Opinion

Chrystia Freeland

Chinese authoritarianism does not guarantee prosperity

By Chrystia Freeland
October 21, 2010

On a recent trip to Hong Kong Chrystia recorded a podcast for the American Chamber of Commerce in China, about an op-ed she published in the Washington Post this summer that critiqued China’s economic system of state capitalism.  Chrystia, invoking a recent speech from Mike McFaul of the National Security Council, tells the Chamber that while the Chinese system succeeded in raising the country out of the lowest rungs of poverty, there is no historical evidence that suggests it can turn China into a rich nation:

My argument, and as it turns out quite independently, Mike’s argument, was we have to be really careful about thinking that authoritarian regimes are better at modernization, and one reason why we have to be careful is there is some historical evidence that says that authoritarian regimes can be quite good at the early stages of modernization.  They can be pretty good at that brute force moment when you’re dragging and economy out of being an agrarian society into industrialization.  What we haven’t seen yet—and as we look across the world, across histories—we haven’t yet seen that an authoritarian state is able to move an economy to the next level, and in fact what we’ve seen is that even in those countries where an authoritarian state successfully led an industrialization effort, as the country got richer and the economic transformation that needed to be achieved was more complex, what you actually have had happening is democratization.  There are some Asian countries that are a really good example of that.  I think South Korea is perhaps the best one.  […]  What we don’t have evidence of is that the state capitalist model… works in a really rich country.  All the countries that are really rich are democracies.

Chrystia also elaborates on a topic she touched on in her original op-ed, namely economic historian Joel Mokyr’s thesis that the same centralized, authoritarian decision-making process which foreigners marvel at today actually caused China to miss out on the Industrial Revolution centuries ago:

What is most interesting is China could have been the place where the Industrial Revolution actually started.  If you look at medieval Chinese history, China had all of the ingredients for an Industrial Revolution centuries before Western Europe did, but it didn’t happen in China.  And why was that?  Because China had a highly centralized authoritarian state, and just as those elements were coming together, the Chinese state, which was authoritarian and centralized, decided, “We don’t want that,” and decided to go in another direction.  That couldn’t have happened in Western Europe because Western Europe was much less centralized.  Suffered from that of course—lots of wars, lots of countries moving in bad directions, less good at doing all sorts of things.  But because you didn’t have this centralized, authoritarian decision-making process, industrialization did happen in Western Europe.  And when one Western European country slowed down, went off the rails, became too authoritarian, that process—those people, those ideas—very quickly jumped across the border into another country and the energy, the economic growth went there.  And the whole continent, the whole society benefitted.

Do go listen to the whole thing.

Posted by Peter Rudegeair

Comments
14 comments so far | RSS Comments RSS

Nice article. One major component is that authoritarian regimes breed resentment which hampers innovation and productivity. Look at the USSR where people deliberately gamed the system to fail. China will never benefit from its peoples’ power and talents, as long as it fears that power. What happened to Falun Gong is a perfect example of soul killing repression by paranoid, psychopathic leaders. The Chinese mentality accepts levels of brutality and corruption which inhibit their growth.

Posted by Barts | Report as abusive
 

China is now second in the world in its publication of biomedical research articles, having recently surpassed Japan, the United Kingdom, Germany, Italy, France, Canada and Spain. J. Karlberg. Biomedical Publication Trends by Geographic Area. Clinical Trial
Magnifier. 2 (12), December, 2009. Roughly half of America’s outstanding public debt is now foreignowned with China the largest holder.Information on foreign holdings of U.S, treasury securities is available at: http://www.ustreas.gov/tic/mfh.txt.
Total debt held by the public is available at: http://www.treasurydirect.gov/NP/NPGatew ay

Oh never mind. No sense in going any further.

Posted by beachbear2011 | Report as abusive
 

Neither does democracy. But China’s achievements in a short thirty years is nothing short of a miracle for a country of over one billion.

Posted by greenacres | Report as abusive
 

still have to wait for years what China does could maintain the growth and increase their productivity until
no others countries feel China is a thread. Although authoritarian more tourist love to visit china now.

Posted by hm88s | Report as abusive
 

The author would’ve been entirely right if:
- the regime was totalitarian – but it’s authoritarian. Isn’t the regime in the USA also authoritarian???
- system of state capitalism – the state/government sets the rules in China, but in which country doesn’t it? On the other hand, if the state doesn’t control the means of production (i.e. the businesses), why name it ‘state’ capitalism? In China, I have noticed, the state plays a very wise role by investing, next privatising, thereby speeding up development. Besides, didn’t Ms Thatcher do rather the same thing with troubled companies???
- democracy – this word means ‘rule by the people’. Shortly, the Chinese are neither Americans, nor Europeans, in order to adopt their model of democracy. Considerring the progress they’ve made in thirty years – maybe we should consider adopting some of their values? e.g. publicly executing corrupt officials/politicians.
- prosperity – one must have a completely biased attitude to even hint the Chinese people haven’t become much, much richer, surpasing even ‘developed’ in many aspects (e.g. benefits of public infrastructure, etc.)

Posted by GPD | Report as abusive
 

You need to compare apples with apples. India, a democracy, has .a similar history of foreign occupation and population to China. There are more poor people in India than in China. In fact today most Chinese people are happy and proud of their government today.

Posted by Tellthetruth | Report as abusive
 

the headline sure is true though…even if the stuff underneath doesn’t really do the work…

Posted by adamt78 | Report as abusive
 

I can give you an example of an authoritarian regime having achieved modernisation and economic transformation — Singapore. The city state, which is China’s model of state capitalism, remains undemocratic while achieving per capita GDP higher than that of the US and most European countries.

Having lived in both worlds, I used to admire western democratic system. But now, I see western democracy as a receipie of populism, inefficiency, overspending, high tax, huge debts…. and you name it.

The fact that China has effective control over its banks, and that the government dares to cool off the overheating economy, shows that state capitalism can achieve things that a free market economy/democracy can never achieve.

I don’t know much about India, but if its economy goes down the road of the USA, it will eventually groom an echelon of uncontrollable bankers who will eventually ruin the national economy.

Posted by chinawatcher | Report as abusive
 

Here we go again with Freeland, like all dedicated capitalists, living in the past and defending her system against all comers. I, however, live in the present. China relaxed control of its citizens just a hair and now it is the world’s largest exporter. Germany is second on the exporter list. The USA is third and falling fast because it actively allows multinational corporations to outsource jobs to China and India.

How did China do it? Some people would say that China is the reincarnation of the USA in the 1800s — with all of the robber baron implications of oligarchs and serfs — and there is some justification for that. China’s problem with melamine tainted milk is just their version of the USA’s snake oil. However, there are two additional factors. First, China does not respect intellectual property: China has stolen trade secrets and other IP. Second, in its contracts with major industrial companies, China insists on a clause for the company to share its trade secrets. The company naively assumes that China will continue to buy products from them; they are always wrong, as China intends all along to use those newly acquired trade secrets to start its own industry.

Germany has a different model. It understands that a nation can successfully consist of two grades of skilled labor, university and trade school. So it has large numbers of technicians, with Germany manufacturing the highest quality products in the world. Contrast that to the USA, which has virtually no manufacturing left. The USA will soon have three classes of people: a tiny ruling class, a small middle class where university graduates reside, and an enormous poor class where 90%+ of the population resides.

Both China and Germany’s models are economically successful, while the USA’s sole reliance on Wall Street is proving to be an albatross around the necks of the vanishing middle class.

Freeland talked about how when one European country “went off the rails,” another took its place. Today we have a different model, the lemming model, where many countries play “follow the leader.” The USA has outsourced its way to oblivion and many other countries are following its example on their way into the abyss.

http://saucymugwump.blogspot.com/

Posted by saucymugwump | Report as abusive
 

I would think China is looking at what has been a relatively successful Singapore model, with autocratic rule by one party and comparatively viable testing ground for a multicultural society with a main stream Chinese population.

Posted by LeslieCheung001 | Report as abusive
 

WHY?
The author is EXTREMELY IGNORANT of Chinese history.
IT’s because the BRitish pushed an new item, completely unknown to the Chinese leaders, grown in India.
That item is called Opium

The Chinese resisted when they found out it’s a very dangerous substance.
THe CHinese banned opium, and burnt all the opium the British merchants were selling in China.

HOwever, Queen Victoria and her government supported the British druglords.
They fought a war, called the Opium War.

The druglords won, and took Hong Kong as a result of the Opium War.

It’s among the most shameful chapter of imperialism and racism.

Yet, the people in Hong KOng managed to become prosperous even under the authoritarian colonial system under the British.
Likewise, Chinese Americans suffered no less lynching than Afro-americans, and unfair discrimination under the CHinese Exclusion Act and many other shameful discriminatory racist scorning, but they rose above and overcame it all. They became the most educated, prosperous under American democracy.

My conclusion is: That’s a culture of success, not a government of success. That’s the key difference.

Posted by CommonSensLogic | Report as abusive
 

Some dozen of years ago, Times magazine featured “emotional intelligence” on its cover.

American scientists talk about the intelligence of kids being able to wait minutes before getting candies.

Chinese emotional intelligence allow them to wait for generations before achieving their dreams.
That’s ultimately the smartest emotional makeup, beyond emulation by other cultures. THat’s what allowed them to survive much worse hardships than the famine and persecution than during the Cultural Revolution and other government adminstrative mistakes. I don’t think the west can emulate it, as long as their culture is the still in the mindset of Generation X, which is outdated.

Posted by Janeallen | Report as abusive
 

Let’s examine this argument:

Seinfeld and J Lo caused our economic collapse. How? What?!

Seinfeld made his followers believe that the “hip” way to live, is to take as much unfair advantage as possible that one can get away with. That was Madoff’s philosophy, wasn’t it? Both Madoff and the people Madoff scammed were Seinfeld lovers.

J Lo made her followers believe that they can quit school, follow her, and become rich, popular, beautiful.
Well, even Saturday Night Live once featured her followers telling her that they were all out of work and without an education. Plus they had nobody to follow when she was temporarily gone and having a baby!

Obvious. Isn’t it?!

Posted by jo5319 | Report as abusive
 

There’s an additional element to the German success story in manufacturing— its cultural component.
The stoic, almost mechanical and austere component of their culture, paves the way for its reputation in heavy machinery manufacturing.
America has a workoholic bent to part of its culture, but by and large, the generations Xs and Ys promoted a real disdain against hard work. Maybe not in the high schools we went to, but where many kids studied, there was a counter-culture against working hard, propelled largely by the media. Taking marijuana, partying interests, do not promote pristine, exacting high quality technical products day in day out. That’s culture, not public policy, but may arguably be more decisive in the product quality, which, impacts the competitiveness of the products on the open market.

Posted by Janeallen | Report as abusive
 

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