The ultimate success of China's search for economic prosperity, cultural renaissance, and a "peaceful rise" depends, in large part, on whether a free market for ideas can reemerge and flourish in China. The concept of the "market for ideas" (sixian shichang) was first introduced to a Chinese audience by Ronald Coase and myself in How China Became Capitalist (Coase and Wang 2012, see also Coase 1974). It quickly won acceptance among academics and the media. China is the only leading economy where the production and communication of ideas remains under strict state control. Universities, the primary venue where new ideas are produced, are run by the state. Newspapers, radio and TV stations, and publishers are all controlled by the state; ideas unwelcome by the state have a hard time to see the light of day. Because the freedom to supply ideas, choose ideas, and criticize ideas is severely limited, the creativity of the Chinese people is underutilized and their innovative potential undertapped.
In the past several years, our argument has been picked up and further developed in China--most consistently and prominently by Weiying Zhang (2015). (1) In public speeches and writings, Zhang (e.g., 2014) highlights the leading role played by ideas in energizing and transforming the Chinese economy and emphasizes the importance of a free market for ideas in facilitating political reform and sustaining economic development. Wu Jinglian (2016) is another prominent Chinese economist who has come to appreciate the importance of the market for ideas in determining China's future. Outside economics, Chinese legal scholars (e.g., Guo Daohui 2015) have also recognized the market for ideas as a critical check on state power and as a prelude to the rule of law.
The Chinese translation of our book was published in January 2013, with a different title, [TEXT NOT REPRODUCIBLE IN ASCII]. If translated back into English, it reads: "China under Transformation: China's Road to the Market Economy." That the Chinese publisher had to erase "capitalist" from the title and substitute "market economy" or "market system" for "capitalism" in the book is an act of self-censorship. This is a delicate art of compromise between reality and integrity, between the pressure of power and the pursuit of truth--a critical skill of survival in a society where a free market for ideas is lacking. Nonetheless, the contents and arguments of the book are kept intact. A major argument that Coase and I put forward in the book is that China's future crucially hinges upon whether it can embrace a free market for ideas.
This is what we wrote:
As remarkable as the Chinese market transformation is, capitalism with Chinese characteristics is impoverished by the lack of a free market for ideas; this deficiency has become the most restrictive bottleneck in China's economic and social development. Ever since the start of economic reform, the Chinese government has been persistently calling for the "emancipation of the mind," but nothing is more effective than an active market for ideas in freeing people's minds. Indeed, without this, any "emancipation of the mind" is doomed. The creative minds of the Chinese people and their inventive power have been underexploited. This is unfortunate since capitalism with Chinese characteristics could definitely be more innovative and more driven by quality rather than quantity. As the largest producer of PhDs in the world, China could have contributed much more to the growth of human knowledge. In today's world, new products and industries, novel ideas and practices, flexible and innovative organizations and institutions urgently need to tackle global challenges, from poverty and disease to war, from energy conservation and water shortage to environmental protection. We simply cannot afford to set aside the human potential of one-fifth of humanity [Coase and Wang 2012: 199].
The rest of the article is organized as follows. First, I distinguish the market for ideas from democracy; this separation obtains special significance in the Chinese context. Next, I defend the freedom to partake in an open market for ideas as a basic natural right; the prevailing practice to associate the market for ideas as a bundle of political rights mischaracterizes the relationship between the state and the market for ideas. Following the defense and elaboration of the market for ideas, I then sketch a new, rather Hayekian, vision of the economy, which portrays the modern economy as an enterprise of knowledge. I conclude with a battle cry for the market for ideas.
Priority of the Market for Ideas over Democracy
Among many factors, Coase and I singled out the lack of a market for ideas as China's most vital defect; this was a novel and quite unconventional position. When our book manuscript was under review, we were censured by several reviewers for our overarching stress on this market for ideas. At the time, many China experts instead placed their emphasis on democratization--that is, on opening up the political system and introducing multiparty political competition to replace the existing party-state--as the most critical challenge facing China. When and how China will embrace democracy, and whether the Chinese Communist Party can survive democratization, were the main questions asked about China's political future. That we did not engage with these questions certainly left some readers disappointed. Yet with no pretense of pleasing everyone, and absent any pressure to maximize readership, we stuck to our position and offered in the book a different diagnosis of the main flaw of the Chinese market economy: China has developed a robust market for goods, but it still lacks a free market for ideas. For China to become a normal country, we argued, it has to embrace--or, rather, reembrace--this market for ideas.
A market for ideas flourished much earlier in China, at the time of Confucius. During the so-called Axial Age, Confucius, Lao-zi, and Mo-zi and their followers, each established competing schools of Chinese thought. These thinkers lived in an era when the Zhou dynasty was disintegrating and China was divided into many small states, each competing with the others for wealth, power, and human talent. As learning was no longer a privilege confined to the royal house of Zhou, knowledge began to spread out in society, transmitted by private tutor houses, somewhat similar to the academies in ancient Greece. New ideas about the nature of man and society, and competing views and strategies about the pursuit of wealth and power, all burst into life. From this emerging marketplace for ideas, all the Chinese schools of philosophy were born; together these gave life and character to Chinese civilization.
Since Chinese civilization first emerged out of "competition among one hundred schools of thong] it" (baijia zhengming), the idea of a free market for ideas has acquired sacred status in Chinese history. It has remained an inspiration for the Chinese literati and is accepted as a golden benchmark by which to judge the merits and legitimacy of political regimes. The first emperor of Qin, despite his historical role in unifying China, is forever condemned as a "tyrant" (baozheng) for "burning books and burying Gonfucian scholars alive" (fenshu kengru). A thousand years later, the first emperor of the Song dynasty set a rule that no scholars or critics of government should be killed, laying a crucial platform for the glory of Song China. (2) Modern China witnessed a brief resurgence of this free market for ideas during the early decades of the 20th century, after the collapse of the Qing dynasty and before the socialist revolution. During this period, while the nation was ravaged by foreign invasion and civil wars, a modern free press and private universities boomed. It may seem ironic, but even Mao himself, probably the most damaging enemy of the free market for ideas in modern China, who executed many critics of his policies and imprisoned hundreds of thousands of intellectuals, admitted the need to "let one hundred flowers bloom and one hundred schools of thought contend." If the long history of Chinese political thought can be distilled into a single piece of wisdom, it may well be that attributed to Wei Zheng, the chief minister of the first emperor of the Tang dynasty: "listening...