Is Autocratic Capitalism Winning?

[flintauqua]

From the Wall Street Journal

OCTOBER 29, 2009.

After the Wall: A Debate Over Democracy's Reach

The Collapse of Communism Marked an Ideological Victory, but Some Wonder If China Now Has a Competing Autocratic Model

BERLIN -- To many observers, the fall of the Berlin Wall on Nov. 9, 1989, symbolized the triumph of liberal democracy and free markets over their last serious ideological rival.

Two decades and one financial crisis later, a new debate is growing over whether that assessment was premature.

Some Western thinkers now argue that democracy is in a new competition with unexpectedly robust authoritarian regimes over which form of government can better deliver prosperity, security and national strength.

Critics of that view argue that democracy has far better serviced the needs of people and greatly boosted living standards through much of Central and Eastern Europe. They add that it remains to be seen whether autocrats anywhere can satisfy people's aspirations in the long run.

In the summer of 1989, American political economist Francis Fukuyama foresaw the "End of History" in a landmark essay, meaning that no credible alternative had survived to political and economic liberty as practiced in the U.S. and Western Europe. All that remained, he argued, was for other countries to catch up.


Today, history is back, according to writers such as Israeli military historian Azar Gat. In his new book, "Victorious and Vulnerable," he says that although democracy is the most benign system in history, it will have to demonstrate its advantages all over again in the face of its latest rival: authoritarian capitalism, as practiced by self-confident powers such as China and Russia.

In retrospect, 1989 led to the near-universal adoption of capitalism, but the same can't be said of democracy.

Indeed, by switching from Communist economics to capitalism -- albeit a state-controlled kind that Adam Smith wouldn't recognize -- China and Russia have adopted "a far more efficient brand of authoritarianism" than they had during the Cold War, says Prof. Gat.

Other political scientists say it is too early to tell whether the two powers really represent an alternative path of development to the West.

"It is by no means certain that China can maintain its existing structure of power," says Niall Ferguson, an economic historian who teaches at Harvard Business School.

What's more, today's Russia may be growing more assertive, but it's still a far weaker power than the Soviet Union that preceded it, while two of the major emerging economies -- India and Brazil -- are in the democratic camp, Prof. Ferguson points out.

Part of the recent strength of autocratic rulers in Russia, Iran and Venezuela derived from high oil prices, says Tom Carothers, head of the democracy project at the Carnegie Endowment for International Peace. "But when commodity prices go down, they hurt," he says.

Liberal democracy remains the system that's best suited to protecting individual rights, says Mr. Carothers: "People don't like to be mistreated by their government."

However, Mr. Carothers says "people also want government to take care of them and make them feel secure." Leaders in some countries can exploit that desire to prioritize order and economic growth over individual rights and liberty, he says.

Today, 46% of all countries are full-blown democracies, according to Freedom House, a Washington-based nonpartisan think tank that gets much of its funding from the U.S. government.

That's up from 36% in 1989. Much of the progress has been in former Soviet satellites in Central Europe such as Poland, which has achieved dramatic economic advances under democracy.

But the spread of democracy has stalled in recent years, according to Chris Walker, director of studies at Freedom House. The proportion of liberal democracies in world, 46%, is exactly where it was in 1999, according to Freedom House.

While countries such as Serbia, Croatia and Slovakia have become more democratic in recent years, Vladimir Putin's Russia and a majority of its neighbors from the former Soviet Union have been sliding back into authoritarianism, Mr. Walker says.

Today, even Prof. Fukuyama is more circumspect than in 1989 about how history will play out. China's unexpected success at developing a capitalist economy while keeping one-party rule is the biggest challenge to the notion that autocracy is fated to die out, Prof. Fukuyama says.

"They've mastered economic development under authoritarian circumstances, and you can argue they've done it faster because they're authoritarian," he says.

China's attraction as an alternative to Western recipes extends to places such as South Africa, which democratized soon after the Cold War but now cites Beijing as an inspiration.

South African Labor Minister Membathisi Mdladlana declared during a visit to Beijing in 2007 that "It is clear that there is something right that China is doing, and South Africa has a lot to learn from sharing experiences with them."

Neither China nor Russia is actively promoting its system of government the way the U.S. does. But China's recent growth in particular is feeding a conviction in parts of the world that democracy isn't necessary, or even helpful, for prosperity, say some analysts.

"There are hundreds of millions of people, especially in Asia, who believe that democracy usually means more bickering, more indecision and less economic efficiency, and that it requires a trade-off with prosperity that they're not prepared to pay," says Jonathan Eyal, director of studies at the Royal United Services Institute, a nonpartisan foreign-affairs think tank in London.

Mr. Eyal argues that the backlash against Western-style democracy began while 1989's democratic revolutions were still under way -- thanks above all to the way Beijing reacted to that year's convulsions.

China's ruling Communists, who had bloodily suppressed their own street protests around Tiananmen Square in June 1989, were transfixed by the revolutions sweeping Eastern Europe that summer and fall. Their first reaction was to freeze economic and political change. But "paramount leader" Deng Xiaoping took the view that the Soviet bloc had failed because of its economic stagnation.

In early 1992, weeks after the dissolution of the Soviet Union, Deng toured China's south to promote a strategy of rapid economic change, coupled with tight political control.

"Deng's approach was something new," says Michael Yahuda, a leading historian of China. "In the previous reform period, from 1979 to 1989, there was much discussion of political reform too. Thereafter, there was no mention of political change," he says.

In 1989, no China watcher believed the party would still monopolize power 20 years later, says Prof. Yahuda.

Prof. Fukuyama argues democracy might still prevail in China in the end. "If Chinese incomes double in the next 10 to 15 years, putting them at the level of South Koreans or Taiwanese at the time of their democratic transitions, will there be [popular] pressure to democratize?" He expects so.

South Korea and Taiwan are the star witnesses for the argument that prosperity ultimately ushers in democracy. Both authoritarian regimes gave way to liberal democracy around 20 years ago, in parallel with their economic advances. That seemed to confirm the Western theory that capitalism creates a moneyed middle class that demands representation in return for taxation.

Prof. Gat argues that South Korea and Taiwan aren't a good guide to China's future: "They were two small countries within a U.S. orbit during the Cold War, and they were overwhelmed" by U.S. influence, he says.

Meanwhile, Singapore has stuck with strict paternalistic rule, showing there's more than one path even at a high level of economic development, he says.

India responded to the collapse of the Soviet bloc by abandoning its socialist economy in 1991 in favor of market-oriented reforms, while keeping its fractious democracy. The appeal of democracy outside the West may hinge on how India performs, says Prof. Yahuda: "It's an alternative example for the developing world."

Write to Marcus Walker at marcus.walker@wsj.com

Printed in The Wall Street Journal, page A17

[Diane Amberg]

Very interesting! Thanks.