Though China has been the global economic star of the last low-growth decade, it remains a totalitarian dictatorship, with its economy shrouded in state secrecy. What we’re encountering in this crisis is the spectacle of a closed society colliding with the forces of complex, free-market capitalism. If we look beyond China, we can find a long history of these collisions, dating back hundreds of years, as both closed societies and capitalism evolved and became more complex. And the history has a clear but unsettling lesson to offer: When such a collision happens, it’s a moment to genuinely worry. ... Since the dawn of capitalism, closed societies with repressive governments have — much like China — been capable of remarkable growth and innovation. Sixteenth-century Spain was a great imperial power, with a massive navy and extensive industry such as shipbuilding and mining. One could say the same thing about Louis XIV’s France during the 17th century, which also had vast wealth, burgeoning industry and a sprawling empire. ... But both countries were also secretive, absolute monarchies, and they found themselves thrust into competition with the freer countries Holland and Great Britain. Holland, in particular, with a government that didn’t try to control information, became the information center of Europe — the place traders went to find out vital information which they then used as the basis of their projects and investments. The large empires, on the other hand, had economies so centrally planned that the monarch himself would often make detailed economic decisions. As these secretive monarchies tried to prop up their economies, they ended up in unsustainable positions that invariably led to bankruptcy, collapse and conflict. ... China is a new case, for it has mixed capitalism and totalitarianism in a unique way. ... The government may not be able to control the stock market, but it does successfully keep a veil over state finances. This is what closed, authoritarian governments have done since the 16th century. ... what we are seeing in this current financial crisis is likely to be only the beginning of the political and societal crisis brought about by a dictatorship’s efforts to simulate the performance of a capitalist economy — but one that only grows. ... There is no historical example of a closed imperial economy facing large capital-driven, open states and sustainably competing over a long term.
To traders at the famous Royal FloraHolland flower market near Amsterdam, Vincenzo Crupi was just another businessman helping to make the Netherlands the largest exporter of cut flowers in the world. ... To the police, Crupi was a mafia suspect allegedly concealing drugs worth millions of dollars alongside fragrant bouquets he trucked to Italy. By last year they were hot on his scent. So they bugged his offices at the flower market. ... In conversations recorded by hidden microphones and cameras, the 52-year-old Italian was heard speaking at length about mafia affairs, according to previously unpublished details of the investigation contained in 1,700 pages of Italian court documents reviewed by Reuters. ... Crupi was heard allegedly discussing drug deals, arms shipments and a lethal power struggle between mafia members in Canada. ... Police and prosecutors say the case sheds new light on the ‘Ndrangheta – the Calabrian mafia – and the way it has spread its tentacles from southern Italy into dozens of countries across five continents. ... For much of the last century, the Calabrian mafia made its money from extortion and kidnappings. Then in the late 1980s and early 1990s the group, which consists of about 160 patriarchal clans, bet big on the cocaine trade. ... Its success at drug smuggling catapulted the ‘Ndrangheta past its more storied Sicilian rival, the Cosa Nostra, in both wealth and power. Italian authorities now consider the ‘Ndrangheta to be Europe’s single biggest importer of cocaine.