In today’s Washington Post editorial, National Endowment for Democracy President Carl Gershman referred to battling “authoritarian economic development models” as one of the challenges facing democracy promoters and a key element of the backlash against democracy. Mr. Gershman’s comments are right on the mark, and highlight a growing area of debate not only within the authoritarian world, but our own democracy promotion community.
Some commentators have suggested that economic reform and democracy need not go hand in hand, they view China’s economic success and the ability of other dictatorships such as Belarus to provide economic growth while maintaining quasi-communist governance structures as evidence of this. The argument goes that dictators have learned to provide the framework for economic growth while at the same time maintaining strict control over the state and individual freedoms. Economic reform and growth therefore become enablers of dictatorship, not drivers of freedom.
To me this argument rings hollow, as many commentators mistake the concepts of “economic growth” and “economic reform” for “economic freedom”. Mr. Gershman rightly coins this phrase “authoritarian economic growth”. While cloaking itself in the garb of markets and freedom most authoritarian economic growth systems are eventually doomed to fail because of the contradictions in their own structure. Authoritarian states by their nature cannot give up their controlling influence in the economy, and this is what will doom them in the end as they ignore the basic freedoms and accountabilities that provide sustained and equitable growth. Development experience has shown us that authoritarian control is ultimately incompatible with property rights, it breeds corruption, dismisses the rule of law, and lacks the ability to innovate and compete on a sustained basis. “Good” economic growth based on open market principles and the rule of law is a key element of “democracy that delivers” in the long term.
Authoritarian growth may now be driven by oil prices, the ability to take up excess capacity in the economy and cheap labor, but as economies grow and the need to compete on global markets drives competitiveness, these political/economies do not have the flexibility needed to respond to global market pressures, nor can they provide growth that serves all citizens. Indeed China is already showing signs of these tensions, and the potential role economic freedom has in promoting democracy is making itself evident. Across China demonstrations erupted last year focusing on the areas in which authoritarian economic growth falls short; property rights, corruption, and other “social abuses” conducted by “insider firms” exploiting their connections to the Communist Party. The only effective solutions to these problems lie in promoting transparency, accountability, and the rule of law, things authoritarian regimes seem to fall short on.
Asia is providing us with two contrasting models of dynamic growth, authoritarian China and democratic India, one driven by cheap production – the other by high tech growth and an appetite to enter the global economy as a producer and investor. Democracy and free markets have given Indian companies the public and corporate governance frameworks they need to succeed in the global market place. It will be interesting to watch these two contrasting models over the coming years, I’m confident that democracy and economic freedom will deliver sustainable growth in the long term. The debate is interesting, but those of us who believe in the inexorable link between markets and democracy must define our own terms, perhaps “Democratic Economic Development” could be a starting place.
Published Date: June 08, 2007