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The gyroscope-like economy (Part II)

Published 27 May 2020 / By Biao Xiang

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Introduction

This blog is part of the COMPAS Coronavirus and Mobility Forum.

Read The gyroscope-like economy (Part I) here.

Economic function always relies on circulation to some degree, but our current system is particularly dependent on ever-accelerating movements. This is because it is structurally unbalanced. A common syndrome of the imbalance is the widening gap between the returns to capital and rewards to labour. The concentration of profit amongst top earners and platform technology corporations, accompanied by the increasing precariousness among employees, is a clear indicator of this.

In China, such imbalance is also seen in the rural-urban divide, the surplus production capacity, over-investments in fixed assets, and non-performing debts of state banks. If structurally unbalanced, the economy cannot stand on its own feet and must be in frantic circulation to sustain itself, as well as prolonging problems into the future. Otherwise, there will be debts defected, investments wasted, wages unpaid, and livelihoods crushed. And perhaps most importantly, deep contradictions could surface, leading to social tension.

Think of the global economy like a gyroscope. A gyroscope cannot stand balanced unless spun fast. This image forms a sharp contrast to the model of “high-level equilibrium trap” proposed by Mark Elvin (1973). Elvin attempts to explain why imperial China failed to industrialise despite its early achievements in rural economy, science and governance. His explanation is that the steady growth of population ate up rural outputs from the 17th century when new frontier land was exhausted. This prevented China from accumulating surplus into industrial capital. The large population, or the widely available cheap labour, disincentivised technical innovations. This high level of equilibrium resulted in a static trap.

The gyroscope-like economy represents an opposite type of trap. Highly dynamic and driven by capital’s feverish pursuit of surplus maximisation, the economy has no stable equilibrium to be based on. Disequilibrium does encourage technological innovation and capital mobility to sectors with the highest returns, but it is far from clear whether these innovations—such as replacing local grocers with online shops—would improve human well-being and bring long-term stability. Unable to stop, the gyroscope economy is trapped in endless mobility.

Solving, or dissolving, social contradictions?

What will the post-pandemic economy look like?

The Politburo of the Communist Party of China (CPC), in an effort to gradually reopen the economy even before the pandemic was completely under control, stressed on 21 February that the most urgent task is to “ensure full access to transport and smooth functioning of road systems.” Transportation was identified as the “vanguard” in the recovery as it would open the “arteries” and promote “microcirculation.” The same Politburo meeting highlighted the importance of “maintaining the stability of global supply chains.” In China, this is an entirely new official term, which was reiterated by the Politburo Standing Committee on 4 March. Mobility has almost become a security concern—not only because mobility may raise security threats, but, more importantly, because continuous circulations must be protected.

Many of us hope that there will be more social protection (e.g. universal basic income schemes) and less casualisation (e.g. formalisation of the gig economy), that recognises the vital social value of platform workers as evidenced throughout the lockdown. But developments on the ground look less promising. Amazon and Alibaba are growing with each passing day. Casualisation could, in fact, become more prevalent during times of mass unemployment. And as we know, forcing the unemployed into casual work and pushing them to move even more constantly has always been a way to dissolve — not solve — social problems.

After this is over, the gyroscope may spin ever faster.

An earlier version of this article titled “Hostages of Mobility” appeared in Pandemic Discourses, a blog co-published by the India China Institute and the Julien J. Studley Graduate Programs in International Affairs at The New School for Social Research.

References

Elvin, Mark.1973. The Pattern of the Chinese Past. Stanford University Press.