Theory and Practice: China Has an Economic Plan — The US Does Not

Robert Reich notes the fundamental difference between the economies of the US and China:  China has a plan, and we don’t.  This hands-off approach has characterized both Democratic and Republican presidential administrations.  In general, the US relies on faith in the free market place, while China assumes that the government must make careful plans to advance its interests.  Consequently, the Chinese invest heavily in green industries, even when there is no immediate profit and cost is high, because this technology is the future.  Whoever controls it will have an enormous advantage in global competition.  The US engages in talk, but not much action.

The US has an almost magical faith in the free market.  It’s almost as if the US believes that simply reciting an ideological creed will guarantee economic success.

The US still has one advantage:  the deep creativity and inventiveness that marks our culture.  Americans do not rely on the past and on tradition, but look for new and original ways of doing things.  This has always carried the US through before, and I hope it will continue to do so.  But can the US rely on this, while others make plans?

The whole issue relates to an even more fundamental matter.  Will human beings rely on ideology or on practical, integrative approaches to solve problems?  Ideology is  pure theory, ideas separate from concrete reality.  Communism, Marxism, radical free market capitalism, absolute pacifism, religious fundamentalism, and postmodern theory all fall into that category.  They are ideologies rather than evidence-based methods. Significantly ideologues exist on both the left and right. among both the secular and the religious.  Even when something contradicts the theory, followers of the theory simply ignore the data, because fundamentally day-to-day life is messy, confusing, ambiguous, contradictory, and therefore too difficult to interpret.

While the US has recently been primarily concerned with ideas about what should work, the Chinese and others are approaching matters pragmatically, testing for what actually does work.  The US would do well to return to its historical roots in pragmatism and develop more of a balance between theory and practice.

http://robertreich.org/post/2830348699