Middle Kingdom, Middle Path?
James Mann has an interesting article in today’s Washington Post, “A Shining Model of Wealth Without Liberty,” which asks whether China presents a new model political/economic system. China raises issues that are not applicable to other models, such as Venezuela, Russia, and (in their day) Iraq and Saudi Arabia, which accumulate wealth through exploitation of rent-producing resources (oil), rather than through production and exchange facilitated by well defined and legally secure rights and a rule-governed legal system.
The topic certainly deserves a lot more study and thought. How much prosperity are the Chinese sacrificing by maintaining such controls, or is the enormous increase in prosperity (enjoyed very, very unevenly throughout the country, as are measures of the rule of law and marketization) sufficient in comparison to what preceded it to generate sufficient legitimacy for the system to persist indefinitely? Or is the system itself responsible for a net increase in prosperity over what a more democratic regime might have produced, given that it might well have proven to be unstable, chaotic, and prey to potentially even worse forms of tyranny? These are hard questions, but they urgently need to be asked.
China’s economy has momentum…for now. While the West’s economy has become knowledge based, the need for inexpensive manufacturered items has not diminished. China’s large and cheap workforce is arriving on the world stage at the right time. Combine that with the cultural norms that compare to the Protestant ethic and you have an emerging powerhouse. There are others aspects as well including a willingness to engage in free trade agreements and getting their population boom under (somewhat) control.
However, the economy at some point will inevitably falter. At that time, China’s vast economic inequities, environmental issues, and corruption rot will all come to a head. I don’t think that the resulting unrest will be overly violent but more of a orderly turnover to a Gorbachev-like figure.
Tom,
Political freedom and economic freedom are orthogonal states. One can have one without the other. As long as a dictatorial regime maintains the proper conditions to run a free market economy, people can prosper without political freedom.
Three comments:
1) Political freedom should be defended upon moral grounds. An economic justification belies the major reasons that people should live in a free society.
2) In a dictatorship, power is maintained by granting supporters advantages for gaining wealth. Corruption is the inevitable result, thus the absence of political freedom means that economic freedom will eventually dissapear.
3) China’s ace-in-the-hole is cheep labor. Once wages rise China will have to evolve to more of an information age economy. Lack of political freedom will stunt Ghina’s growth in information technology and in an information age economy.
I think that George is almost right. It is logically possible, of course, to have one freedom and not another. And there are odd cases, such as Hong Kong, in which substantial economic freedom coexisted with, not tyranny, but lack of political representation. Similarly, a handful of countries transformed themselves from government by military coup to representative democracy and capitalism. But those are generally odd cases and not good general models of the relationship between political freedom and economic freedom.
You can’t have free-market capitalism without a functioning legal system that will protect rights and enforce contracts. So there is a connection between capitalism and law, as the law and economics scholars have demonstrated time and time again. What about access to the courts? Same thing. If I don’t have access to legal arbitrartion that is expected to be unbiased and fair, I won’t engage in a lot of potentially wealth-enhancing exchanges. The semi-functional and systemically predatory “crony capitalism” of the sort found in many countries is a result of very limited access to the courts on the part of the poor, as Hernando de Soto argues in “The Mystery of Capital.” Access to courts means access to legal protections, including against the state itself. So there is a connection between the legal system and the economic system and between both and the broader political system within which the function.
I have quoted this observation of the late Mancur Olson before and will do so here, not so much for the argument from authority, but for their clarity:
â??Interestingly, the conditions that are needed to have the individual rights needed for maximum economic development are exactly the same conditions that are needed to have a lasting democracy. Obviously, a democracy is not viable if individuals, including the leading rivals of the administration in power, lack the rights to free speech and to security for their property and contracts or if the rule of law is not followed even when it calls for the current administration to leave office. Thus the same court system, independent judiciary, and respect for law and individual rights that are needed for a lasting democracy are also required for security of property and contract rights.â?*
*Mancur Olson, â??Dictatorship, Democracy, and Development,â? American Political Science Review, Vol. 8, No. 3 (September 1993), 567-76, 572.