Rarely in history do two political leadership contests occur simultaneously in the world’s two pre-eminent nations. The coincidence between the 57th presidential election in the United States and the 18th National Congress of the Communist Party of China has the capacity to impact the entire planet due to the collective weight of these two states and their forms of governance.

The American presidential race between incumbent Barack Obama and challenger Mitt Romney is a true election with the classic characteristic of democratic competition between political parties in which the outcome is not foreordained before people cast their choices. It is an affirmation that periodic party-based elections are necessary to give hope to the populace that their collective will has some power. If there is dissatisfaction with the current administration, one gets a chance to “throw the rascals out” in four years. No one can question the authenticity of electoral democracy in the United States, although it is not textbook perfect.
On the other hand, the Chinese Communist Party’s once-in-a-decade change of guard, which commences just two days after Americans pick their next President, is a closed-door affair making a mockery of China’s self-description as a “People’s Republic”. The way Beijing has been sanitised and re-routed in preparations for the congress in the party’s quest for maximising “social harmony and stability” shows how uninvolved Chinese citizens are in the whole exercise of leadership transfer.
The final slate of which individuals will become the new President and Premier is fixed in advance and universally known in this ho-hum affair. While the fates of Mr Obama and Mr Romney will be sealed by voters, Xi Jinping and Li Keqiang will ascend as the new duo without any deviation from a script decided long ago through intra-Communist Party manoeuvrings and rivalries.
The suspense in the Chinese case is less about the No. 1 and No. 2 and more about who will make it to the elite Standing Committee of the Politburo and what its eventual size would be. Prognoses that the Standing Committee would be trimmed down from nine members to seven have unleashed speculation as to which faction of the party will gain or lose bargaining power at the top of the pyramid and what this will mean for domestic and foreign policy directions.
All authoritarian systems have their own admittedly narrow but nonetheless crucial ingredients of political competition. Politics would die out if there were no opposing interests whatsoever. The Chinese “selection” cannot therefore be dismissed as outward manifestation of essential continuity under Communist dictatorship. There have been dramatic shifts in China’s economy with variation in political leadership. The tenure of Zhu Rongji as Premier (1998-2003), when Jiang Zemin was the President, was notable for greater devolution of power to the private sector at the expense of the state-owned enterprises (SOEs).
But Jiang and Zhu’s “reformist” policy orientation was reversed by President Hu Jintao and Premier Wen Jiabao, who came to the pinnacle at the 16th Party Congress in 2002 and instituted the statist doctrine of guo jin min tui (“the public sector advances and the private sector retreats”). If China is today the global flag-bearer of state capitalism, it owes it to the outgoing leadership.
The mode of capitalism in the world’s second-largest economy is the overarching structural stake for Xi Jinping and Li Keqiang as they embark beneath a challenging horizon of slowing economic growth. Whether the “princeling” Xi has the political capital to clip the wings of oversized SOEs and their lobbies is the central guessing game in China. With the “cadre capitalists” having gone overboard in corruption and siphoning off all the benefits of Chinese GDP growth, the level of alienation of Chinese people from the economic miracle is at an all-time high.
Incoming Chinese leaders are aware that affordable housing, healthcare and social safety nets need to be delivered if popular unrest is to be kept at sub-revolutionary levels. An alternative formula of guo jin min ye jin (“the state and the market develop together”) could find light of the day if Xi’s team sees the writing on the wall and reforms China’s Leviathan
economy.
In the US, too, the presidential election carries portents for the type of capitalism that will be required to emerge from a nagging economic crisis. Eduardo Porter of the New York Times has argued that the choice between Mr Obama and Mr Romney is respectively one between “cuddly capitalism” (with more social democratic provisions for the poor and the middle class) and “cut-throat capitalism” (with financial benefits skewed totally towards entrepreneurs and big businesses). The trade-off in the former model is that innovation and the quintessential “creative destruction” of the marketplace are curbed by the state so as to make the income distribution more humane. Economists Daren Acemoglu, James Robinson and Thierry Verdier contend that the “cuddly” variant of capitalism produces lesser inequalities but is also less innovative.
The big question awaiting the next American administration really is about which model of capitalism will end the economic crisis and propel recovery. A Romney presidency would maintain that spurring innovation and rewarding the markets would do it. A second term for Mr Obama would presumably go down the path of eroding America’s economic apartheid, wherein the proverbial one per cent of society has eaten too much of the wealth pie and left no purchasing power in the middle and working classes to lift the economy out of the slump.
As a politician who needs to be covering all bases, Mr Obama has rhetorically made the case for a second term which promises both socio-economic equality and business innovation. But if the theoreticians are right, he has to sacrifice one for the other in his second innings. The economic crisis and its pressures on political leadership may transform America into a “social democratic” capitalist system from its current neoliberal avatar, which has rained down shock after shock and immiserised the bulk of society.
The election in the US and the selection in China are, thus, bellwethers for the future of capitalism in advanced and emerging economies. No less than the terms for markets and the livelihoods for billions are on the line. As the utilitarians say, may the “greatest happiness of the greatest number” prevail.

The writer is a professor and dean at the Jindal School of International Affairs