Yesterday’s Washington Post article on Shanghai’s middle class revolt raises some interesting questions about how we are to treat autocracies that endeavor to ‘progress’ in ways that contradict our Westocentric norms.  I indulged in debates on this matter with several of my Georgetown colleagues last semester in Barak Hoffman’s class, The Politics of Economic Reform.  These were sparked by the venerable Dani Rodrik and his 2006 article “Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank’s Economic Growth in the 1990s: Learning from a Decade of Reform.”[1]  The following is an excerpt from an essay I wrote for that course.

 

“In his article, Rodrik pursues a “practical agenda for formulating growth strategies” (982) based on the three steps of: 1) diagnosing the causes of weak growth, 2) designing policies focused on alleviating the worst problems (so as to maximize marginal gains), and 3) to institutionalize reforms with the goals of “[maintaining] productive dynamism” over time and “strengthening… institutions of conflict management” (985).  This paradigm is adopted with the increasing economic growth of China in mind.  Rather than reconstructing China into a private ownership economy, officials circumvented this formerly “necessary” step by concentrating ownership rights in local governments through township and village enterprises (TVEs).  Rodrik explains:

… the first-best logical is not helpful here because a private property system relies on an effective judiciary for the enforcement of property rights and contracts.  In the absence of such a legal system, formal property rights are not worth much… Until an effective judiciary is created, it may make more sense to make virtue out of necessity and force entrepreneurs into partnership with their most likely expropriators…  In the environment characteristic of China, property rights were effectively more secure under direct local government ownership than they would likely have been under a private property-rights legal regime…  Such examples can be easily multiplied. (984-5)

 

“While there may be some merit to this argument, this particular situation is likely to end in dangerous failure.  For his part, Rodrik later admits that China risks “total economic and political collapse” if it does not “strengthen the rule of law and enhance democratic participation” (985). 

 

“Some warning.  The Chinese model of ownership erects barriers to democratic norms by institutionalizing economic and political inequality.  China’s “unconventional” alternative to privatization acts as a modified clientelism in which officials in the single-party government solidify political support by keeping local political leaders economically content.  The end result is the emergence of small fiefdoms that are little better than a unified central one.  Indeed, Chinese villagers face significant impediments to economic advancement and repression when they attempt to harness the power of collective action.  Institutionalizing such sub-optimal structures, particularly in countries that do not possess strong democratic institutions that can reform them peacefully, forebodes hazardous collapse.”


The Post article demonstrates that I was a bit too limiting when I limited the collective action problem to villagers.  Regardless, China is a perfect example of what happens when non-democratic mechanisms become locked into a political system.  I am not against finding creative ways to take steps toward freedom, prosperity, and democracy, but all we must do is look to the Middle East to discern how half-assed approaches can strengthen autocratic regimes.  If we are going to be creative, we should work toward identifying approaches that incentivize democratic behaviors.  We need not demand that developing countries implement policies that transform them immediately into liberal Western democracies.  But we should think twice or thrice before we advocate policy alternatives that preclude democratic norms from being realized. 

 

China is not a world power, nor is it an economic power.  A small portion of Chinese wield all the economic and political power due to that great economy and the masses have no legal mechanisms to demand their fair share of the pie.  Introducing mechanisms of equality to such a regime is dangerous because regime softliners, who desire liberalization, must confront the threat of regime hardliners, who do not want to give up the privileges they enjoy in the status quo.  Liberalization, thus, will depend on how ‘necessary’ it is viewed to be by those who reap the benefits of the status quo.  In other words, the liberals have to figure out a way to undermine the conservatives, despite it being in all of their private interests to maintain the present situation.  Until China’s inequalities are addressed, China’s power will be constrained by the regime’s desire to survive.    



[1] Rodrik, Dani. 2006. “Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank’s Economic Growth in the 1990s: Learning from a Decade of Reform.” Journal of Economic Literature 44(4): 973-987.

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