Tom Friedman is concerned that it might:

“One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century. It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power. China’s leaders understand that in a world of exploding populations and rising emerging-market middle classes, demand for clean power and energy efficiency is going to soar. Beijing wants to make sure that it owns that industry and is ordering the policies to do that, including boosting gasoline prices, from the top down.

Our one-party democracy is worse. The fact is, on both the energy/climate legislation and health care legislation, only the Democrats are really playing. With a few notable exceptions, the Republican Party is standing, arms folded and saying “no.” “

A dictator can simply impose policies but in messy American democracy a filibuster-proof consensus has to emerge to get anything done.  This is an advantage for central planning, at least if the dictator is benevolent.  This is Friedman’s main  idea.

But he misses a key point, the cornerstone of laissez-faire market economics: even a benevolent dictator is not omniscient and does not know what to invest in.  Demand and cost information is dispersed through the economy and the dictator may invest in the wrong industry.  Overproduction of tractors and shoes and underproduction of soap, the cliches of communist central planning.  Market prices aggregate information and the invisible hand directs investment into the right activities.  Chinese central planning might be as bad as Soviet or for that matter Indian central planning of yesteryear.  So messy democracy mixed up with free markets might dominate Chinese communism.  This is the flaw in Friedman’s logic.

Still, I think there is an element of truth in his conclusion if not his reasoning.  As we shop in any American store, we realize how many goods are made in China.  New Communism is  not closed economy central planning but open economy central planning.  Chinese central planners can learn what sells and what doesn’t sell by observing prices.  If green products are in, the reds can easily find out the same way we can.  And then can order, subsidize and simply force entry into green products.  Messy American politics will have a harder time doing the same thing.  American capitalists will not fight on a level playing field with Chinese “capunnists”.  American innovators may come up with new products first but if they can be made cheaply in China, they won’t stay American.

So there is a chance that Chinese communism can outperform American capitalism.

(HT: Thanks to dinner companions in Princeton for listening to my random warbling and also for identifying the Friedman thesis that I use to begin this post.)