Barry Brownstein: What Happens When an MBA Student Raised in Communist China Reads Hayek

Imagine being born during the bloody Cultural Revolution in China and growing up in a country with little economic or personal freedom. Few Chinese citizens had the knowledge that human rights are not granted by government, and those few who knew could not say. Few knew that government is not the source of economic progress; and again, those who knew could not fully share their understanding.

An exasperated Shanghai student responded, “You miss the point, central planning is precisely why China is comparatively poor.”

Now imagine you’re thirty-something years old, traveling to the United States to begin your MBA studies. In the spring of 1999, I taught an MBA economics class to a cohort of 30 such Chinese students.

The class was split between students from Beijing and Shanghai. Students from Shanghai—having more experience with the beneficial impact of liberalizing markets—were much more willing to embrace the ideas of classical liberalism.

Beijing students were more likely to believe in a larger role for government. This split between the Beijing and Shanghai students was most evident in a class discussion after the class read Hayek’s “The Use of Knowledge in Society;” the reading led to a discussion of central planning.

A student from Beijing was emphatic, “This theory is not applicable to China—China is a relatively poor country, and in a poor country the government needs to plan.”

An exasperated Shanghai student responded, “You miss the point, central planning is precisely why China is comparatively poor.”

Hayek’s ideas were so provocative that soon the entire class had joined in; the two factions began shouting at each other in Mandarin. Someone, concerned about the din, called campus security. The students lowered their voices, but Hayek’s ideas had left their mark. I feel certain those students carry an indelible memory of that class.

The Light Goes On

Recently, sorting through a box of former student essays, one written by a student in that 1999 class captured my interest. Almost twenty years later, as I read this student’s essay, I was still spellbound by his clarity.

Over the course of the semester, the student recounts how he came to see “individuals are the source of the nation’s greatness, not the government.”

The essay writer observed, “I was always amazed by the great wealth the United States has created over such a short period of history compared to that of China.” Formerly, he attributed the success of America to, “its abundant natural resources, its youth and talented population coming from all over the world.”

The Chinese government, he explained, had ready excuses for its failures: “On the other hand, I ascribed China’s slow progress to its scarce natural resources, the burden of its long history of feudalism and poor education of the population. My view was quite similar to what our government explained to us.”

Over the course of the semester, the student recounts how he came to see “individuals are the source of the nation’s greatness, not the government.”

His studies of Hayek, Mises, Kirzner, and Rothbard gave him a fresh lens to examine, with a critical eye, the Chinese Constitution. He saw its foundation, placing the powers of government before the rights of individuals, was the exact opposite of the basis of the American Constitution. The founding principles of the Chinese Constitution, not scarce resources, were at the heart of China’s difficulties.

Article 1 of the Chinese Constitution states the Chinese system is socialistic: “The socialist system is the basic system of the People’s Republic of China. Sabotage of the socialist system by any organization or individual is prohibited.” Article 1 also introduces the oxymoronic concept of a “democratic dictatorship” which will guide the country.

The Chinese Constitution stipulates some rights for the people. For example, Article 35 seemingly grants freedom of speech: “Citizens of the People’s Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration.”

However, any freedoms granted are meaningless, as they are taken away in the catch-all Article 51; “The exercise by citizens of the People’s Republic of China of their freedoms and rights may not infringe upon the interests of the state, of society and of the collective, or upon the lawful freedoms and rights of other citizens.”

The 1999 class of Chinese students grasped—perhaps more than many Americans—the gift that America’s founders bequeathed to humanity.

Despite Articles 38 and 39 guaranteeing “The personal dignity of citizens…[and that] the home of citizens of the People’s Republic of China is inviolable,” there was no freedom to oppose Mao’s murder of millions of Chinese citizens, since to do so would infringe on the “interests of the state.”  

There is no freedom in China today to oppose appointment for life for President Xi Jinping. The Chinese Constitution was recently amended to elevate the supremacy of “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” for guiding the nation.

“Xi Jinping Thought,” permeates everything, including religion and the arts. Recently China’s top actors and directors were sent for training on how to “extol our Party, our country, our people and our heroes.”

In other words, the interest of the “socialist state” as led by Xi is paramount. There is no freedom when the interest of government comes first.

Article 51 places society and the collective above individuals. Today on American college campuses, would students who advocate for the prohibition of “hurtful” speech feel right at home with China’s Constitution?

I can imagine my former student shouting at contemporary American students:  Do you have the slightest idea of the hard-won freedoms you are clamoring to surrender?

The Revolutionary Basis of America

The 1999 class of Chinese students grasped—perhaps more than many Americans—the gift that America’s founders bequeathed to humanity. That human rights are self-evident, unalienable, and originated in individuals is a powerful idea that struck, as another student in that class put it, like “a lightning bolt across my long-closed mind.”

For the essay writer and many in his class, Jefferson’s immortal words were sacred: “We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness.”

Rose Wilder Lane, in her book The Discovery of Freedom, brilliantly explains the uniqueness of the American idea. From Lane’s work, the essay writer quoted: “This revolutionary basis is recognition of the fact that human rights are natural rights, born in every human being with his life, and inseparable from his life; not rights and freedoms that can be granted by any power on earth.”

Lane continues,

The true revolutionary course which must be followed toward a free world is a cautious, experimental process of further decreasing the uses of force which individuals permit to Government; of increasing the prohibitions of Government’s action, and thus decreasing the use of brute force in human affairs.

No doubt, my former student is dismayed that the authoritarian Xi is increasing the use of government force in China.  

Planning Is Counterproductive

The Chinese students in that 1999 economics class began their MBA studies much like the essay writer who explained, “I had trouble conceiving of an economic or social order that is not deliberately made for a specific purpose.” “Government planning,” it seemed to him, was needed “to bring order and coordination to otherwise chaotic economic conditions.”

Reading Hayek’s, “The Use of Knowledge in Society” convinced him otherwise.  He wrote, “Central planning ignores its impossible knowledge requirements. It demanded that all the fragments of knowledge existing in different minds be brought together in one mind, a feat requiring that single mind process knowledge far in excess of what anyone could ever comprehend.”

The student realized, quoting Hayek from his book  Law, Legislation and Liberty, Vol. 2, there is no need to agree on aims: “The Great Society arose through the discovery that men can live together in peace and mutually benefiting each other without agreeing on the particular aims which they severally pursue.”

After reading Kirzner and Mises, the student wrote,   

Pure profit opportunities emerge continually as errors are made by market participants in a changing world… Only through this process of error detection and correction within the market that keeps entrepreneurial hunches reasonably abreast of changes in consumer tastes, resource availabilities, and technological possibilities… Without entrepreneurs, not only would markets fail to coordinate, they would also fail to innovate resulting in stagnation…The free market must depend on this entrepreneurial discovery process for its socially benign character.

I graded student essays anonymously, so I don’t know the career arc of the student whose essay I have quoted here. I would like to think he and others in his class have pursued entrepreneurial opportunities and are making the world a better place. During that spring of 1999, this student discovered freedom. With the knowledge he gained he could be indelibly changing the lives of those he touches. Such is the power of economic education.

Barry Brownstein


Barry Brownstein

Barry Brownstein is professor emeritus of economics and leadership at the University of Baltimore. He is the author of The Inner-Work of Leadership. To receive Barry’s essays subscribe at Mindset Shifts.

This article was originally published on FEE.org. Read the original article.

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17 Responses to Barry Brownstein: What Happens When an MBA Student Raised in Communist China Reads Hayek

  1. Ƶĩppʯ (ȊꞪꞨV)

    freedom is the root cause of prosperity

  2. OneWorldGovernment

    Thanks for posting this.

    Would that our socialist shithole find FREEDOM.

  3. Arky

    China is both our greatest potential danger and our best hope.
    So much time and opportunity pissed away.
    If it all comes out good at the end it will be because of billions of individual interactions like those described in this post, not because of governments.

  4. W Hogg

    Today the prof is probably banned as a Nazi.

  5. Egor

    Indeed, Bazza needs to be careful. Chinese funding of “educational institutions” doesn’t just happen by luck.

  6. Brilliant.
    As long as the works of the masters are available, there is hope.
    But I fear Fahrenheit 451 wasn’t just a novel, but a work in progress.

  7. Tom

    Great post. Very instructive and ironic.

    It would be hysterically funny if it wasn’t so evil to watch all the West’s zombies diseducated in the West’s own Marxist curriculum, where every year is Year Zero, chanting the slogans of totalitarian communism. But that is exactly what Marxism set out to achieve 70 years ago in its long march through the West’s institutions.

    The long march has been renovated with the slogans of identity politics, which makes the zombies think it’s new, but communism’s same old confrontation with capitalism is still there: the system is so unfair, so all our wealth must be redistributed. And we must outlaw merit and initiative, which are unfair to the weak.

    The zombies are never told that, come the revolution, dissent of any kind must be abolished to enable the dictatorship of the proletariat, which the leftist media — Fakefacts, Graniaud, Their ABC, etc — have already instituted with the banning of all but the communist party line by “moderators” policing the commentariat.

  8. Boambee John

    Far too many people enter politics or the bureaucracy because they want power over others. To gain and hold such power, they must remove freedom from those over whom they seek to rule.

    How we detect and reject those with this psychology before they consolidate their positions in a peaceful way is beyond me.

  9. Boambee John

    That should be “detect and reject in a peaceful way …”

  10. Beachcomber

    Tom #2692572, posted on April 22, 2018 at 11:39 am
    It would be hysterically funny if it wasn’t so evil to watch all the West’s zombies diseducated in the West’s own Marxist curriculum, where every year is Year Zero, chanting the slogans of totalitarian communism. But that is exactly what Marxism set out to achieve 70 years ago in its long march through the West’s institutions.

    Australia’s universities are openly implementing the Maoist Cultural Revolution. Check out Monash’s student recruitment video ‘If you don’t like it, change it’. At the end of the video the students are Marxist drones, trance-walking towards the university halls of cultural Marxist indroctination.

    Almost all of the ‘great research’ touted as changing the world is really nothing more than cultural Marxist circle-jerking, attacking western culture.

  11. Beachcomber

    Check out Monash’s student recruitment video ‘If you don’t like it, change it’.

  12. JC

    JC – your swearing / insults only reveals how weak your arguments are.

    No it doesn’t, Bonehead. They reveal no such thing other than utter contempt for what you represent. We’ve had enough of the lies and the hallucinations coming from the left about energy markets.

    Can’t believe your posts are allowed on this website. Understand that you have the brains and maturity of a 3-year old, but keep going and I would love to give you a spanking !!

    Great contra argument. Obviously, you have nothing to say another than abusing me.

    In any case, mate, I’ve read your responses and you’ve been found out and embarrassed. There is nothing there that is persuasive – only the rants of a 3-year old.

    Again, no argument, just the ranting of a leftist zombie.

    No company in Aus is doing coal,

    Existing plants are encouraged to close down. No company is doing coal because the political risk of losing one’s capital are too great, you fucking moron.

    renewables are getting rolled out fast. No, it’s not some conspiracy- it’s because they’re cheaper. Coal is still allowed – am sure you could get a good deal on Liddell, if you put your money up. But no – not for you.

    Renewballs are subsidised to the hilt and on top of that subsidy whores are receiving exceedingly high rates for feed in. No fucking wonder subsidy whores are tripping over themselves to get in on the racket.

    Your hallucinations that renewball energy is cheaper is fucking laughable.

    I’ve also noticed a few comments about gas and Warren Buffett. A couple of points here. Buffet was talking about the US. America has wet gas, we have the more costly dry gas. Consequently, gas is only really economic in Aus as a peaker, not baseload.

    Who cares, as we have loads of coal.

    Totally understand that supporting renewables can be a bit confronting for the ideologically dogmatic among us – but you better shape up, because renewables are cheaper and they’re coming into the market hard and fast.

    Hard and fast alright, you dishonest scumbag. You should be in jail peddling bullshit like this. As I said, fuck off and stop wasting our time. You leftist muppet.

  13. Barry Bones

    JC – wrong post you D’head !

  14. Barry Bones

    Good post, a couple things of things:

    a) not sure if freedom in China has gone anywhere since the class o ‘99;

    b) I’m not sure I want a prosperous China. Pretty aggressive lot.

  15. Louis Hissink

    As long as we continue using the phrase “Human Rights” we are maintaining the cultural Marxist nomenclature of collectivism.

    It is Individual rights that matter, not human.

    Because only individuals can have rights.

  16. Barry Bones;

    b) I’m not sure I want a prosperous China. Pretty aggressive lot.

    Imagine a China with the entrepreneurial drive shown by its emigres in the Western World.
    Scary shit indeed.

  17. J.H.

    Well said JC…. But I think yer on th’ wrong ‘fred. 😉

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