@ Martin Enlund
2025-02-23 10:00:20
Europe's economic framework requires restructuring grounded in realism. The Commission's Competitiveness Compass, alas, reveals dangerous left-hemisphere dominance and risks repeating Mao's mistakes.
The European Commission presented its "competitiveness compass" in January. There will be massive investments in biotechnology, materials technology, medicines, space, and the defence industry. AI gigafactories are to be established, while Europe will "maintain its leadership in quantum technologies" (a leadership that few seem to be aware of). This will be achieved through more environmental labelling schemes, nature credits, procurement rules, platforms, cooperation plans, and coordination systems. Although the report contains some bright spots, such as promises to ease the regulatory burden, **the overall picture is strikingly lacking in creativity**. Instead, we are mainly met with the usual thought patterns of the European technocracy, which manifest in additional centralised frameworks, quantifiable goals, and annual reports. Mao's ghost haunts Brussels.
#### The Missing Half of Europe's Brain
Iain McGilchrist, a British psychiatrist and philosopher, has launched the hemispheric hypothesis (a theory about how the two hemispheres of the brain work). The left hemisphere is more detail- and control-oriented, while the right hemisphere is holistic and creative. A society dominated by the left hemisphere, [like our own according to McGilchrist](https://www.youtube.com/watch?v=WYB7P-xPRsk), "would see it as its task to control everything maximally." **The Commission's compass appears similarly lobotomised , prioritising measurable processes over imaginative solutions.**
In an earlier text, I mentioned that Europe might need to return [to its roots](https://www.affarsvarlden.se/kronika/enlund-lar-av-elon-musk-vi-behover-ett-mer-radikalt-europa) and asked if Europe should have "the same end goal as China." This is still a relevant and justified question. But if we are honest, China has implemented a series of well-thought-out reforms since the 1980s, in addition to its many well-known and large-scale investments. It is not necessarily wrong to be inspired by China, as many believe; it depends on which China you are inspired by.
#### Lessons from the Cat Theory
When Deng Xiaoping returned to power in the late 1970s, he chose a more pragmatic approach than his predecessors. China left Mao Zedong's purges of dissidents behind. Instead, he launched the cat theory: **"it doesn't matter what colour the cat is as long as it catches mice"**, regarding economic development. It was now free to experiment with different models. Instead of ideological conformity, the most important thing was to increase productivity and material prosperity.
What was done in China?
* Companies and individuals were given more freedom
* Provinces and municipalities were given more autonomy
* Special economic zones were established, with different conditions and rules
* Programs to increase the number of banks were introduced
* The banking sector was deregulated
* Property rights and contract law began to be respected
China has since gone from being an economic backwater to not only being the world's largest economy in terms of purchasing power but also a [global tech contender](https://www.aspi.org.au/index.php/report/critical-technology-tracker) (leading in 37 out of 44 key technologies per ASPI).
#### EU's Compliance Obsession vs Chinese Pragmatism
And today, when China is astonishing the world with surprisingly cheap and competent AI systems, which recently set American tech stocks in motion, in the EU one is met with advertisements for yet another compliance training, this time about AI. **Every new compliance training echoes Mao's ghost** – ideological correctness overriding practical results. Is prosperity really built with certifications, directives, requirements, and penalties?
When we compare the Chinese experience with today's EU, the contrast is clear:
* Freedoms are curtailed. The right to privacy is undermined (Chat Control, etc.)
* Member states' ability to self-govern is reduced, year by year
* Streamlining and harmony are popular buzzwords in the bureaucracy
* The ECB is actively working to reduce the number of banks
* The banking sector is being regulated more and more
* Property rights and contract law are being eroded, which can be partly attributed to [developments in payment systems](https://underorion.se/en/posts/freedom_to_transact/)
Deng's cat theory was an example of when the right hemisphere was involved in decision-making. Rather than just focusing on details (the cat's colour), the whole (the result) was important. **The Chinese proverb "cross the river by feeling the stones" is another example of more holistic thinking**. Under Deng's leadership, reforms were first tested in a free zone or a province. After a while, the reforms could be evaluated before they were possibly implemented on a larger scale. "Try before you buy" is also a wise principle that follows from complexity research. In sharp contrast to this approach was Mao's "Great Leap Forward," a part of a disastrous five-year plan that shows what can happen when the left hemisphere is given too much power. A tragedy of historic proportions - a mass famine - resulted. While Deng exorcized Mao's ghost through pragmatic experimentation, Brussels seems determined to resurrect. **Today's EU risks repeating Mao's mistake of letting political abstractions ("green transition! digital decade!") override reality** – Mao's ghost surely smiles at nature credit schemes replacing actual market signals.
#### Mao's ghost trives on the ontological mistake
The serious problems that the EU is facing have been built up over decades and stem from incorrect assumptions. The economy is not complicated. It is complex. The concepts are often confused, but they describe two fundamentally different things. The complicated refers to something composite, but which can still be unfolded and then folded back up again without changing its essence. The complex, on the other hand, refers to something entangled, where every attempt to divide it changes its character. Compare, for example, an airplane engine with a béarnaise sauce. If you mix up the concepts, you make an ontological mistake, a philosopher would say. A programmer would say: garbage in, garbage out. **Mao's ghost thrives on this ontological error**, convincing technocrats they can blueprint society like a Soviet tractor factory.
**When a system is complicated, predictable, and linear, centralised coordination and control by the left hemisphere can work well.** But in complex systems, it can never be a solution because it leads to reduced adaptability and increased system risks. Instead, the goal should be diversity and decentralisation, which provide greater adaptability! The faster the changes of the system or in the environment, the greater the demands on adaptability and flexibility - if the system is to survive, that is. Increased diversity and decentralisation would not only increase adaptability and flexibility but also promote creativity, an ability that will likely become increasingly important in a world where AI and automation are changing the rules.
#### A better path forward
Europe's economic framework requires restructuring grounded in realism. The Commission's competitiveness compass - fixated on metrics and control - reveals dangerous left-hemisphere dominance, echoing Maoist central planning's epistemological errors. Our path forward demands:
* Dual-brain governance (prioritising creativity over control)
* Banishing of category mistakes (acknowledging the complex adaptive nature of the economy)
* Pragmatism over ideology (policy sandboxes inspired by China's special economic zones)
* Anti-fragile design (increased autonomy of EU nations, within states, and decentralised banking)
* Sunset clauses on all bureaucracy (regulators cannot originate breakthroughs)
The alternative? Another technocratic Great Leap Forward - eco-certified, AI-monitored, but economically brittle and fundamentally maladapted to the complex global economy. **As Deng's reformers understood: no institutional architecture, not even the First Emperor's Terracotta Army, can withstand modernity's tide.**