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May 29, 2014



// US is gearing towards robotics, no need of cheap labor force

1. China is no longer cheap labor force. Cheap labor is India etc.

2. Robotics would need no labor force at all, neither cheap, neither expensive.

// bolsheviks and the SR were enemies

Chairman of the Petrograd Military Revolutionary Committee, that is formal head of October Revolution, was (leftwing) SR Lazimir. So, SR and Bolsheviks were very close allies in 1917

// the Communists purged the SR mercilessly after the October revolution //

Nope, given circumstances (civil war, SR coup attempt etc) Bolsheviks theatment of SR was exeptionally mild. Reason: they all knew history of French Revolution very well, it was their major cookbook and example kept in mind.

Look at SR Konratiev as example. Appointing a head of Institute, where he writes his major works, isn't really that harsh treatment.

"Communist" is too vague a category. Mensheviks, and many others, also were 'communists' at that time. And Kondratiev was a Marxist economist.

When Stalin's purges began, it could neither be called "communist purged SR", nor "Bolsheviks purged SR", since it were Bolsheviks themselves, who suffered most from Stalin's purges.

// SR were vastly more popular than the bolsheviks

Bolsheviks were popular in cities, since they were industrial workers ('proletariat') party. Leftwing SR were popular in rural areas. As peasants were majority of Russian population at the time, Bolsheviks declared 'proletarian dictatorship', that is, a power of a minority (workers, urban population) over majority (peasants, rural population). Right before Civil War started, it was set in 1918 constitution, that one vote of a worker is equivalent to five votes of peasants. Given about 20% of workers populace, it was 50:50 deal among Bolsheviks and Left-Wing SR. But capitalist parties, whose support at he time was stable nil, has no hopes in elections of any kind, and so they allied with the West and started Civil War.

Rightwing SR has no serious popular support, as Civil War has shown. They tried to be a third force in the war, with little success.

Leftwing SR were popular around 1917-19. But Stalin's purges began much, much later, when SR popularity was already ancient history.


// it is hard to believe that a planned economy will be more efficient than a free market economy //

India had free market economy, and China had not. Why then, it is China who is new world power, and not India?



It is a common pitfall to think that what applies to individuals is relevant in the same way to states. This is not so.

Case in point, linking with Tomi's post: during WWII, the UK ended up massively indebted to the USA. Did it provide leverage to the UK against the USA? Nope. On the contrary. The UK had to give up its gold and its patents (ASDIC, Radar, atomic technology, etc) to the USA.

China will "foreclose" when the USA will be in a comparable dire need of more financing, or some crucial manufacturing products (that it no longer manufactures), or, who knows, the support of a 100'000'000 strong army against an unforeseen global enemy.


// China will have 50 years now (maybe 55) until the next global hegemony power steps in. Who will that be? //

Nobody will be. Kondratiev's conjunctures are for growing capitalist economies. Each next capitalist economy center (CC, for short) is substantially larger than previous one. This (larger size) is a CONDITION AND REASON for a transfer of economic power.

UK was roughly 50mil populace, with controlled markets, mostly european, of about half-billion, 8-10 times of UK population.

USA was roughly 300mil, which is about 6 times bigger than UK, with half of the world (about 2-3 bn) controlled markets

China is 1+ bn. It would need whole world (7 bn or so) as its market space.

There's could be no next China, as there is no country of about 5 bn population with about 40 bn of markets.

Even usa-china transfer could be too huge a transfer to happen.

These are statements of a modified theory (compared to one that tomi explained), where several CC could exist at the same time.

So, there were no germany-uk transfer, according to this modified theory. Germany, as well as Japan, and also USSR from 1917 (not Russia), were these alternative CCs, this solving the confuse with different CC lines.

France never has been a CC, it was always a sub of UK. CC is an ecosystem, that is, CC is producing product and mostly all of its parts. France never achieved anything close to this.

When there's a lot of free place, CCs may either appear from nothing (Japan, Germany, Soviet bloc), or as a transfer from former CC (UK-USA). Or they could be consumed by a bigger rival, like Japan, Germany ad USSR were, which usually takes a form of war (WW2 and WW1 were such wars, where Japan and Germany disappeared). In the case of transfer, new CC should be substantially larger than old one.

New CC to appear from nothing should be about the same size as existing ones, to compete. Japan and Germany were alternative CCs to UK. They appeared due to proper 'protectionist' market regulations in 19th century

Soviet bloc, appeared in 1917, was an Boloshevik's feat (helped by bright minds like Kondratiev) to build artificaly, in a planned way. It competed with UK-USA, which made a bi-polar world.

These will be no more alternative CCs, since the current single CC (defined as ongoing USA-China transfer) is just too big for anyone to compete with it.

Chinese going to India, Africa etc, is not 'Go game' tactic. They just really need it, all these places.

USA, a previous and smaller guy, had no needs in India Africa etc., it was happy with control over EU, latin america and such. The only thing USA needed, is to block Soviet growth there, these wars in Vietnam, Korea etc. To keep the comparable size, but still a smaller and weaker rival (USSR) from growth.

However, China, given its size, needs to develop these markets, they need them just to go on.

That's why this chinese 'go'-looking strategy.

eduardo m

Nice post, Tomi.

However, you are missing some major barriers that China faces in becoming the next superpower.

--it lacks a government that is well-supported by the population. When an economic downturn happens, it is likely to be deeply rocked by mass unrest, as has happened many times in China's past.

--the finance system is deeply dysfunctional, with countless billions in bad loans and immense over-investment in real estate.

--thanks to the one-child policy, China faces a deep demographic crisis in the coming decades, with the labor force shrinking and the retired population skyrocketing

--continuing growth would require far more in energy and other natural resources than the globe can supply

--enormous ecological damage that impacts on the health of the population

--poor health, sanitation, and a lack of enforced regulations, and enormous corruption. Its so bad a large portion of millionaires leave and take up residence in the US or other western countries.

The problem is that China has grown explosively without first getting its political and societal fundamentals in order. It is entirely possible it will stall out and even go into decline starting in another decade or two.



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"The fact that violations of IPR are widespread in China just mirrors what took place in the USA and Europe in the 19th century at the height of the first industrial revolution."

Indeed. The Dutch example was especially clear. But even today it is obvious.

Every US politician or civil servant will stress at every opportunity tha patents exist to "Protect AMERICAN innovation".

Patents most definitely do NOT exist to protect non-American (i.e. non-USA) innovation. The same holds more or less in the EU.


China always - except last two centuries - dominated "all its known world" - but via commence not military power.
Of course they used military power but for keeping trading ways open...

Their society is not individual, goals are set by the leaders and passing decades does not really count. See 'rare-earth metals' storiy:

So, things are just going back to 'normal' from their point of view... :-)


@Tomi: any comment on this:

Let's see how it goes...

It either proves B95 - there is no (sw development) life outside of SV :-) - or give us some hope he is wrong on it... :-)

Kirsi Kommonen

Thank you, Tomi, for the big awakening... haha.

As long as the actual message in Tomi's post is not heard because people are too busy trying to come up with excuses and explanations for why this development should not be true, we are wasting time...

Believe it or not, the Chinese will buy and copy all knowledge they have not already got, branding expertise included. If Western brands and businesses are not willing to get away from their comfort zone and learn the ropes on the Chinese market, tough luck. Then they will either fight the same fight on their home soil and loose (even more embarrassing) or end up being bought up by Chinese capital. The only way to continue to be competitive in the long run is to be competitive against the Chinese.

On top of our children learning Chinese at school, they will learn the Chinese management and competitive strategies such as the Art of War at business school. And what do you know, the Chinese have believed that there is a 60 year cycle with everything in the world... or maybe 55, haha.



You are simply just missing the point. While China is succeeding now, they simply can't continue dominating in the future because there are even more powerful countries. Countries like India. While China is actually destroying the future of the nation with the one child policy, India is not doing such thing.

It's inevitable that counties like India will dominate in the future. India has no aging industrial infrastructure they need to maintain. India can simply build a new modern one with a fraction of the cost China needs for maintaining the current aging industrial infrastructure.



"circa 1820, China's GDP was about 10 times LARGER than US GDP."

Perhaps true, but not terribly relevant. The USA was a country in the making, not very populated (actually, in the process of replacing the native population by an immigrant one), nor as intensely industrialized as the UK, for instance.

The real comparison is with Europe. I never saw complete figures for 1820, but during the whole 18th century, the two worldwide largest (by far) economies were China and India, with neighboring regions (like Siam or Ceylon) more prosperous and economically active (as measured by international trade, for instance) than many comparable European countries.

Current trends are indeed a return to the normal.

"just like the EU is a larger economy than the US, it punches way below their weight [...]"

And it will continue to do so, since the EU, despite the unified market and many common regulations, has neither a unified economy, nor a single culture, nor a common finance system, nor an integrated military.

"China, will be even further condemned to punch way below its weight internationally.*

And 50 years ago, it was "condemned" to remain a closed, overpopulated country mired in privations and underdevelopment. Chinese are actors of history, not subjects "condemned" to socio-economic iron laws promulgated by Western pundits.

"There is no global rush to watch Chinese programs around the world, no lines forming for the introduction of Chinese products"

As Tomi pointed out, historically one is generally beholden to the previously dominant originator of cultural production, which continues to enjoy its reputation, while the new entrant takes over and is being often initially considered as inferior.

There might not be line of fans to buy Xiaomi phones in the West, but it will not last long till the vast majority of mobile phones are designed and manufactured in China. It is already the case with PC, for instance. And again: in Western countries we are naturally oblivious to economic and cultural trends taking place in regions and amongst populations in which we are not interested (e.g. central or southeastern Asia, Africa, or Latin America). You will find plenty of Chinese cars in those regions, for instance. Chinese martial arts movies and Chinese eateries are popular all over the world as well.

I suspect many surprises are in store. I also agree with multipolarity and continued Japanese decline.

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