Communitarian Capitalism and the Social Market Economy: An Application to China

Abstract

The 1990s saw a worldwide interest in comparative business systems and the different types of capitalism. The Asian financial crisis of 1997–99, the transition economies of Eastern Europe, as well as the emerging and developing economies in South America and Africa all raised issue of successful business systems in the twenty-first century. The economic success of the United States in the mid-1990s created for several years the idea that the capitalism or business system of the United States was ideal, and that globalization was equal to Americanization. However, the stockmarket and technology crash of 2001, and the subsequent corporate scandals such as Enron, Andersen, WorldCom, Global Crossing and Tyco, all showed that no single business system is perfect in the twenty-first century. What was also underestimated in the 1990s was the phenomenal emergence of China, its global economic influence, as well as it business system. In the twenty-first century, China’s business and economic influence throughout the world has become self-evident for all countries. In 2004, China became the world’s largest recipient of foreign direct investment of $65 billion dollars and this complements an economic growth rate approaching 10 per cent per year for the last 25 years. China has advocated a ‘social market economy’ as their business system.