Hey kids, it’s time for Macro Deathmatch! Yay! The point of this great confrontation is to pit pairs of countries against one-another. In all four cases that follow our contenders are truly made for each other. “Why?” you ask? Because today for the price of admission only you get to see East and West, North and South, past and present battle for the souls of Germany, Korea, China and India! So buckle up, seal your bourbons in your shatter-proof vessels, crank your bow-ties to 11, cos it’s gonna get crazy up in here!



Whatever was the state of play in these two halves of a whole come reunification in 1990? Yes, reunification was in 1990, not 1989. The German people in the East had been subject to a regime that had abrogated their rights to everything including their own lives, and so had annihilated almost all sense of social responsibility and work ethic. No privacy could be enjoyed for more than moments, and the industrial giants, called combines (kombinaten) steadily ossified over the decades from 1950 to 1990 as they succumbed to the economic calculation problem. The West, on the other hand, enjoyed the Wirtschaftwunder and many decades of solid economic growth before enduring a period of stagnation after unification.



Oh dear, this one remains in force. So it could be argued that the verdict is not yet in but for one unfortunate observation;

South Korea GDP per capita – $26,482 (nominal) – $33,200 (purchasing power parity)

North Korea GDP per capita – $583 (nominal) – $1,800 (purchasing power parity)

Nominal figures are from the United Nations, purchasing power parity ones from the Central Intelligence Agency. Needless to say, North Koreans are effectively serfs and prisoners. Considering the problems left over after German reunification, it is clear now that uniting Korea would be a risky and chaotic undertaking, as the income disparity between the two countries is now more than 18 to 1. The Hermit Kingdom continues onward in a perpetual state of crisis while the Republic to the South goes from strength to strength, bringing the world k-pop, kimchi, and all those delectable chaebol such as Samsung and LG.



Are you gagging for a Great Leap Forward? Do you crave Cultural Revolution? Is it tea time at Tienanmen Square? Or do you wanna be the first person in your village ever to earn a wage and save money for cars, houses, education and a better future? Ironically, the special economic zones in China have embraced capitalism far more than most of present-day Western Europe, and have boomed as a result. The purchasing power of ordinary Chinese people has sky-rocketed over the last 30 years since the reforms of Deng Xiaoping, albeit reforms that remain incomplete.

The country does not have one form of citizenship, but two, effectively subsidising Eastern-born urbanites at the expense of the Western migrant workers who build their plazas, freeways and offices. This is Hukou, the system that registers citizens as rural and urban, and dictates what services they can and cannot make use of. Eastern citizens get state-funded schooling while migrants and their children do not, even if those children are born on the Eastern seaboard.



In 1947 India became an independent nation, and the people were so overjoyed that more than a tenth of them promptly seceded to form the two separate parts of Pakistan, with the Eastern part going its own way and becoming Bangladesh in 1971. The economic model that the India government imposed was widely referred to as the Third Way, a kind of halfway house between the socialism of the USSR and the capitalism of the USA. People’s pesonal ambition was continually thwarted by the License Raj, since business owners required lots of complex licenses that were hard to acquire to do business, inevitably inviting corruption.

On top of this the government took control of many industries outright. To this day the Indian government still makes watches. Overall, the economy was characterised by subsistence farming from independence right up the the 1990’s, an embarrassing lack of progress that was finally kicked into higher gear by the abolition of most of the red tape of the License Raj and the selling off of many state-owned corporations in 1991, the same year in which the Soviet Union and Somalia collapsed. Nevertheless much that was social democratic remained and remains to this day. Regulations are still immensely stifling, corruption remains endemic, and economic growth is faltering. But still, it’s better than the Third Way precisely because there is more market capitalism.


Well gee there’s a trend in there somewhere, but I just can’t see it. Maybe this video about The Lego Movie will help me.

Hang on, planning leads to less good outcomes than emergent order? No way! Rad, man! Admittedly India never went down the full planning route, preferring a kind of botched macroeconomic surgery of socialism in some industries, corporatism in others, and subsistence in most of the countryside. Some I think we have our case in favour of freedom made. Of course, this was all just on practical grounds. Time to say goodbye. Tune in next week when we take the hobbits to Isengard!