FUKUYAMA: So you have to understand what that means. China

28 FUKUYAMA: So you have to understand what that means. China didn’t create the first state, it created the first modern state, meaning a state which recruited people into a centralized bureaucracy based on talent and merit, essentially, and not based on family relations, or connections to the household of the emperor, or something of that sort. So it had a modern form of public administration. And this was all consolidated by the third century B.C. But what the country never got to was the rule of law. Up to the modern day, the concept of a sovereign being limited by the rule of law never existed. So what that meant is that at a very early period in their history, the Chinese perfected strong, absolutist government. And that’s been a consistent pattern — high-quality, authoritarian government. And I think that continues up to the present. SHAFFER: Could we trace Western ascendance to that one factor, the rule of law? FUKUYAMA: That’s what’s interesting about the present period. A lot of economic theory says you can’t have modern economic growth without Western-style rule of law. Economists who believe this are thinking about two critical things — property rights and contract enforcement. And there’s a lot of theory and a lot of empirical evidence that show that these are in fact important. The problem with that theory is that it doesn’t really square with the facts in contemporary China. As everybody knows, for the past three decades, China has been growing at double-digit rates and they don’t have Western rule of law. I think you can rescue the theory in the long run, because without rule of law they can’t keep this up. In a way the challenge that contemporary China poses it that they are doing well, and in the short HOUSE_OVERSIGHT_031903