On Authoritarian Capitalism

In the new issue of Foreign Affairs, Azar Gat has a fascinating argument that the authoritarian capitalism as practiced by Russia may represent an alternative path to modernity – and that the future triumph of global liberal democracy is not inevitable, and may in fact be threatened by this phenomenon. (As though Francis Fukuyama hadn’t been proven wrong enough times….). Excerpt:

The question is made relevant by the recent emergence of nondemocratic giants, above all formerly communist and booming authoritarian capitalist China. Russia, too, is retreating from its postcommunist liberalism and assuming an increasingly authoritarian character as its economic clout grows. Some believe that these countries could ultimately become liberal democracies through a combination of internal development, increasing affluence, and outside influence. Alternatively, they may have enough weight to create a new nondemocratic but economically advanced Second World. They could establish a powerful authoritarian capitalist order that allies political elites, industrialists, and the military; that is nationalist in orientation; and that participates in the global economy on its own terms, as imperial Germany and imperial Japan did. It is widely contended that economic and social development create pressures for democratization that an authoritarian state structure cannot contain. There is also the view that “closed societies” may be able to excel in mass manufacturing but not in the advanced stages of the information economy. The jury on these issues is still out, because the data set is incomplete. Imperial and Nazi Germany stood at the forefront of the advanced scientific and manufacturing economies of their times, but some would argue that their success no longer applies because the information economy is much more diversified. Nondemocratic Singapore has a highly successful information economy, but Singapore is a city-state, not a big country. It will take a long time before China reaches the stage when the possibility of an authoritarian state with an advanced capitalist economy can be tested. All that can be said at the moment is that there is nothing in the historical record to suggest that a transition to democracy by today’s authoritarian capitalist powers is inevitable, whereas there is a great deal to suggest that such powers have far greater economic and military potential than their communist predecessors did. China and Russia represent a return of economically successful authoritarian capitalist powers, which have been absent since the defeat of Germany and Japan in 1945, but they are much larger than the latter two countries ever were. Although Germany was only a medium-sized country uncomfortably squeezed at the center of Europe, it twice nearly broke out of its confines to become a true world power on account of its economic and military might. In 1941, Japan was still behind the leading great powers in terms of economic development, but its growth rate since 1913 had been the highest in the world. Ultimately, however, both Germany and Japan were too small — in terms of population, resources, and potential — to take on the United States. Present-day China, on the other hand, is the largest player in the international system in terms of population and is experiencing spectacular economic growth. By shifting from communism to capitalism, China has switched to a far more efficient brand of authoritarianism. As China rapidly narrows the economic gap with the developed world, the possibility looms that it will become a true authoritarian superpower. … So does the greater power potential of authoritarian capitalism mean that the transformation of the former communist great powers may ultimately prove to have been a negative development for global democracy? It is too early to tell. Economically, the liberalization of the former communist countries has given the global economy a tremendous boost, and there may be more in store. But the possibility of a move toward protectionism by them in the future also needs to be taken into account — and assiduously avoided. It was, after all, the prospect of growing protectionism in the world economy at the turn of the twentieth century and the protectionist bent of the 1930s that helped radicalize the nondemocratic capitalist powers of the time and precipitate both world wars. On the positive side for the democracies, the collapse of the Soviet Union and its empire stripped Moscow of about half the resources it commanded during the Cold War, with eastern Europe absorbed by a greatly expanded democratic Europe. This is perhaps the most significant change in the global balance of power since the forced postwar democratic reorientation of Germany and Japan under U.S. tutelage. Moreover, China may still eventually democratize, and Russia could reverse its drift away from democracy. If China and Russia do not become democratic, it will be critical that India remain so, both because of its vital role in balancing China and because of the model that it represents for other developing countries.