Stephen Kotkin

So what happens is there's no way for them to open debate and then to put a lid on the debate.

It becomes a Pandora's box.

You can't be half communist, half monopoly.

You either have the monopoly or you don't.

So every time they liberalize politically...

the system liquidates itself.

Hungary in 56, Czechoslovakia in 68, and Gorbachev.

Had Gorbachev not happened, China might have done its own Gorbachev.

Had they not seen Gorbachev accidentally liquidate the party, they might have done political reform, opened up the party, and watched the thing unravel.

Or they would have had it cracked down and put the lid back on, much bigger than the Tiananmen episode in June 1989.

So they're not going to do political reform because they know from studying the Gorbachev case, which everybody studies in party school,

which is where all the cadre have to go to be trained.

They're not going to open up the system politically because that's suicide.

And they're not going to commit suicide like what happened with Gorbachev.

So this means their policy options, their menu of policy options is limited.

They can open up the economy, but if it gets too open and too liberalized, too many people with independent sources of power and wealth, too many Jack Ma's, they lose control potentially.

So they can open up the system economically, but then they got to somehow reimpose controls.

But if they reimpose too much controls, the GDP goes down and they don't have the job creation.

So you have this constant back and forth of how much economic liberalization you can have before it becomes a threat or how little economic liberalization you can have before it becomes a threat to your ability to create jobs and wealth.

So that's the dilemma they're in.