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TEDGlobal 2013

Eric X. Li: A tale of two political systems

June 12, 2013

It's a standard assumption in the West: As a society progresses, it eventually becomes a capitalist, multi-party democracy. Right? Eric X. Li, a Chinese investor and political scientist, begs to differ. In this provocative, boundary-pushing talk, he asks his audience to consider that there's more than one way to run a successful modern nation.

Eric X. Li - Investor and political scientist
A venture capitalist and political scientist, Eric X Li argues that the universality claim of Western democratic systems is going to be "morally challenged" by China. Full bio

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Double-click the English subtitles below to play the video.
Good morning.
00:12
My name is Eric Li, and I was born here.
00:13
But no, I wasn't born there.
00:18
This was where I was born:
00:21
Shanghai, at the height of the Cultural Revolution.
00:24
My grandmother tells me that she heard
00:28
the sound of gunfire along with my first cries.
00:29
When I was growing up, I was told a story
00:32
that explained all I ever needed to know about humanity.
00:36
It went like this.
00:40
All human societies develop in linear progression,
00:41
beginning with primitive society, then slave society,
00:45
feudalism, capitalism, socialism,
00:48
and finally, guess where we end up?
00:51
Communism!
00:53
Sooner or later, all of humanity,
00:57
regardless of culture, language, nationality,
01:00
will arrive at this final stage
01:03
of political and social development.
01:06
The entire world's peoples will be unified
01:08
in this paradise on Earth
01:10
and live happily ever after.
01:13
But before we get there, we're engaged
01:15
in a struggle between good and evil,
01:18
the good of socialism against the evil of capitalism,
01:20
and the good shall triumph.
01:23
That, of course, was the meta-narrative
01:25
distilled from the theories of Karl Marx.
01:28
And the Chinese bought it.
01:30
We were taught that grand story day in and day out.
01:33
It became part of us, and we believed in it.
01:36
The story was a bestseller.
01:39
About one third of the entire world's population
01:41
lived under that meta-narrative.
01:43
Then, the world changed overnight.
01:46
As for me, disillusioned by the failed religion of my youth,
01:49
I went to America and became a Berkeley hippie.
01:52
(Laughter)
01:55
Now, as I was coming of age, something else happened.
01:58
As if one big story wasn't enough,
02:02
I was told another one.
02:04
This one was just as grand.
02:07
It also claims that all human societies
02:10
develop in a linear progression towards a singular end.
02:12
This one went as follows:
02:16
All societies, regardless of culture,
02:19
be it Christian, Muslim, Confucian,
02:21
must progress from traditional societies
02:24
in which groups are the basic units
02:26
to modern societies in which atomized individuals
02:29
are the sovereign units,
02:32
and all these individuals are, by definition, rational,
02:34
and they all want one thing:
02:38
the vote.
02:40
Because they are all rational, once given the vote,
02:42
they produce good government
02:45
and live happily ever after.
02:46
Paradise on Earth, again.
02:48
Sooner or later, electoral democracy will be
02:51
the only political system for all countries and all peoples,
02:54
with a free market to make them all rich.
02:58
But before we get there, we're engaged in a struggle
03:01
between good and evil.
03:04
(Laughter)
03:06
The good belongs to those who are democracies
03:08
and are charged with a mission of spreading it
03:10
around the globe, sometimes by force,
03:12
against the evil of those who do not hold elections.
03:15
(Video) George H.W. Bush: A new world order ...
03:19
(Video) George W. Bush: ... ending tyranny in our world ...
03:21
(Video) Barack Obama: ... a single standard for all
03:23
who would hold power.
03:25
Eric X. Li: Now --
03:28
(Laughter) (Applause)
03:30
This story also became a bestseller.
03:38
According to Freedom House,
03:42
the number of democracies went from 45 in 1970
03:44
to 115 in 2010.
03:47
In the last 20 years, Western elites tirelessly
03:49
trotted around the globe selling this prospectus:
03:52
Multiple parties fight for political power
03:56
and everyone voting on them
03:58
is the only path to salvation
04:00
to the long-suffering developing world.
04:02
Those who buy the prospectus are destined for success.
04:05
Those who do not are doomed to fail.
04:08
But this time, the Chinese didn't buy it.
04:11
Fool me once ...
04:14
(Laughter)
04:16
The rest is history.
04:21
In just 30 years, China went from
04:23
one of the poorest agricultural countries in the world
04:25
to its second-largest economy.
04:27
Six hundred fifty million people
04:29
were lifted out of poverty.
04:31
Eighty percent of the entire world's poverty alleviation
04:33
during that period happened in China.
04:36
In other words, all the new and old democracies
04:38
put together amounted to a mere fraction
04:41
of what a single, one-party state did without voting.
04:44
See, I grew up on this stuff: food stamps.
04:49
Meat was rationed to a few hundred grams
04:52
per person per month at one point.
04:54
Needless to say, I ate all my grandmother's portions.
04:57
So I asked myself, what's wrong with this picture?
05:01
Here I am in my hometown,
05:05
my business growing leaps and bounds.
05:07
Entrepreneurs are starting companies every day.
05:09
Middle class is expanding in speed and scale
05:11
unprecedented in human history.
05:14
Yet, according to the grand story,
05:16
none of this should be happening.
05:19
So I went and did the only thing I could. I studied it.
05:22
Yes, China is a one-party state
05:25
run by the Chinese Communist Party, the Party,
05:27
and they don't hold elections.
05:31
Three assumptions are made
05:33
by the dominant political theories of our time.
05:35
Such a system is operationally rigid,
05:38
politically closed, and morally illegitimate.
05:41
Well, the assumptions are wrong.
05:44
The opposites are true.
05:48
Adaptability, meritocracy, and legitimacy
05:50
are the three defining characteristics
05:53
of China's one-party system.
05:55
Now, most political scientists will tell us
05:57
that a one-party system is inherently incapable
05:59
of self-correction.
06:03
It won't last long because it cannot adapt.
06:05
Now here are the facts.
06:07
In 64 years of running the largest country in the world,
06:09
the range of the Party's policies has been wider
06:12
than any other country in recent memory,
06:15
from radical land collectivization to the Great Leap Forward,
06:18
then privatization of farmland,
06:22
then the Cultural Revolution,
06:24
then Deng Xiaoping's market reform,
06:27
then successor Jiang Zemin took the giant political step
06:29
of opening up Party membership to private businesspeople,
06:33
something unimaginable during Mao's rule.
06:36
So the Party self-corrects in rather dramatic fashions.
06:39
Institutionally, new rules get enacted
06:43
to correct previous dysfunctions.
06:45
For example, term limits.
06:48
Political leaders used to retain their positions for life,
06:50
and they used that to accumulate power
06:52
and perpetuate their rules.
06:54
Mao was the father of modern China,
06:56
yet his prolonged rule led to disastrous mistakes.
06:58
So the Party instituted term limits
07:01
with mandatory retirement age of 68 to 70.
07:03
One thing we often hear is,
07:07
"Political reforms have lagged far behind economic reforms,"
07:09
and "China is in dire need of political reform."
07:13
But this claim is a rhetorical trap
07:16
hidden behind a political bias.
07:19
See, some have decided a priori
07:21
what kinds of changes they want to see,
07:24
and only such changes can be called political reform.
07:26
The truth is, political reforms have never stopped.
07:29
Compared with 30 years ago, 20 years, even 10 years ago,
07:32
every aspect of Chinese society,
07:36
how the country is governed,
07:38
from the most local level to the highest center,
07:39
are unrecognizable today.
07:41
Now such changes are simply not possible
07:44
without political reforms of the most fundamental kind.
07:47
Now I would venture to suggest the Party
07:50
is the world's leading expert in political reform.
07:53
The second assumption is that in a one-party state,
07:57
power gets concentrated in the hands of the few,
08:00
and bad governance and corruption follow.
08:03
Indeed, corruption is a big problem,
08:05
but let's first look at the larger context.
08:07
Now, this may be counterintuitive to you.
08:10
The Party happens to be one of the most meritocratic
08:12
political institutions in the world today.
08:15
China's highest ruling body, the Politburo, has 25 members.
08:17
In the most recent one, only five of them
08:22
came from a background of privilege, so-called princelings.
08:24
The other 20, including the president and the premier,
08:27
came from entirely ordinary backgrounds.
08:30
In the larger central committee of 300 or more,
08:33
the percentage of those who were born
08:35
into power and wealth was even smaller.
08:37
The vast majority of senior Chinese leaders
08:39
worked and competed their way to the top.
08:42
Compare that with the ruling elites
08:45
in both developed and developing countries,
08:47
I think you'll find the Party being near the top
08:49
in upward mobility.
08:52
The question then is, how could that be possible
08:54
in a system run by one party?
08:57
Now we come to a powerful political institution,
09:00
little-known to Westerners:
09:03
the Party's Organization Department.
09:04
The department functions like a giant
09:07
human resource engine that would be the envy
09:09
of even some of the most successful corporations.
09:12
It operates a rotating pyramid
09:15
made up of three components:
09:17
civil service, state-owned enterprises,
09:19
and social organizations like a university
09:21
or a community program.
09:23
They form separate yet integrated career paths
09:25
for Chinese officials.
09:28
They recruit college grads into entry-level positions
09:30
in all three tracks, and they start from the bottom,
09:33
called "keyuan" [clerk].
09:36
Then they could get promoted
09:37
through four increasingly elite ranks:
09:39
fuke [deputy section manager], ke [section manager], fuchu [deputy division manager], and chu [division manger].
09:44
Now these are not moves from "Karate Kid," okay?
09:47
It's serious business.
09:49
The range of positions is wide,
09:53
from running health care in a village
09:55
to foreign investment in a city district
09:57
to manager in a company.
09:59
Once a year, the department reviews their performance.
10:01
They interview their superiors, their peers,
10:03
their subordinates. They vet their personal conduct.
10:06
They conduct public opinion surveys.
10:09
Then they promote the winners.
10:11
Throughout their careers, these cadres
10:13
can move through and out of all three tracks.
10:14
Over time, the good ones move beyond the four base levels
10:17
to the fuju [deputy bureau chief] and ju [bureau chief] levels.
10:20
There, they enter high officialdom.
10:23
By that point, a typical assignment will be
10:26
to manage a district with a population in the millions
10:28
or a company with hundreds of millions of dollars in revenue.
10:31
Just to show you how competitive the system is,
10:34
in 2012, there were 900,000 fuke and ke levels,
10:38
600,000 fuchu and chu levels,
10:42
and only 40,000 fuju and ju levels.
10:45
After the ju levels,
10:48
the best few move further up several more ranks,
10:50
and eventually make it to the Central Committee.
10:53
The process takes two to three decades.
10:56
Does patronage play a role? Yes, of course.
10:58
But merit remains the fundamental driver.
11:02
In essence, the Organization Department runs
11:05
a modernized version of China's centuries-old
11:08
mentoring system.
11:10
China's new president, Xi Jinping,
11:12
is the son of a former leader, which is very unusual,
11:14
first of his kind to make the top job.
11:17
Even for him, the career took 30 years.
11:19
He started as a village manager,
11:22
and by the time he entered the Politburo,
11:24
he had managed areas with a total population
11:26
of 150 million people
11:28
and combined GDPs of 1.5 trillion U.S. dollars.
11:30
Now, please don't get me wrong, okay?
11:34
This is not a put-down of anyone. It's just a statement of fact.
11:36
George W. Bush, remember him?
11:40
This is not a put-down.
11:43
(Laughter)
11:46
Before becoming governor of Texas,
11:47
or Barack Obama before running for president,
11:50
could not make even a small county manager
11:52
in China's system.
11:55
Winston Churchill once said that democracy
11:57
is a terrible system except for all the rest.
11:59
Well, apparently he hadn't heard of the Organization Department.
12:01
Now, Westerners always assume that
12:06
multi-party election with universal suffrage
12:08
is the only source of political legitimacy.
12:11
I was asked once, "The Party wasn't voted in by election.
12:14
Where is the source of legitimacy?"
12:18
I said, "How about competency?"
12:20
We all know the facts.
12:23
In 1949, when the Party took power,
12:25
China was mired in civil wars, dismembered by foreign aggression,
12:27
average life expectancy at that time, 41 years old.
12:30
Today, it's the second largest economy in the world,
12:34
an industrial powerhouse, and its people live
12:37
in increasing prosperity.
12:40
Pew Research polls Chinese public attitudes,
12:42
and here are the numbers in recent years.
12:45
Satisfaction with the direction of the country: 85 percent.
12:47
Those who think they're better off than five years ago:
12:52
70 percent.
12:54
Those who expect the future to be better:
12:56
a whopping 82 percent.
12:59
Financial Times polls global youth attitudes,
13:01
and these numbers, brand new, just came from last week.
13:05
Ninety-three percent of China's Generation Y
13:08
are optimistic about their country's future.
13:11
Now, if this is not legitimacy, I'm not sure what is.
13:14
In contrast, most electoral democracies around the world
13:20
are suffering from dismal performance.
13:23
I don't need to elaborate for this audience
13:25
how dysfunctional it is, from Washington to European capitals.
13:27
With a few exceptions, the vast number
13:31
of developing countries that have adopted electoral regimes
13:34
are still suffering from poverty and civil strife.
13:37
Governments get elected, and then they fall
13:41
below 50 percent approval in a few months
13:43
and stay there and get worse until the next election.
13:46
Democracy is becoming a perpetual cycle
13:49
of elect and regret.
13:52
At this rate, I'm afraid it is democracy,
13:54
not China's one-party system, that is in danger
13:58
of losing legitimacy.
14:00
Now, I don't want to create the misimpression
14:03
that China's hunky-dory, on the way
14:05
to some kind of superpowerdom.
14:07
The country faces enormous challenges.
14:09
The social and economic problems that come
14:12
with wrenching change like this are mind-boggling.
14:14
Pollution is one. Food safety. Population issues.
14:18
On the political front, the worst problem is corruption.
14:22
Corruption is widespread and undermines the system
14:26
and its moral legitimacy.
14:28
But most analysts misdiagnose the disease.
14:30
They say that corruption is the result of the one-party system,
14:33
and therefore, in order to cure it,
14:36
you have to do away with the entire system.
14:37
But a more careful look would tell us otherwise.
14:39
Transparency International ranks China
14:43
between 70 and 80 in recent years among 170 countries,
14:45
and it's been moving up.
14:49
India, the largest democracy in the world,
14:51
94 and dropping.
14:53
For the hundred or so countries that are ranked below China,
14:56
more than half of them are electoral democracies.
14:58
So if election is the panacea for corruption,
15:01
how come these countries can't fix it?
15:04
Now, I'm a venture capitalist. I make bets.
15:08
It wouldn't be fair to end this talk without
15:11
putting myself on the line and making some predictions.
15:14
So here they are.
15:16
In the next 10 years, China will surpass the U.S.
15:18
and become the largest economy in the world.
15:21
Income per capita will be near the top
15:23
of all developing countries.
15:25
Corruption will be curbed, but not eliminated,
15:27
and China will move up 10 to 20 notches
15:30
to above 60 in T.I. ranking.
15:32
Economic reform will accelerate, political reform will continue,
15:35
and the one-party system will hold firm.
15:38
We live in the dusk of an era.
15:41
Meta-narratives that make universal claims
15:45
failed us in the 20th century
15:48
and are failing us in the 21st.
15:50
Meta-narrative is the cancer
15:53
that is killing democracy from the inside.
15:55
Now, I want to clarify something.
15:58
I'm not here to make an indictment of democracy.
16:00
On the contrary, I think democracy contributed
16:02
to the rise of the West and the creation of the modern world.
16:05
It is the universal claim that many Western elites
16:08
are making about their political system, the hubris,
16:11
that is at the heart of the West's current ills.
16:15
If they would spend just a little less time
16:18
on trying to force their way onto others,
16:20
and a little bit more on political reform at home,
16:22
they might give their democracy a better chance.
16:26
China's political model will never supplant
16:29
electoral democracy, because unlike the latter,
16:32
it doesn't pretend to be universal.
16:34
It cannot be exported. But that is the point precisely.
16:36
The significance of China's example
16:40
is not that it provides an alternative,
16:42
but the demonstration that alternatives exist.
16:44
Let us draw to a close this era of meta-narratives.
16:49
Communism and democracy may both be laudable ideals,
16:53
but the era of their dogmatic universalism is over.
16:56
Let us stop telling people and our children
17:00
there's only one way to govern ourselves
17:02
and a singular future towards which
17:05
all societies must evolve.
17:07
It is wrong. It is irresponsible.
17:09
And worst of all, it is boring.
17:12
Let universality make way for plurality.
17:16
Perhaps a more interesting age is upon us.
17:20
Are we brave enough to welcome it?
17:23
Thank you.
17:25
(Applause)
17:26
Thank you. Thank you. Thank you. Thanks.
17:42
Bruno Giussani: Eric, stay with me for a couple of minutes,
17:46
because I want to ask you a couple of questions.
17:48
I think many here, and in general in Western countries,
17:51
would agree with your statement about analysis
17:55
of democratic systems becoming dysfunctional,
17:58
but at the same time, many would kind of find
18:01
unsettling the thought that there is an unelected
18:04
authority that, without any form of oversight or consultation,
18:08
decides what the national interest is.
18:13
What is the mechanism in the Chinese model
18:16
that allows people to say, actually,
18:19
the national interest as you defined it is wrong?
18:21
EXL: You know, Frank Fukuyama, the political scientist,
18:24
called the Chinese system "responsive authoritarianism."
18:28
It's not exactly right, but I think it comes close.
18:32
So I know the largest public opinion survey company
18:35
in China, okay?
18:39
Do you know who their biggest client is?
18:41
The Chinese government.
18:43
Not just from the central government,
18:45
the city government, the provincial government,
18:48
to the most local neighborhood districts.
18:49
They conduct surveys all the time.
18:51
Are you happy with the garbage collection?
18:53
Are you happy with the general direction of the country?
18:56
So there is, in China, there is a different kind of mechanism
18:58
to be responsive to the demands and the thinking of the people.
19:01
My point is, I think we should get unstuck
19:05
from the thinking that there's only one political system --
19:08
election, election, election --
19:10
that could make it responsive.
19:12
I'm not sure, actually, elections produce
19:14
responsive government anymore in the world.
19:16
(Applause)
19:19
BG: Many seem to agree.
19:23
One of the features of a democratic system
19:24
is a space for civil society to express itself.
19:27
And you have shown figures about the support
19:30
that the government and the authorities have in China.
19:33
But then you've just mentioned other elements
19:36
like, you know, big challenges, and there are, of course,
19:39
a lot of other data that go in a different direction:
19:41
tens of thousands of unrests and protests
19:44
and environmental protests, etc.
19:47
So you seem to suggest the Chinese model
19:50
doesn't have a space outside of the Party
19:53
for civil society to express itself.
19:55
EXL: There's a vibrant civil society in China,
19:57
whether it's environment or what-have-you.
20:01
But it's different. You wouldn't recognize it.
20:03
Because, by Western definitions, a so-called civil society
20:05
has to be separate or even in opposition
20:08
to the political system,
20:11
but that concept is alien for Chinese culture.
20:12
For thousands of years, you have civil society,
20:17
yet they are consistent and coherent
20:20
and part of a political order, and I think
20:22
it's a big cultural difference.
20:25
BG: Eric, thank you for sharing this with TED.
EXL: Thank you.
20:28

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Eric X. Li - Investor and political scientist
A venture capitalist and political scientist, Eric X Li argues that the universality claim of Western democratic systems is going to be "morally challenged" by China.

Why you should listen

A well-connected venture capitalist in Shanghai, where he was born, Eric X. Li studied in America (and even worked for Ross Perot's 1992 presidential campaign) before returning home, where he started doubting the idea that China's progress could only follow the path of the West's free-market principles.
 
In a much-discussed op-ed he wrote for the New York Times in February 2012 and in other writings, he has put forth the idea that China needed a different development framework, around a different idea of modernity. The Chinese system, he says, is meritocratic, highly adaptable despite the one-party rule, long term-oriented, pragmatic and non-individualistic. As he writes: "The Chinese political system ... comes close to the best formula for governing a large country: meritocracy at the top, democracy at the bottom, with room for experimentation in between.
 
While some criticize him as a cheerleader of the Chinese government and a champion of Chinese exceptionalism, Li is comfortable in the role of provocateur. He is the founder of Chengwei Capital in Shanghai, serves on the board of directors of China Europe International Business School (CEIBS) and is a Fellow of the Aspen Institute.

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