October 21st saw the commemoration in Beijing of the 80th Anniversary of the Long March Victory. Inevitably it was a hugely symbolic occasion, such is the significance of the Long March in modern Chinese history, particularly for the Communist Party. But it also seemed to accompany a mood shift in China; a tightening of party control and a reassertion of socialist virtues. The struggle against ‘historical nihilism‘ serves as shorthand for an ongoing battle over different interpretations of China’s history and — much more importantly — future.

Visitors look at paintings at the National Museum in Beijing during an exhibition to mark the 80th anniversary of the Red Army’s Long March. As China marks 80 years since the Red Army ended its epic Long March, the Communist Party is attacking revisionist history in an effort to compel reverence for its founding legend. (FRED DUFOUR/AFP/Getty Images)

This debate has a corollary in the field of economics, in which China’s extraordinary growth rates are treated by many as a direct vindication of China’s reform path, along with offering support for the notion of a ”Chinese Model” of authoritarian capitalism, inherently superior to its more chaotic Western counterpart. Running against this narrative is a more pessimistic account of China’s current predicament, expertly surveyed in a recentopinion piece by Tyler Cowen of Bloomberg.

Resting behind these competing tales of China’s current fortunes lies a familiar — if overly simplified — debate that divides economists the world over; that between so-called Keynesians, and the more conservative Austrians. The distinctions between the two schools are too numerous to detail, but one key philosophical difference concerns the role of what is called the ‘Long Run.’

Keynesians tend to focus on the necessary role of state intervention to smooth out the business cycle, premised on a view of the business cycle as essentially man-made. Austrians tend to view the business more like a natural mechanism for the correction of poor investment decisions. The former view the ‘long run’ with a degree of suspicion, believing that the present provides the impetus for action. The latter, however, take the ‘long run’ more seriously, assuming that action taken to remedy current distortions merely worsens the scale of those distortions in the ‘long run.’

Applied to China, this debate arises most clearly in the reaction to the 2008/9 global financial crisis. While the Chinese economy had been driven by investment and exports for many years, but encountered a crunch in 2008/9. At this point they faced a dilemma, consolidate and weather the downturn, or release the Keynesian stimulus kraken? History will record the widespread derision meted out at the time by Keynesian disciples onto those governments who chose ‘Austrian’ restraint, and by the same token, the almost universal praise heaped on China for opening up the spending taps.