Note: Look out for TOC’s first media release at 3pm today, Wednesday, August 27.
Tan Kin Lian / Columnist
The concept of “One Country, Two Systems” was created by Deng Xiaoping to accommodate the absorption of capitalist Hong Kong into communist China on the return of the territory to China in 1997.
This concept worked quite well, judging by the social and economic progress of Hong Kong over the past decade. The social and economic life of the territory progressed and offered a high quality of life to its people.
China has also boomed during the past decide. The concept of a capitalist and free-market economy was applied in many urban areas. China fitted well into the global economy and benefited from the inflow of foreign capital and investments.
A large segment of the population of China continues to enjoy the relative security and low cost of living under socialism. Although prices of the basic essentials have to be adjusted to reflect global prices, there is some measure of protection against the worst effects.
Can this concept work in other countries?
I believe that the concept of two systems, i.e. capitalism and socialism, in co-existence can apply to other countries too. Actually, this is already in existence in the form of a public and a private sector in many countries. It also fits into the needs of the population, as I shall explain below.
In any country, there are two groups of people. The first group prefers the excitement and rewards of the free-market capitalist system. The second group prefers a more stable and secure life, and to be protected from the uncertainties of the market economy.
The second group, which comprises the lower and middle segments, forms the majority of the population. They prefer to work in the public sector and in large companies. They are willing to work hard in return for a fair wage that is sufficient to sustain a reasonable standard of living and have some savings for the future. They do not like the uncertainty of the free market and do not wish to make many difficult decisions in their lives, for example, on how to invest their money or manage their wealth, issues on which they are not equipped to handle.
A mixed economic system offers more choices that meets the needs of both groups of people.
Competition
The free-market capitalist system, which is now favored in many countries, has several serious drawbacks which are not well understood. This system requires all businesses to compete fiercely for their share of the market to survive. It is the law of the jungle. It seems to be all right to kill off a competitor, even if undesirable methods are used, so long as it is not against the law.
Some businesses resort to cheating their customers, in order to survive. This goes beyond the need for survival. Some cheat their customers in order to make more profits. The end, namely pursuit of shareholder value, seems to justify the means and is more important than ethical behavior.
People have to compete for jobs. They work long hours to keep their jobs. They are afraid to lose their jobs and face the uncertainty of unemployment. This leads to a poor balance of their family and work life.
Economic theory says that competition will lead to greater efficiency and lower cost, but this is not the only outcome. In practice, it leads to duplication and wastefulness, with too many varieties of the same product and too much excessive capacity in producing products that are not really needed.
If there is less wasteful production, less time is needed to produce these goods. People will have more time for other important aspects of their lives, such as their family and friends. The products that they buy can be made to last a longer time, and not be thrown away too early.
Planning with flexibility
We need an economic system that has better planning. Planning helps to determine the types of products and services that are needed by the people and to allocate the resources to meet these needs. The setting of these national priorities and organising the resources is the role of the elected Government.
There is a similar role in the corporate sector. Companies adopt corporate planning to determine their strategy and use of resources to do their business and serve their customers. They do not let these matters be decided in a haphazard manner.
In recent years, there is a belief that decisions can be best left to the free market and national planning is unnecessary. I disagree with this view.
Advocates of the free-market system quote examples of the negative aspects of the rigid central-planning system adopted by communist regimes in past years.
This does not mean that all planning will lead to this negative outcome. It is possible to find a better and more effective way to plan our economy, to make the best use of the resources to achieve the desired outcomes. It should focus on the strategic issues and provide guidelines and flexibility on how to deal with operational issues.
We need planning to make the best use of human and other resources, such as the number of people needed for the various sectors of the economy. This allows people to plan their careers and their future with greater certainty.
Business ethics
We need a stronger sense of business ethics and purpose to govern our economic activities.
People at all levels should be paid fairly for their services. Professionals and business entrepreneurs can earn more than ordinary workers, but the difference in earnings should be kept at a reasonable ratio. They should not be allowed to earn excessive remuneration at the expense of workers by depressing their wages.
Businesses should offer products at a fair price to consumers. A fair price should be determined by a product’s actual cost plus a fair margin of profits. The business should be encouraged to reduce its cost by operating efficiently, and not by exploiting workers. They cannot make excessive profits by misleading or exploiting the customers. They should be prevented from making wealth through corruption and cheating.
Conclusion
The world has accepted that the capitalist, free-market system is the best way for the past two decades. It is time to reconsider and see if there is a better mixed system that can provide a happier and better life for citizens.
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I think there are many ways to help the poor..no need to do it by setting minimum wages.
Setting minium wages might cause new problems, for example, if more businesses cannot affort the labour costs, they will retrench workers…so at the end instead of helping the poors, we are hurting them…
i think we should have more policies that encourage the rich to help the poor…for example, by imposing tough checks on charity organizations and punishing heavily those who cheat through these charity organizations…
“1 country 2 system” rooted before the day Dr Sun Yat-Sen(孙中山 1866-1925) passed away. Both communist and republican’s mission are the same – one China only. Deng was the heir. His strategy was “1:2 system” for 100 years from 1997. It was a chapter of shameful and sad Chinese history! I never want to see such history repeat again.
I received this e-mail through the internet. It is relevant to this discussion about the system in China.
We Can Help China Embrace the Future By TONY BLAIR August 26, 2008; Page A21
The Beijing Olympic Games were a powerful spectacle, stunning in sight and sound. But the moment that made the biggest impression on me came during an informal visit just before the Games to one of the new Chinese Internet companies, and in conversation with some of the younger Chinese entrepreneurs.
These people, men and women, were smart, sharp, forthright, unafraid to express their views about China and its future. Above all, there was a confidence, an optimism, a lack of the cynical, and a presence of the spirit of get up and go, that reminded me greatly of the U.S. at its best and any country on its way forward.
These people weren’t living in fear, but looking forward in hope. And for all the millions still in poverty in China, for all the sweep of issues — political, social and economic — still to be addressed, that was the spirit of China during this festival of sport, and that is the spirit that will define its future.
During my 10 years as British leader, I could see the accelerating pace of China’s continued emergence as a major power. I gave speeches about China, I understood it analytically. But I did not feel it emotionally and therefore did not fully understand it politically.
Since leaving office I have visited four times and will shortly return again. People ask what is the legacy of these Olympics for China? It is that they mark a new epoch — an opening up of China that can never be reversed. It also means that ignorance and fear of China will steadily decline as the reality of modern China becomes more apparent.
Ex-British PM Tony Blair visit China many times. I think he appreciates the accomodation of new China communist leadership who do not hate the invasion of China by 20000 troop from 8 allied countries (British inclusive) in 1990.
Accomodation (有容乃大) and “1:2 System” (一多相容) were ancient Chinese philosohy thought. Confucius (BC 551-479) said:” 君子和而不同A leader would accept differences and maintain harmony.” The “1:2″ system maintains harmony like HK since 1997. This is proven today.
What if a leader would NOT accept differences, an ancient China scholar 西周史伯 had warned in BC771: “同则不续Oneness never survive ” Soviet Union collapsed !
Mr TKL suggestion of ’1:2″ system would best relate it to Chinese civilization.
The global financial system is falling apart. The capitalis system is exploitative and encourage greed. Even US Government realise their flaws in the system. It is time for other countries, including Singapore, to open their eyes and see the flaws – and correct them.
Maybe what Tan Kin Lian is trying to say is to balance capitalism with some controls..so it’s a balancing art rather than 2 systems.
Or 2 systems means :
1. capitalism in CBD area
2. and socialism outside CBD ???
:D
no.maybe wat mr tan is trying to say is to balance the 4 corners of the world.