Why Autocracy Persists

About a month ago, I wrote an Insight mostly about the death penalty but which also explored the general desire to expunge non-rational ideas from our society. I argued that attempting to strip political life down to rational self-interest is a bad idea, that, “We need to believe in non-rational stories—myths, religion, anything—if we are to have healthy and decent democratic politics.”

A comment left on that article led me to revisit some of those ideas. Okay, the commenter was my dad, but he said that the argument reminded him of a conversation he had with a Chinese resident who said, “the government can not take their ‘foot off the gas’ because there is nothing that binds the Chinese together anymore but for economic advancement. In its absence the government would collapse.”

At least according to Xi Jinping, President of the People’s Republic of China, such an impression of Chinese nationalism is not far off. In a speech earlier this year, marking 100 years since the founding of the Chinese Communist Party, Xi said, “On this special occasion, it is my honor to declare...we have realized the first centenary goal of building a moderately prosperous society in all respects.”

In the speech, Xi goes on, detailing the history of abuse and subjugation suffered by China which renders the “national rejuvenation” so remarkable. For Xi, and for the Party and the Chinese people, it is economic growth which constitutes the bedrock of Chinese nationalism.

And there’s good reason for this to be a powerful unifying force in China. According to the World Bank, the poverty rate in China dropped from about 50% in 2000, the year China joined the World Trade Organization (WTO), to less than 1% in 2019. Ordinarily, this kind of meteoric and unprecedented economic development is thought impossible from an autocratic regime like China.

These past few weeks, we’ve been exploring a key theory about democracy and autocracy which supports this belief: Mancur Olson’s “stationary bandit.” According to Olson—and our application of his theory to Portuguese dictator Antonio de Oliveira Salazar in a recent Bird’s Eye—autocracy just isn’t that efficient. Growth is limited by structural factors such as the lack of enforceable property rights conducive to investment or the need to grant monopolies to powerful elites propping up the regime.

Liberal democracy, according to Olson, is the way to extraordinary growth. Only with a decentralized economy, an independent judiciary, and enforceable individual rights to property and liberty, can a society promote the necessary investment and innovation.

But Olson’s theory of autocracy doesn’t work quite so well in today’s globalized world, and China, to a greater extent than any other authoritarian state, has opened itself up to the changes globalization brings. While Olson may be right about the limits of homegrown development in a society lacking domestic liberalism, participation in the international liberal market has proven a powerful force for growth within China.

Xi Jinping even admits this in the same speech, saying, “By pursuing reform and opening up, a crucial move in making China what it is today, China caught up with the times in great strides.”

Back in 2000, the year that China joined the WTO, they also were granted “Permanent Normal Trade Relations” with the United States. In other words, the turn of the 21st century was also the turning point at which China began to fully engage with the world.

At a ceremony announcing his intention to establish permanent normal trade relations, President Bill Clinton offered the microphone to Alan Greenspan, longtime Chair of the Federal Reserve. Mr. Greenspan, rationalizing this decision and accurately predicting the future, said, “Should China accept the challenge of international competition...it will doubtless promote internal economic development...and contribute to lifting its citizens out of poverty.”

But that wasn’t all that Mr. Greenspan promised. In the same speech, he added,

“History has demonstrated that implicit in any removal of power from central planners and broadening of market mechanisms, as would occur under WTO, is a more general spread of rights to individuals. Such a development will be a far stronger vehicle to foster other individual rights than any other alternative of which I am aware. Further development of relationships with the United States and other industrial countries will work to strengthen the rule of law within China and firm its commitment to economic reform.”

In other words, Chinese engagement with the global liberal market was promised to be a force for the development of democracy, of individual rights, of domestic liberalism within China.

But that promise rings quite hollow today. Indeed, poverty has been decimated in the process, but, as Mr. Greenspan illustrates, the philosophy of liberalism has never been merely about material enrichment. Liberalism, ever since its birth, has treated individual liberty with central importance.

The material wealth facilitated by liberalism is necessary but not sufficient to achieve its final end. The value of prosperity is how it may enable individuals to pursue the lives they would wish to live and empower them to hold the government and the wealthy to account. The liberalization of global markets, then, was meant to spread not only wealth but freedom.

However, the admission of China into the “club” of the global liberal market complicates that project. During the Cold War, we took seriously the idea that while liberal democracy was good, it was not an unstoppable force. Faced with the growth of communist totalitarianism, American diplomat George Kennan articulated a strategy that reshaped the world: containment.

Mr. Kennan believed that if liberal democracy was going to win out, it was going to have to contain the spread of communism. In a way, this assumed that freedom could not triumph in the world if simply left on auto-pilot. The virtues of liberal democracy were not so great that they would inevitably win out over all other ideas. Autocracy, indeed, can be a force to reckon with.

As Mr. Greenspan indicates and WTO admission conditions for China confirm, however, by 2000 America had apparently forgotten this key truth. The WTO was designed for the integration of liberal states. The organization was never, and still isn’t, structured to facilitate the liberalization of non-liberal states. As a result, WTO requirements for China’s admission were minimal. Instead of rules which required conformity and punitive enforcements, the WTO laid out expectations that China would do its best to liberalize.

Of course, in hindsight, it may be obvious that this could not have turned out as hoped, with the liberalization of China and the disintegration of the Communist Party in the face of the all-powerful market. However, it should have been clear from the beginning, because this strategy pursued only one aspect of liberal democracy, leaving the rest to languish.

Liberalism and democracy certainly do complement one another in innumerable ways. However, liberalism unchecked—with the immense power it yields to those with money to spend it however they like—has a tendency to subvert democracy. If or as wealth consolidates, budding oligarchs have little concern for democracy and can leverage their resources against it to protect their interests. This should have been an obvious danger in our approach to China when Mr. Greenspan said, “As China’s citizens experience economic gains, so will the American firms that trade in their expanding markets,” without mention of Chinese political equality.

This disinterest in democracy on the part of the wealthy is evident in the failure of prior action by Mr. Clinton. In the first years of his presidency he tried to be more forceful with China, revoking its favorable trade status and demanding reform and a stop to human rights violations. The Party, however, dug in its heels, and American multinational corporations suffered. Mr. Clinton quickly reversed course, and eventually made China’s acceptance permanent in 2000: no longer subject to annual contestation in Congress.

Maybe two decades isn’t enough to see the long arc of globalization bend toward democracy. China’s growth has been spectacular, but it is slowing, and their economy remains unevenly developed. Crises in sectors like real estate with the firm Evergrande have imperiled the stability of its economy.

Perhaps the economic complexity which has grown in the nation as a result of its development and engagement with the liberal world will ultimately loosen the Party’s grip on power.

But even if the Party falls, democracy is not guaranteed. The presence of liberal markets does not necessarily generate democracy. Time and again history has shown that to some extent Mr. Greenspan is right but also that democracy is won politically, not economically.

It was a mistake to believe that unconditionally admitting such a repressive authoritarian state to the realm of global trade would seamlessly democratize it. As I wrote in the article which inspired this piece, democracy is not merely a rational, material endeavor. Mr. Greenspan, by insisting on a unidimensional economic process for the development of liberty, seems not to have grasped that truth. Allowing our vision for the potential of global trade to languish into something so empty is what has allowed autocracy to persist both in China and elsewhere.

There is no doubt that the near-eradication of material poverty, a result of global trade, is an almost unparalleled achievement which is impossible to regret. However, there remains a great poverty of freedom which trade alone cannot deliver, and we would do well to remember that fact.