Market Liberalization Doesn’t Lead to Dem0cracy?

From guest-blogger Martyn…

The IHT, in this op-ed, asks where it all went wrong. We all remember the many articles in the ‘90s telling us that China’s economic reforms would inevitably lead to a more open and free society. It was inevitable, or so a lot of people said. The reality in 2005 is that, as described here for example, the government has on the one hand continued economic reform but used the other to slap down dissent and further tighten its iron grip on society:

When Deng Xiaoping opened up China’s economy more than 25 years ago, the prevailing view in much of the West was that his reforms signaled the beginning of the end for the country’s authoritarian regime.

This prediction was not specific to China. Conventional wisdom at the time held – and to some extent still holds – that market liberalization is the most reliable path to democracy. Economic openness, it was reasoned, leads to the emergence of an educated and entrepreneurial middle class that over time, will start to demand more and more control over its own fate.

But something went wrong in China, Russia and other states where authoritarian regimes loosened the economic reins. Economic growth arrived but liberal democracy is still nowhere is sight. The reason is simple but disturbing: A new and more sophisticated breed of autocrat has discovered a strategy that permits them to enjoy the benefits of economic growth while postponing – often for decades – the emergence of authentic competitive democracy.

In order to understand the autocrats’ strategy for maintaining a near-monopoly on political power, we must first understand the process through which citizens are able to obtain political power for themselves, a process which the article’s authors call “strategic coordination – activities such as disseminating information, recruiting and organizing party members, selecting leaders, raising funds and holding meetings and demonstrations.”

To maintain political control, China’s leaders have learned to “ration carefully the subset of public goods that facilitate political coordination, while investing in others that are essential to economic growth. The ‘coordination goods’ that they need to worry about consist of things such as political and civil rights, press freedom and access to higher education.”

China has been extremely careful over the years to ensure that no independent groups emerge that are not directly under government control. To this day, there is a massive overlap between the political and economic elite within society. As well as The Three Represents theory attempting to open up party membership to the new entrepreneurial class in China, private entrepreneurs still lack the direct support of the government and the politically-driven state-owned banks as the government do not wish to create a rich and powerful, and independent, entrepreneurial class.

So, if the past policy of engagement with China has failed, the article asks: “What should Western governments make of these findings?”

First, they should recognize that promoting economic growth is not nearly as effective a way to promote democracy as was once believed. By limiting coordination goods, oppressive incumbents can have it all: a contented constituency of rich elites who benefit from economic growth; plenty of resources to cope with economic and political shocks; and a weak, dispirited political opposition.

Second, the World Bank and other donor organizations should broaden the set of conditions that they attach to loans to developing states, and start requiring that recipients increase basic civil liberties, political rights and other coordination goods. This does not mean placing less emphasis on economic growth or the provision of standard public goods. Both kinds of goods are necessary conditions for the realization of real democracy.

Such structural reforms by themselves tend to be more symbolic than real in autocratic states. Policy makers seriously interested in measuring democratic progress in the region should focus on the availability of coordination goods: on the number and variety of truly independent media outlets, for example, or on how easy (and safe) it is to hold a large antigovernment demonstration.

These are the kind of freedoms that make real democracy possible. Until they appear, the United States, the European Union, aid agencies and other donors and must keep exerting pressure for change.

The Discussion: 30 Comments

Well that is rather disheartening…

August 17, 2005 @ 11:48 pm | Comment

strangely enough, i see a lot of signals that china is moving towards more democracy, not less

August 18, 2005 @ 12:36 am | Comment

Bingfeng, I hope you’re right. I see both trends happening at once, and at this point, I’m not sure which tendency will triumph. I think this article disregards the greater personal freedom that people have – that, more than any economic liberalization, eventually translates into political freedom, I think.

August 18, 2005 @ 1:07 am | Comment

What signals would these be? The increasing restrictions on what can be pulbished? The extra legal methods the gov’t have taken to hamper book distribution by private publishers?

The warm and fuzzy way the gov’t deals with any quasi religious group that they don’t like?

The emergence of an independent judiciary… oh wait, that hasn’t happened yet.

You aren’t refering to the riots are you?

August 18, 2005 @ 1:08 am | Comment

Bingfeng, what signals do you see that are indicative of a trend towards greater democracy? I would really rather be an optimist!

August 18, 2005 @ 1:08 am | Comment

I’m with GWBH. Precisely what are these purported signals?

The PRC has avoided permitting any additional democracy even in Hong Kong, where the Basic Law says that universal is the ultimate goal. I certainly don’t see them making any democratic moves on the mainland.

August 18, 2005 @ 1:15 am | Comment

er, that should be “universal sufferage”

August 18, 2005 @ 1:16 am | Comment

institional settings are skin-deep, they are determined by political agenda, in which the pirority is dominated by economic and social development. just like what Lee of singapore commented on CR in early 1970s: “it’s like watercolor in a stone, eventually a rain will wash them away”

the more important, and more difficult part is the mentality of chinese people, do they think it’s helpful? do they believe it’s critical for china’s further development? do they have the urge for it? do they prepare for it? do they have the tolerance level? ………….. without all these, it won’t come and it won’t last. hey, china has established a democracy in 1920s, but it failed.

i see a lot of signals that china and chinese are moving to that threshold level …… such as the media’s involvement into various public issues, emergence of independent media, ask for the separations of public powers and commercil entities (shanghai real estate case), shift from a homogenous to a more diversified society, increased tolerance level, etc. etc.


and to westerners, besides altruistic motivations, you have to realize that more democracy doesn’t translate to a more stable policy ………. i have to stop here

to be continued

August 18, 2005 @ 1:48 am | Comment

Good, bingfeng.

I have the feeling they’ll postpone it as long as possible, until the resistance to political change causes obvious costs on the prosperity front. But they won’t call it d3m0cracy, they’ll call it something else. And it won’t be liberalized in a form that we readily recognize from our standard western models.

In the meantime, there’ll be shitty, difficult issues, like the current information ignorance.

The other option that gives me the shivers is that the new entrepreneurial elite could merge with the cadres, leaving the other 9/10 of the people out in the cold (or out in the fields and factories). From the little I know of the culture, it actually seems plausible. When all the business and all the profit IS the government, why share with anyone? Then you have all the worst bits of capitalism and totalitarianism wrapped together.

August 18, 2005 @ 3:23 am | Comment

Not to be bleak, but money attracts power, and vice versa. That’s a real possibility, Sam, especially with the more-or-less complete erosion of any underlying Ideological framework for the Party.

August 18, 2005 @ 4:34 am | Comment

Good Stuff from Richard’s Guest Bloggers

August 18, 2005 @ 5:32 am | Comment

After 4 years here, my confidence in the regime loosening its tenacious grip on power has lessened and lessened. The article confirms and goes some way in explaing the reasons why such confidence was misplaced in the first place.

August 18, 2005 @ 7:28 am | Comment

China is curently praticing a one-party didatorship; and I prefer democracy over didatorship.

China needs to find a new form of government which is efficient and responsible to its people; and leaders are elected by the people in some way. Western-style democracy is not necessary the answer. China can not afford, at least for now, a government which politians are bickering all the time and nothing get done (just what you see in many western democracies).

August 18, 2005 @ 9:13 am | Comment

I agree with most of what you say.
But please remember that there is NOT just ONE kind of “Western” democracy. I’m an American citizen but I often think Britain’s democracy functions more effectively than America’s does. (Although, Britain’s system would never work anywhere else, because it evolved in peculiar ways over many centuries.)
And America could learn a lot from Norway, Sweden, Finland, Netherlands, and Switzerland. (But I will not say France. France has too many problems of its own – although I wish America had at least SOME social welfare like France does. And I won’t include Germany as a role model for America, because Germany’s democracy was forced onto it at gunpoint by America and Britain – and it’s still too early for Germany to lay any claim to political superiority…..maybe a hundred years from now, long after the last Nazis have died….sorry to any Germans here, but I’m one who says, today’s Germans are no longer guilty, but today’s Germans still need to be reminded of why they should be humble…..criticize America? Sure, Germans should do that, as I do.
Claim moral superiority over America?
No. Still too soon for Germany to do that. Give it another 100 years….
Anyway I basically agree with you, but I think it’s a mistake to think all “Western” democracies are the same. Maybe China can consider what has worked in many different kinds of Western democracies, and then adapt whatever methods work best for China?

August 18, 2005 @ 9:49 am | Comment

I’m currently having access problems to TPD which
means that I can only comment here via Lisa’s Inbox. Sod’s Law that it should happen on the same day that my guest post goes up. Bugger.

Like most China residents, I don’t waste much thought on China’s possible move towards any form of dem0cracy. The chances of the CCP meekly moving to any kind of open elections and then inevitably and promptly losing power is remote to say the least.

The cadres losing power? When half of the cadres sons have just started university in California, Vancouver or Melbourne and half the daughters are currently applying for their Green CardAustralian/Canadian citizenship?

As others have mentioned above, in China, with
political power usually comes cash—and lots of it.
Those in power are quite prepared to bring in one of the largest standing armies in the world for
protection against their own (poor) people and
everyone else is hoping that they too can one day
join the ranks of the noveau riche.

August 18, 2005 @ 10:02 am | Comment

Never, ever? You really need to write your prophet down on a piece of enduring paper so Chinese maybe a few hundred years from now would look you up as the great prophet of our time.

/sarcasm off

I actually agreed with most points you made and you did say remote not never. For me, I don’t really care if China is a multi-party democracy or not as long as there are transparency in the government and rule of law.

August 18, 2005 @ 11:41 am | Comment


Rule of law? the problem is that many chinese officials talk about rule of law all the time and not much has really been done in that area.

August 18, 2005 @ 12:12 pm | Comment

Wawa writes:

“I don’t really care if China is a multi-party
democracy or not as long as there are transparency in the government and rule of law.”

Exactly. However, democracy and freedom ususally go hand-in-hand as they are complimentary. one can’t really exist without the other—and vica-versa. Authoritarian one-party rule and transparency, the rule of law/independent judiciary is almost a direct contradiction in terms.

An authoritarian one-party state would and could never accept an independent judiciary, for instance, because it could directly challenge its rule and would effectively make the party answerable to the law. The problem in China isn’t that it doesn’t have
sophisticated laws (at least in certain areas), the
problem is their implementation, or lack thereof.

The CCP is above the law, only with the party’s direct approval can their members go through the courts—and even then the results are dictated by the party.

The way I see it, the system of governance must open up before basic freedoms are, or can be, given to society.

It’s sad to see that the CCP spend almost as much time protecting their own rule and crushing potential dissent then they do actually ruling the country.

August 18, 2005 @ 12:47 pm | Comment

China And Open Societies

I posted yesterday that I was under no illusions about the severity of the Chinese government, but I was (and am still) hopeful for a peaceful transistion to democratic government. I have always felt that economic development would naturally result in…

August 18, 2005 @ 2:44 pm | Comment

For Westerners, freedom from coercion is the highest political good, and that is the first thing we would demand if we found ourselves in a similar situation to Chinese people.
The mistake that those authors may have made is to assume that people from very different cultures will also demand the same thing. The impression I get from talking to Chinese people is that democracy would be nice to have, but it’s not the highest priority, and that if they had to choose between a free China and a strong China, they would choose a strong China. The reason China is not becoming more democratic in spite of its economic growth and rising middle class may be simply that that middle class doesn’t want it enough because it has other priorities.

August 18, 2005 @ 4:59 pm | Comment

I see just the opposite, that economic development is developing ‘democracy’.

Just look at the social changes that have occurred since economic development: It is much easier for individuals to migrate out of the country (from Chinese restrictions, there may still be restrictions from the other countries), not just permament migrations, but just temporary for business or pleasure reasons.

Look at the ease for internal migration that is so much easier now, look at how easier it is for many individuals in the more affluent parts of China to travel, by car or train or bus or plane. They move quickly for commercial or social reasons. And not just the big shots, many middle level managers or even workers.

Look how much easier it is for individuals to complain about the government, or about people.

The list can be made much larger, but the ‘democratization process’ is taking place at the individual level, not the social level. This is not bad, but good. That means that when the ‘democratization’ takes place at the government level, the people will be better prepared, not less prepared.

The idea that democracy follows economics is still true, but it does not mean that it will be some type of linear progression or will occur without resistance.

I generally like the IHT, but this is just bad analysis based on superficial theory.

August 18, 2005 @ 9:27 pm | Comment

OK, joining late and I’ve not read the comments, but…

To maintain political control, China’s leaders have learned to “ration carefully the subset of public goods that facilitate political coordination

There’s one very obvious exception which has already shown it’s power: the mobile phone.

August 18, 2005 @ 11:47 pm | Comment

Peter, JFS,

I agree with what you said. It seems that you two have a very deep understanding of China, -:)

It is often said that human rights are universal. I believe it is mostly true. But people with different cultural background look at the right issues differently. Political rights are paramount to people in the West. It is not so for the Chinese. They are OK with a government if it is efficient and accountable even if it is not popularly elected. Of course, the Chinese government is far from that; but most people feel it has been improving over the years.

When I was a college student in the late 80’s, there were lols of talk all cross China about political reform (directed from the central government). But not much really happened as the whole social strutrue remained intact. The opposite is happening now, little talk about political reform but the whole country is in rapid transition in many ways. I think that China has developed to the stage that it can afford for some shock-therapy in political reform and I am disappointed the leaders have avoided it. But, when people look back, 20 years from now, they may realize that what’s happening in China now is sigficiant for its more reasonable political system.

August 19, 2005 @ 12:47 am | Comment

JFS: I agree that many more freedoms exist now than say 20 years ago: relaxation of the Hukou system, ease of travelling abroad, a greater range of allowable media topics. But none of those freedoms can be called “democracy” as such. They are not political freedoms, and they don’t represent a change in the political system.

August 19, 2005 @ 1:08 am | Comment

Just before I try to address some of the great points proffered, just a quick word about Simon “mobile phone” comment.

Simon, in the 90s we were all told that the onset of new technology such as the mobile phone and Internet in particular would act like nuclear bombs to the repressive CCP regime and blow it completely out of the water.

However, nowadays, the CCP, for good or for bad, is more secure and entrenched than at any time in recent history.

The truth is, those mobile phone users are all using their SMSs to flirt and send jokes and jabbering to their boss, customers and friends about everything apart from politics.

Internet users are QQ-ing, playing games and browing the pages of China E-Bay and

August 19, 2005 @ 1:19 am | Comment

Indeed, Martyn. But you only have to look at how the anti-Japan protests spiralled almost out of control to see their power, and that was on an issue the Government whipped up itself.

If mobiles were as popular back in 1989, the events of June would have been very different. The thing with disruptive technology is it requires people to use it disruptively. In recent times many people in China haven’t got to that point thanks to rising living standards. But the CCP are acutely aware that they need to keep the merry-go-round going to avoid a true uprising of the proletariat.

August 19, 2005 @ 2:31 am | Comment

Why Economic Liberalization Does Not Lead to Democracy

Freedom in an information economy does not mean free information.

August 19, 2005 @ 10:00 pm | Comment

Very interesting stuff.

August 22, 2005 @ 10:36 am | Comment

Very interesting blog!

September 16, 2005 @ 6:48 am | Comment

What make me annoyed is Western Politicians who fawn over the Chinese Dictators and justify or ignore their tyranny. The late Ted Heath excused the Tyanaman Square massacre, he showed his contempt for democracy in the UK by refusing a referendum on the UK entering the Common Market. When will Tony Blair or George Bush criticise the Chinese Governement? When birds grow teeth.

September 28, 2005 @ 10:08 am | Comment

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