Ancient China and the Free-Market

David S. Landes talks in his book The Wealth and Poverty of Nations. Why Some Are So Rich and Some So Poor (1998) why sinologists say ancient China did not reach its economic potential:

• The absence of a free market and institutionalized property rights.  The Chinese state was always interfering with private enterprise—taking over lucrative activities, prohibiting others, manipulating prices, exacting bribes curtailing private enrichment. Bad government strangled initiative, increased the cost of transactions, diverted talent from commerce and industry.
• The quasi-confinement of women to the home made it impossible, for example, to exploit textile machinery profitably in a factory setting.
• Sinologist Etienne Balazs would stress the larger context. He sees China’s abortive technology as part of a larger pattern of totalitarian control. The author quotes Mr. Balazs saying: “The ingenuity and inventiveness of the Chinese, which have
  given so much to mankind—silk, tea, porcelain, paper, printing, and more—would no doubt have enriched China further and probably brought it to the threshold of modern industry, had it not been for this stifling state control…. It is a regime of paper work and harassment….. It is the State [my emphasis] that kills technological progress in China.”

In my humble opinion, is the State in any country that can kill technological progress. The State doesn’t understand technology and/or business when it tries to control the economy. Since the State will probably never understand technology and economics it would be better off to leave hands off. But since the State contains people who are usually controlling  and arrogant (a nasty combination) this probably will never happen unless you get legislatures who are not power hungry and who are humble. Good luck with that.
The Chinese gov’t now is not much better. They have now what they call “state capitalism.” This is just another name for national socialism. If this sounds familiar think back to Germany in the 1930’s. You know the evil guy with the mustache who we’re not supposed to mention in polite company anymore. Yea, that guy. He created national socialism. It’s not a new idea.