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Tuesday, August 26, 2008

Development Authoritarianism

Is the world having an "authoritarian moment"?:

What does this authoritarian moment mean for developing countries?, by Pranab Bardhan, Commentary, Financial Times: As the petro-authoritarianism of Russia flexes its muscles and the economic prowess of China struts in Olympic glory, developing countries ... might start rethinking the lectures on democracy and development they have heard all these years from the West. ...

The Chinese case in particular is reviving a ... myth of how ... development authoritarianism delivers much more than democracy. This is also backed by the memory of impressive economic performance of other East Asian authoritarian regimes (like those in South Korea and Taiwan...). The lingering hope of democrats had been that as the middle classes prosper in these regimes, they then demand, and in the latter two cases got, the movement toward political democracy.

But... Authoritarianism is neither necessary nor sufficient for economic development. That it is not necessary is illustrated ... by scattered cases of recent development success: Costa Rica, Botswana, and now India. That it is not sufficient is amply evident from disastrous authoritarian regimes in Africa and elsewhere. ...

[I]t is worth reiterating the several advantages of democracy from the point of view of development. Democracies are better able to avoid catastrophic mistakes, (such as China’s ... massive mayhem in the ... Cultural Revolution), and have greater healing powers after difficult times. Democracies also experience more intense pressure to share the benefits of development among the people, thus making it sustainable, and provide more scope for popular movements against industrial fallout such as environmental degradation. In addition, they are better able to mitigate social inequalities ... that act as barriers to social and economic mobility and to the full development of individual potential. Finally, democratic open societies provide a better environment for nurturing the development of information and related technologies, a matter of some importance in the current knowledge-driven global economy. ...

All that said,... democracy can also hinder development in a number of ways. Competitive populism– short-run pandering and handouts to win elections– may hurt long-run investment, particularly in physical infrastructure... Finally, democracy’s slow decision-making processes can be costly in a world of fast-changing markets and technology.

The hopes of democrats relying on the middle classes in authoritarian regimes have not always borne fruit. Latin American or South European history has been replete with many episodes of middle classes hailing a supreme caudillo. The police state in China shows no signs of loosening its grip soon... Most people in the Chinese middle class are complicit in this in the name of preserving social stability, as long as opportunities for money-making and wallowing in nationalist pride keep on thriving.

So markets and capitalism will not do their political cleansing job automatically. On the contrary, markets often sharpen inequality, and the resultant structures of political power, buttressed by corporate plutocrats and all-powerful lobbies, may even hijack or corrupt the democratic political process, a phenomenon not unknown in some industrial democracies. Thus both for democracy and development, other social forces and movements for civil and economic rights for the common people have to be pro-active and eternally vigilant.

Industrial policy is, essentially, economic authoritarianism. Is it the industrial policy component of the more general authoritarianism in place in many countries that helps with development? If so, couldn't it work just as well, maybe even better, in a democracy?

(Also see, "Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s-2000s" [open link].)

    Posted by on Tuesday, August 26, 2008 at 02:07 AM in Development, Economics | Permalink  TrackBack (0)  Comments (25)


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