An Unexpected Odd Couple: Free Markets and Freedom

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When President Bush declared last week that political openness naturally accompanied economic openness, his counterparts in Beijing and Moscow were not the only ones to object. Liberal and conservative intellectuals, even once ardent supporters, have backed away from the century-old theory that democracy and capitalism, like Paris Hilton and paparazzi, need each other to survive.

From China, where astounding economic growth persists despite Communist Party rule, to Russia, where President Vladimir V. Putin has squelched opposition, to Venezuela, where dissent is silenced, developments around the world have been tearing jawbreaker-size holes in what has been a remarkably powerful idea, not only in academic circles but also in both Republican and Democratic administrations — that capitalism and democracy are two sides of a coin.

“People, including myself, still have reasons to think it will eventually happen,” Francis Fukuyama, a political economist at the Johns Hopkins School of Advanced International Studies, said of China’s evolution to democracy. “But the time frame has to be a lot longer.” At least in the next couple of decades, he said, it is likely that “the authoritarian system will keep going and get stronger.”

Mr. Fukuyama, perhaps more than anyone else, has been associated with the idea that capitalism and democracy are inextricably linked. In his famous essay, “The End of History,” written in 1989 as the Soviet Union was in decline, he declared that all nations would ultimately develop into Western-style liberal democracies.

“There was great hope in the early 1990s,” said Michael Mandelbaum, the author of the forthcoming book “Democracy’s Good Name: The Rise and Risks of the World’s Most Popular Form of Government.” The belief was that rising incomes would create a middle class that would agitate for personal liberty and political power. The tipping point seemed to occur when per capita income reached somewhere between $6,000 and $8,000. True, there were exceptions like tiny Singapore with its growing wealth and one-party state, but they were often dismissed as too small or transitional to really put a dent in the theory.

Yet, as the free market and autocrats gained power in the Caucasus, Central Asia, Latin America and Russia, the initial optimism about democracy’s sure-footed march faltered. Some scholars pointed out that the American experience, where democracy and capitalism arose at the same time, was not so much a model for the rest of the world as an anomaly. “Capitalism came before democracy essentially everywhere, except in this country, where they started at the same time,” said Bruce R. Scott, an economist at Harvard Business School who is finishing a book titled “Capitalism, Democracy and Development.”

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William R. Everdell - 6/18/2007

The Times does not report life-changing news here. If more people would read Amartya Sen along with their Milton Friedman they might see further through the other end of the telescope. Sen measures freedom as the largest increase in the range of choices for the largest number, so Chinese development, like all increasing-inequality development does not figure so high on that scale. Of course if you are willing to produce poisons and fraudulently market them as cheap food using slave labor, any growth rate may be within reach. The only cost is throwing away your country's market reputation.

Ronald Dale Karr - 6/18/2007

"Once people have money and property they resist efforts by an absolute regime to take those assets."

Actually, property rights were secured in England centuries before anything more than a tiny fraction of society participated in the political system. Aside from a few places with broad suffrage (i.e., the parts of London that kept returning John Wilkes to Parliament), the average Englishman had no say in the national government before the 19th century. Nor was political dissent protected (ask, say, William Prynne!). But an Englishman's home was his castle.

Even in absolutist France or Prussia, private property was largely secure from arbitrary state confiscation after about 1700. But it took centuries before these nations allowed popular participation in government.

Joe Bridges - 6/17/2007

Is the author contending that the Communist Chinese government established in 1949 by Mao Zedong is the same government that exists in China now? Does the author equate economic expansion over a few decades under totalitarian control to economic expansion over a century under totalitarian control? China is experiencing new problems every day because of the conflict between its economic growth and the freedom of individuals from state control. Russia is not growing outside of its oil industry.

I can think of periods of ten to twenty years of economic success under totalitarian governments, Germany in the 30's and the Soviet Union in the 1950's, but I can't think of long-sustained economic expansion under a totalitarian regime that matches the economic expansion over extended periods by western capitalist democracies. The fact that totalitarian regimes can experience economic growth for a period of ten to twenty years does not mean that the growth will last for a century. I would appreciate an example of a totalitarian economic model to match the growth of the United States from 1870 to 1970? Once people have money and property they resist efforts by an absolute regime to take those assets. The Magna Carta answered just such a dilemma eight centuries ago, and that dynamic hasn’t changed either.