In early February, 2009, amidst the worst world economic crisis since the Great Depression, Kevin Rudd, the Australian prime minister, in an article entitled: “Global Financial Crisis”, launched an indictment against neoliberalism. As a result of the global financial crisis, Mr. Rudd wrote: “It has called into question the prevailing neoliberal economic orthodoxy of the past 30 years—the orthodoxy that has underpinned the national and global regulatory frameworks that have so spectacularly failed to prevent the economic mayhem which has now been visiting us.”^1.

       Indeed, barely few months after the crisis, global investors have experienced $32 trillion loss from its peak in their stock portfolio. The rising of house prices, viewed by former U.S. Federal Reserve Chairman Alan Greenspan as “wealth creation”, has fallen from the cliff. Unemployment was growing in all the industrial countries, especially in the United States, where millions of people have been laid off. Under the atmosphere of fear, bewilderment, and financial panic, Mr. Rudd’s indictment of neo-liberalism naturally resonated with hundreds of millions of people around the world who suffered from the neoliberal policy of cheap labor and the recent economic crisis.  

       Surprisingly, the first salvo against the prime minister’s comments came from an unexpected quarter, an economic professor from China, a country where tens of millions of workers were laid off and hundreds of thousands of business enterprises went bankrupt as a result of the global economic crisis. Xu Xaonian, a professor from Shanghai and one of the leading neoliberal economists in China denied the assertion “that the crisis came as a result of neoliberalism and the absence of supervision.” On the contrary, as Xu stated: “Instead, it’s time to announce Keynesianism’s failure, time to announce the emperor Lord Keynes has no clothes.”^2.

       It is obvious that the professor’s allegation is startling for its factual distortion, as it is an undeniable fact that America and indeed the industrialized world have entered the age of neoliberalism since the Reagan administration. The rise of neoliberalism was a result of the phenomenon called stagflation in the American economy. Stagflation is characterized as a period of high inflation, slow growth, decline in corporate profit, real wage, rising unemployment and severe recession. To a great extent, the rise of neoliberalism was the failure of capitalism and it also coincided with the election of Ronald Reagan as the president of United States following the 1980 election.

       1980s was also the time China declared its Opening Door policy and, with the implementation of that policy, more than half million students were sent to the United States for advanced learning. Unfortunately, this advanced learning included the field of economics, in which the overseas students were taught by the neoliberal economists of the West. 

       It was in 1983, that Wu Jinglian, an accomplished economic professor from a prestigious Chinese academic institution, was sent to YaleUniversity as a visiting scholar. While in the United States, Mr. Wu, who became Deng Xiaoping’s leading economic adviser after he returned to China, spent one year studying undergrad course on modern economic theory. At Yale, the course of modern economic theory consisted of economic models, decision theory, game theory, and general equilibrium theory. In the West, under the aegis of neoliberalism, students were taught “the equation of ‘modernization’ with capitalist liberalization, the positive role of the multinational corporations and foreign investment.” ^3. They went home with the firm belief that “efficiency was identical with profitability and privatization; the inequality was a result of ‘merit’ (or lack of it)”^3.

       Indeed, marketization was the order of the day after Mr. Wu returned to China in 1984, and he helped the top government adviser draft a paper on China’s transition from planned to market economy. After the proposal of marketization was accepted, Mr. Wu was promoted to a powerful position in the DevelopmentResearchCenter, a think tank associated with State Council. Mr. Wu at once became a person of great influence in the formulation of China’s economic policy, and soon he offered advices to the Chinese leaders and participated in the debate in China’s economic policy. 

       As a result, the Chinese society underwent a sea change. Under the misguided economic policy of neoliberalism, China’s numerous state enterprises were privatized, resulting in economic polarization and increased poverty among the working people. This was taking place in a country once regarded as one of the most egalitarian in the world. There were massive layoffs coupled with the loss of social security, health care, and even educational opportunities. Corruption in the process of privatization caused deep resentment, as pillage of state assets by Chinese officials was widely spread. Corruption worsened with the policy of welcoming foreign capital, as multinationals were well known for their corrupting practices.

      The process of privatization, soaring inflation and indiscriminate welcome of foreign investment went unabated despite mass protests. In the late 1990s, management buyouts (MBOs), in which state assets were sold at a fraction of the real value to the “well-connected” and Chinese officials became fashionable. This is a violation of the Chinese constitution, and “the country’s constitution was amended in 2004 to provide explicit protection for private property.”^4.

      Accordingly, China’s property rights reform and the selling of state-owned enterprises through management buyouts generated a great controversy in 2005. It started when Larry Lang, an economic professor from Hong Kong accused managers and officials of purchasing assets by the process of privatization at very low prices, resulting in the loss of the state assets. However, Zhang Weiying, another neoliberal economist and an academic dean from Beijing University joined the debate by maintaining that entrepreneurs and corporate managers were being demonized in the Chinese press, and that the public should “treat kindly those who have made contributions to society.”^5. For Zhang, who first proposed the “dual-track price” which was responsible for China’s soaring inflation and corruption, China has achieved tremendous economic progress through the process of privatization and entrepreneurs should be protected and gain respect in the Chinese society.^5. 

      Unfortunately, neoliberal economist like Zhang, who studied at Harvard and has long been divorced from the Chinese mass, conveniently neglected the plight of tens of millions of  laid-offs and migrant workers. These workers work in the most miserable condition, and receive meager wages, and their payments are commonly in default. It is clear that China’s neoliberal economists are not in solidarity with the Chinese working people, especially the Chinese farmers, who constitute the majority of the Chinese people.

      With the dissolution of the commune, and the destruction of large-scale mechanized farming, the Chinese farmers are in dire straits. Excessive taxations, the increase in the cost of agricultural inputs, the disintegration of medical service, and the abandonment of infrastructures projects all contribute to the stagnant rural economy in China. As a result, many Chinese farmers in desperation are leaving the countryside to pursue jobs in the urban centers.

      The abandonment of farms by the Chinese farmers, the appropriations of fertile lands for urban real estate development with speculative purposes has been disastrous for Chinese agriculture. The building of golf courses to serve the well-to-do as well as the foreigners, signals the impending agricultural crisis in China, and the failure of agricultural reform of the past decades.

       One would think the failure of the Chinese agricultural reform would be a wake-up call for our neoliberal economic advisors and push them to change course by restoring cooperative farming in China. This is especially significant when thousands of existing co-op farms have all experienced great prosperity, in sharp contrast to the responsibility system brought about by China’s reformers. Unfortunately, the prescription offered by our neoliberal economic advisers for China’s farm crisis, simply put, is “to put together the country’s farmland for a few farmers to cultivate.”^6.

        According to Justin Yifu Lin, the neoliberal economist who studied at the University of Chicago, the birth place of neoliberalism, the prescription for China’s agricultural industry, or the most important thing to do “to reduce the urban-rural gap, is to reduce the rural population by moving large amount of labor out of the rural areas.”^7. 

        Unfortunately, the policy of rapid urbanization and the failure of the Chinese agricultural reform have already pushed China’s environment to a state of disrepair. Without taking into account of the special conditions in China, neoliberal economist Lin advocates more intensive urbanization by citing that farmers in the United States and Japan are no more than 2 to 4 percent of the total population, and China should follow the example of these countries. Other neoliberal economists favor total privatization, as in the name of efficiency, lands would be concentrated in the hands of a few farmers who are the large scale operators. Thus, the specter of hundreds of millions of landless peasants, who are jobless, destitute and resembling the dispossessed in the old pre-revolutionary days, roaming around China’s towns and urban centers, will soon be a reality in China. This is surely the prescription for instability, and a cause for a revolutionary change.^7.

       Incredibly, this kind of half-baked solution is now offered by the likes of Chinese neoliberal economist Justin Yifu Lin, who calls himself a Marxist and has formulated neoliberal economic policy in China for the past 15 years. Prof. Lin is no different from Mr. Wu Jinglian who, according to American writer Laurence Brahm, is like the “father of economics” in China, as “what he said was the blueprint for reform.”^8.

       Unfortunately for China, Mr. Wu, with his bankrupt neoliberal ideology, has “influenced a generation of younger economists who now hold senior government posts, including Zhou Xiaochuan, the leader of China’s central bank, and Lou Jiwei, chairman of the country’s huge sovereign wealth fund. Ironically, Mr. Wu also called himself “an idealistic socialist.”^8. But one should remind him and other neoliberal economists in China to explain how to reconcile Socialism with Neoliberalism, as they are in the opposite spectrum of modern political and economic philosophy.

       In reality, neoliberalism is the political philosophy of free market capitalism, free trade, financial liberalization, and deregulation. It has turned America’s industrial economy into casino capitalism. As a result of the economic crisis and financial meltdown, neoliberalism has already been discredited in the West. Apparently, things are not going too well in China for Mr. Wu Jinglian too. As a result of the neoliberal economic policy advocated by Mr. Wu and his colleagues, Western multinational corporations are increasingly dominating the key sectors of the Chinese economy, while Chinese firms encounter strong opposition when trying to acquire U.S. business in America. Mr. Wu has lost credibility with Chinese people and even the top echelon of the Chinese leadership. He started complaining by giving interview to the Western press. Although Mr. Wu was an adviser to Zhu Rongji and Jiang Zemin during the period of China’s economic reform, he now loudly declares that “government [is] prone to ‘meddling’ in the marketplace; a widening income gap; inefficient monopolies; and crony capitalism.”^8.

       Unfortunately for Mr. Wu, little did he know that in Latin America, the privatization of public monopolies controlled by the Western multinationals only led to the increase of service charges and reducing services, thus penalizing the domestic industry and the population at large, especially the urban poor.

      Although corruption is an inevitable outcome of Mr. Wu’s economic reform, he has not come to terms with it; instead he blames the flaw in China’s leadership. He calls for the establishment of British-style democracy, and that political reform is inevitable in China.^8.

       The calling of the establishment of British-style democracy in China shows that the Chinese academics, especially the neoliberalist economists, who play a major part in China’s economic reform policy formulation are completely out of touch with reality. In Asia, British-style democracy in India and Pakistan together with the democratization imposed by Americans on the Philippines has been a complete failure. Political experiences in these Asian countries clearly demonstrate that without economic equality, there will never be true democracy. Even in the American election, in which money culture has corrupted the American politics, the result was that the traditional concept of one-person-one-vote has proved to be a complete fallacy.

       Thus, neoliberalism, the child of economic liberalism of Adam Smith, reborn as a last ditch attempt to rescue the collapsing capitalism in the latter part of 20^th century, has been embraced by a tiny minority of Chinese intelligentsia, who in the mistaken belief that it represents the most advanced modern economic thought. Without any public debate and behind closed door, these neoliberal economists through their advices to China’s policy makers have unceremoniously implemented policies in China, which are much to the detriment of the interests of China’s working class. Their actions are also against China’s constitution, national interest and destroy the foundation of China’s socialist state, which will have unthinkable consequences for the future of China.