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Authoritarian Capitalism: Here to Stay?

In 1962, Milton Friedman questioned whether “democratic socialism” could exist. His answer was no—at least not in a sustainable way. Today, with the economic rise of countries like China and India that embrace capitalism but remain politically autocratic, we might ask the opposite question: Can “authoritarian capitalism” exist? According to Slovenian philosopher Slavoj Zizek, the answer this time is yes.

In an article for the Financial Times, Zizek describes authoritarian capitalism as “an ideology set to shape the next century much as democracy shaped the last.” Until recently, he argues, “capitalism and democracy had seemed inextricably linked. Now the link is broken. […] Market-based economics has no problem accommodating local religions, cultures or traditions. It is easily reconciled with the primacy of an authoritarian state.” Is he right?

Somewhat of an aside to this question, the title of Zizek’s article ought to catch the reader’s attention: “capitalism has broken free of the shackles of democracy” (emphasis added). The imagery is awfully strange. Democracy, a political system defined by the free and equal participation of all (eligible) citizens, is associated with shackles—a means of bondage. Is this simply a biased perspective, or is Zizek actually hinting at a deeper truth?

Zizek writes that “many of the ideas that westerners hold dear—egalitarianism, fundamental rights, a generous and universal welfare-state—can be deployed as weapons against capitalism.” Later in the article, he comments on protestors in Ukraine and their possession of “powers of agency that westerners, for all their freedom, lack.”

He clarifies this point in an interview for The Guardian where he suggests that the most dangerous lack of freedom is that which is not perceived. In short, he seems to be echoing Alexis de Tocqueville’s fears of “democratic despotism”—what Tocqueville warned could occur when a government (especially of democratic nature) quietly and gently grows in power as it increasingly cares for the needs of its citizens in the name of equality, thus “spar[ing] them all the care of thinking and all the trouble of living.” In other words, those western ideas that Zizek highlights (egalitarianism, a broad welfare state) can be the downfall of free, self-governance, if citizens are not careful. As I’ve written before, freedom is fragile. It must be protected and not taken for granted, or else democracy can eventually give way to both economic and political bondage.

But moving away from Zizek’s legitimate critique of democracy, let’s return to his main premise: that authoritarian capitalism is here to stay. On this point, Milton Friedman provides important insight about the connectedness of the political and the economic. For Friedman, “economic freedom is… an indispensable means toward the achievement of political freedom.” He explains:

Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power. The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other. […] [I]f economic power is kept in separate hands from political power, it can serve as a check and a counter to political power.

This is an abstract concept, so let’s look at a case study: Hong Kong. The city—located on the southeastern coast of China—became a British colony in 1942, was occupied by Japan during World War II, and was then returned to British control until 1997. As a result of negotiations between China and Britain, Hong Kong became a “Special Administration Zone” of the People’s Republic of China on July 1, 1997—under the constitutional principle of “one country, two systems.”

Economically, Hong Kong has developed rapidly over the last 50 years. According to the World Bank, Hong Kong’s GDP per capita in 1960 was about $429 in current US dollars. By 2013, that number had risen to over $38,000. In large part, this development was a result of China’s increasingly laissez-faire economic policy, which opened its markets to the world economy. Today, the Heritage Foundation ranks Hong Kong first in its Index of Economic Freedom.

“As socialism leads to authoritarianism, capitalism leads to democracy.”

Now, let’s go back to politics. Many of us were witness to the pro-democracy protests that engulfed Hong Kong last September. A month earlier, China had announced plans to vet candidates in Hong Kong’s 2017 election—signaling that only Beijing-approved candidates would make the ballot. In response, tens of thousands of protestors flooded the streets of Hong Kong’s Central District, demanding reform of the electoral system.

With the city’s history in mind, one might guess that the economic freedom and prosperity enjoyed by the citizens of Hong Kong over the last several decades have gradually led to demands for political freedom. Getting what they demand may not be easy, but it is hard to imagine that their fight for freedom will simply disappear. And it is not a question of if, but rather of when similar movements will be underway in China, India, and other rapidly developing countries.

As Friedman writes, “there is an intimate connection between economics and politics…. [O]nly certain combinations of political and economic arrangements are possible….” My hypothesis is that freedom begets freedom, and bondage begets bondage. As socialism leads to authoritarianism, capitalism leads to democracy.

So, for the time being, authoritarian capitalism exists. But how long will it last?

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