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