“Red Swan: How Unorthodox Policy-Making Facilitated China’s Rise” by Sebastian Heilmann

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Sebastian Heilmann brings what is, for English-speaking readers, a somewhat rare European—or perhaps more precisely, German—perspective to the question of “China’s rise”, a term now almost de rigueur.

There are almost as many explanations for China’s economic development as there books on the subject. These start, as they must, from the realization that heretofore conventional economic development models and theories—which have tended to emphasize economic and political liberalism, strong institutions, the rule of law, etc.—did not predict China’s success in the form it has taken.

Heilmann has several different things going on his book, the chapters of which originated as previously-published papers. One, and his opening, is to reiterate that traditional development models can’t accommodate China’s path to relative prosperity. Fair enough, but that point hardly seems to need reiterating anymore.

Heilmann discusses in depth, as do such others as Yuen Yuen Ang, the role of localized experimentation as a fundamental factor in China’s development. Whereas Ang discusses “co-evolutionary” interaction between markets and institutions, Heilmann concentrates on the process of experimentation to policy, the mechanisms such as feedback loops within it, and—because it has not been static—the way it has developed and changed over time. He notes in particular the “very different” leadership styles between Deng Xiaoping and Xi Jinping.

Right in the introduction, Heilmann coins the term “guerilla-style policy-making”. The phrase has considerable descriptive utility: it

 

can be characterized as a “push-and-seize” style, that contrasts with the stability-oriented “anticipate-and-regulate” norm of modern constitutional governments and rule-of-law polities …

 

But Heilmann means it literally:

 

The roots are firmly planted … in the fertile soil of China’s Maoist past.

 

While striking, the argument—that, for example, the Great Leap Forward and the opening of China’s stock exchange derive from some basic underlying approach to policy—requires more that the circumstantial evidence that Heilmann here affords it. If anything seems to have characterized the past 30 years or so of Chinese policy success, it has been the almost complete rejection of the decades that had preceded it.

 

Red Swan: How Unorthodox Policy-Making Facilitated China's Rise, Sebastian Heilmann (Chinese University Press, January 2018)
Red Swan: How Unorthodox Policy-Making Facilitated China’s Rise, Sebastian Heilmann (Chinese University Press, January 2018)

One might draw the conclusion from Heilmann’s take-down of conventional models and theories that perhaps the problem is modeling itself. Heilmann himself avoids the term, and presents his analysis as a series of modi operandi.

Heilmann is at pains to note that China is different not just from the West, but also from “the former Soviet and Eastern European Communist party-states” and Japan. But however unique China’s path might be, one perhaps might conversely also want to avoid drawing the conclusion that China is largely if not entirely sui generis. Local policy experimentation, for example, is not itself incompatible with the Western rules-based systems China has ostensibly eschewed: there is considerable policy variation between and experimentation in US states and municipalities, for example. The difference, therefore, must be in the way experiments are initiated, culled and finally adapted for wider implementation. But experimentation combined with circumstance-based top-down decision-making is hardly unique to China either: it’s what prevails in corporations. Kerry Brown, for one, has explicitly drawn this analogy.

Nor do traditional models actually rule out the possibility of centralized control leading to development success. The argument is instead that self-organizing capitalist systems are more robust. But these things can play out over long periods of time. The now much-maligned Soviet Union delivered high rates of industrialization for several decades before it didn’t.

So it may still be early days for what Heilmann calls the Chinese “approach”. The book provides a robust discussion of the risks and as well as the benefits, with the penultimate section succinctly entitled “The systematic risks of a top-down policy process”.

One can’t leave the book without commenting on the title, which is a riff on Nassim Taleb’s “Black Swan”. The point of the “black swan” concept, however, is that black swans actually exist. To call a Communist black swan a red swan is not just “a challenge to the social sciences”, as Heilmann would have it, it is also a mixed metaphor.


Peter Gordon is editor of the Asian Review of Books.