source of his success was his full embrace of outsourcing the actual work of construction of Apple devices to China, to underpaid, overworked staff in rigidly disciplined factory towns wrapped in secrecy. That too has since unravelled. In hindsight, it seems extraordinary that one man could have held together such a global enterprise for so long.

Renewing the legitimacy and thus the power of the Chinese Communist Party is even more extraordinary. Jim O’Neill, former chairman of Goldman Sachs, says “the Chinese Communist Party is essentially the biggest business organisation in the world.”[2] Oddly, that is seldom said outside China, even though the deep mistrust of most Chinese towards the CCP is due to more than endemic corruption, it is a result of the uniquely Chines effusion of enterprise ownership and control. Almost everyone in China knows that effective control of an enterprise is, if anything, more important than legal ownership, and control is in the hands of the party elite.

If the CCP is to remain the world’s biggest business, it must rid itself of the rent seekers whose control is grounded in their negative regulatory power to refuse necessary permits. If China, as a business, is to thrive despite rising incomes, economic slowdown and the “middle-income trap”, the fiefdoms much be rooted out, the enervating licence raj liquidated, and China Inc. must become a lot more like Apple. China must be able to foresee the next big thing, the newest disruptive technology that changes the game, and dominate it. China’s central planners, of whom there are still many, may struggle to discipline a wildly oversupplied steel production industry, but they do have their eyes on the new markets a rising China Inc. can dominate, such as solar panels, nanotech and the dozens of new industries named by the central planners as China’s best chance of staying ahead.

So the current purge of corrupt bosses is not about getting the party out of business, or standing back with a lighter neoliberal governance touch, it is about renewing the party as the greatest business conglomerate of all time. The party will continue to control and profit from what it technically does not own, no longer through franchised rent seeking, but through the more sophisticated and up to date processes of contemporary neoliberal capitalism worldwide. The party will thus remain at the heart of the state it controls, at every level, while giving rein to entrepreneurs able to catch the next disruptive wave, thus ensuring China’s growth and stability. The party-state will not only survive but thrive. The rent seeking of the present phase of primitive accumulation will give way, if Xi Jinping succeeds, to a knowledge economy, intellectual property licencing fees and mass entertainment, as China prospers. The society of the spectacle is arising, and Tibet, as China’s most exotic domestic destination, plays a major part. Tibet is available for consumption, and China’s urban masses are responding, as tourism teaches them how to be a self-made, consuming individual.

If Xi Jinping succeeds, he will be more successful than Steve Jobs, whose reputation and corporation suffered quickly after his death, in part because China found Apple a tempting target to pressure.

But Xi Jinping’s immediate task, before he can move on to making private enterprise, with Chinese characteristics, the dominant driver of the economy, is to clean out the corrupt tigers and flies. Not surprisingly, his team of investigators, the party’s Central Commission for Discipline Inspection are focussing intensely on mining and resource extraction, which have been major opportunities for bribery.

As author of the only book on China’s mining company practices in remote areas, I never imagined the crooked deals would come to light. When my book, Spoiling Tibet: China and Resource Nationalism on the Roof of the World, (Zed Books, London) was published 10 months ago, in October 2013, the dodgy deals were clear, but getting no publicity. The book exposes, for example, how a state owned mining company got China’s central government to shift the mapped boundaries of the primary source, in Tibet, of the Yellow River, to enable it to get at the copper and gold beneath.

Now, less than a year later, story after story of resource extraction, and metals trading, as major opportunities for illicit profiteering pour out of China’s official media, as Xi Jinping proves he is serious about rebuilding the CCP brand.

 

Gabriel Lafitte

 

 

 

[1] http://www.ft.com/cms/s/2/308a133a-1db8-11e4-b927-00144feabdc0.html#ixzz39wZtgSdm

[2] books.google.com.au/books?isbn=1780769105

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