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Thought Leadership on US-China Affairs and the Theft of Innovation

We are at an inflection point in the US-China relationship because innovation and intellectual property
​create a nexus between commerce and international security. 

Concentrating Power in the Hands of a Few

3/31/2021

 
It has often been said that when power is concentrated in the hands of too few for far too long, the system becomes corrupt. Power is the expected utility in both the study of national and firm governance. From the perspective of the US and much of the West, the question is, "How do we check mankind’s inherent quest for power without stifling mankind’s quest for progress?" The response to this question from US policymakers is an appeal to govern by the rule of law: How should economic and political power be dispersed among the governed so that it does not end up concentrated in the hands of too few? Similarly, the same appetite for checks and balances are apparent at the corporate level (although imperfectly applied), hence the alignment of executive interests to that of shareholders and stakeholders, and the presence of external boards to check executive performance.

From the perspective of China and other authoritarian states, the object has been to govern by the rule of force: How do we preserve our power over the governed to maintain and protect our regime’s interests? Whereas the US, like most developed economies, relies on the rule of law, China rules through law. That is, the Party-State uses the legal system as an administrative tool to achieve its political ends. Thus, the Party-State is above the law. Scholars who fail to make the correct assumptions in postulating their theories do so at the people's peril.

The failure to recognize this fundamental difference between the two political economies seems to have discouraged the creation of a synthesis perspective on international trade across the many competing paradigms, and has clouded the implications for promoting an optimal IP regulatory regime for interacting with developing economies. For example, neoliberal economic theory has guided US trade policy for several decades, yet this framework has failed to predict the persistent patterns of outcomes that have emerged in trade between the US and an authoritarian regime, because economists have long predicted that a developing country that trades more will become more free. I reject such broad conclusions. Scholars did not account for the influence potentially working in the other direction. And it appears that scholars across many disciplines, especially in the fields of Economics and Business, are poised to make this mistake again.

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