Authoritarianism.doc

Authoritarianism: Boom or Bane for Economic Development?Wang TianyiEconomic development is a constant goal of human beings in their long history, which not only depends on productivity but also highly pertains to politics. Political issues regarding economic growth is indispensably significant to mankind, while debate on how regime type impacts economic growth has been lasting for decades. The following essay attempts to demonstrate how authoritarianism affects economic development with pertinent examples analyzed.Authoritarianism means the concentration of power in a ruler who demands that people totally obey and refuses to allow them freedom to act as they wish (Cambridge, 2011). The opposition to authoritarianism is democracy, which allows people to freely express their opinions and demand their rights. Intuitively, authoritarianism seems to be a hindering the growth of capitalist economy which emphasizes free market and personal choices. However, the reality seems to be not always in accordance. The most representative examples are East Asian countries, most of which were ruled by authoritarian regimes during 1960s. “The countries of East and Southeast Asia grew extremely rapidly during the last quarter century. The eight best performers - Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, Thailand, and Indonesia - grew at an average of over 5.5% per year in per capita terms between 1965 and 1990” (Radelet, Sachs & Lee, 1997). Although the “East Asia miracles” attributed to many reasons, a state-led economy under authoritarianism appeared to exert its great influence on it. For instance, after Park Chung Hees military coup dtat, his dictatorship saw extraordinary economic development in the 1970s to 1980s, during which the annual economic growth rate achieved 9.3% (Korea: 1945-present, 2011).The “East Asian miracles” urge people to rethink the relationship between economic development and authoritarianism. Does authoritarianism hinder or help economic development, or, under what circumstance does authoritarianism hinder or help economic development? To try to answer these questions, two cases are analyzed in the following: Singapore and Burma Burma changed its name to Myanmar in 1990. The author uses “Burma” as its name in 1960s to 1990s. from 1960s to 1990s.Singapore is among the most urbanized, prosperous and fast-growing countries in the world for the recent three decades. In 1959，its GDP per capita of was only 400 US dollars Singapore was still a state of Malaysia. Singapore declared its independence on August, 9 1965., and this figure became 12000 in 1990 which had increased by 2900% and 22000 in 1999 which had increased by 5400% (Singapore, 2011). However, under its economic aura lays a less conspicuous fact that in this nation, authoritarianism has existed for virtually forty years. Since the independence in 1965, Singapore has been ruled by one political party headed by premier minister Lee Kuan Yew, and the minor opposition parties have been always supplanted and suppressed. Despite the fact that it looks like Singapore has a democratic system from a procedural perspective in that people are granted the right to choose and vote, however, in actuality, it is a country with complete autocracy (Tian, 2005). As an authoritarian regime, Lee Kuan Yew adopted the state-led policy to develop its economy, and utilized the advantage of authoritarianism to enforce three major policies.Firstly, he established and kept a extraordinarily efficient and incorruptible government. To guarantee an elite government, civil servants were rigorously selected. For the officials found to be corruptive, stern punishment was executed, and sophisticated supervision system was strictly operated too. Moreover, the salary for officials was kept in a considerably high level. This policy not only attracted plenty of talents but weakened the incentive to corrupt. All these measures notably helped to reinforce the efficiency in resources allocation and curtail dispensable waste.Additionally, Singapore kept a substantially low tax rate. Intuitively, compared with democracy, authoritarian regimes are more inclined to levy high taxation to finance them. Nevertheless, Singapore has made its income tax rate the lowest and the corporate tax the third lowest among Asian economies (Park, 2006). Due to scarce resources available, Singapore has little choice but rely on export and foreign investment. To melt itself to international economy, a low tax rate hence became vital to be competitive.Furthermore, Singapore tried its best to assure the capitalists benefit. Economically，a high capital return is the prerequisite for strong economic growth. Usually, the capital is held by capitalists, and protecting them has to sacrifices the benefit of the labors. For this aspect, Singapore enhanced its impact on the market to confine the rights of labors including the prohibition in strike of labor unions.From these policies implemented, Singapore was prone to guarantee a strong economic growth by reallocating the resources to investors and capitalists To keep the government incorruptible was also a measure to reallocate the capital to investors and capitalists since it reduced the waste and corruption on the resources which should have been used by investors and capitalists. to stimulate incessant expansion of the investment and production. However, in a democratic regime, this kind of capital reallocation among interest groups might be hard because all interest groups have freedom to demand their benefit and rights. Henceforth, without authoritarianism in Singapore, those policies might not be well carried out or lasted for a long time.In contrast, Burma is also ruled by an authoritarian regime since 1960s but achieved insignificant economic development during these decades. Burmas democratic rule ended in 1962 when General Ne Win led a military coup dtat. He ruled for nearly 26 years under the Burmese Way to Socialism (Malhotra, 1991). During the dictatorship, Burmas average GDP growth rate was 3.5%, 3.9%, and 1.9% in 1960s, 1970s and 1980s respectively, which was the lowest among Greater Mekong Subregion (Myint, 2006).A dominant explanation for its economic failure is the economic policies the military dictator regime enforced. One practice is the nationalization of private enterprises and foreign properties. This policy led to the monopoly over the majority of resources by the government. “The Enterprise Nationalization Law nationalized all major industries including import-export trade, banking, mining, etc, involving around 15,000 private firms” (Burmese Way, 2011). All these nationalization actions extensively frustrated the motivation of investors and caused dramatic outflow in domestic capital and plummeting in production.Another action is the massive land reform in 1963. According to The Tenancy Law, the land owners could not occupy the property lent to tenant-farmers due to debt reasons (1963). Most of the items in the reform tended to protect the benefit of farmers and the government but harm the land owners and capitalists. Again, this practice debased the investment to land which occupies crucial position in agrarian production and stock of capital In economics, economic growth depends on natural resources, stock of capital, human resources and population. Especially, stock of capital is highly independent to economic policies.Under dictator ruling, Burma also realized resources reallocation. However, contrary to Singapore, the resources were forced to flow to farmers and government from the capitalists who accumulated stock of capital and ensure a robust production and economic growth. As a consequence, the economy of Burma was kept to be weak over the decades, prominently in contrast to the simultaneously skyrocketing economy in Singapore.Since the geographically closeness and cultural similarity between the two nations, added both ruled under authoritarianism at the same epoch, the economic development practically appeared in such a gigantic disparity. Especially, authoritarianism rendered Burma from among the richest areas in Indochina to one of least developed economy in the world, while turned Singapore from a diminutive region to a legendary economic miracle. Therefore, authoritarian is not decisively connected to a robust economic development, and the genuine determinant is the specific policies enforced by that authoritarian regime. History proves that the decision made by Singapore is a huge success, while the strategy used by Burma is just emphatically unfavorable.The successes of authoritarian state-led economic development can be listed as many over the past century. Although it is the ruling policies that decide economic development, the close connection between authoritarianism and highly economic growth emerging in these decades are not well explained, especially the East Asian Miracles.Throughout history, in fact, it is prevalent that economic boom happened at the initial stage of a new regime, especially an autocracy. For over hundreds of regimes throughout Chinese history for 5000 years, an overwhelming majority of them were authoritarianism, and most of them experienced economic prosperity a certain period after the establishment of that regime such as Dynasty Shang, West Han, Tang, Song, Ming and Qing. During the beginning of the ruling under Napoleon, France also fulfilled its peak. A key explanation is that a newly launched authoritarian regime tends to implement mercantilist policies to promote economic development. The alternation of regimes is highly probable to be coming along with violence or even wars. Under this circumstance, the foremost objective for a new regime is to stabilize society and recover the economy from turmoil. For a newly established authoritarian regime, its ruling foundation is particularly vulnerable, and it has to acquire peoples advocacy by recovering and promoting economy soon to consolidate its dominance. Consequently, mercantilist practices became an effective tool to remedy this situation including capital gaining incentives and low tax rate, etc. Thus, the economy under authoritarianism at its initial stage when capital accumulation is still immature is remarkably inclined to be propelled. This explanation also appropriately applies to the Singapore case from its policies.Nonetheless, counterexamples still exists including Burma, Laos, and China before “reform and open”. These cases might due to ideological effect on economy, and socialism and communism is a typical representative ideology which blocked the economic development instead.After the World War II, Asian countries and regions tended to more frequently alter their regimes due to historical reasons. Besides, Confucianism which has dominated East Asian countries ideology for thousands of years also contributed to give birth to authoritarian regimes instead of democracy. Henceforth, due to the argument just elaborated, the East Asia Miracles seem to be well explained as authoritarianism tends to accelerate economic development at this initial stage.Nevertheless, authoritarianism can hardly function positively eternally. In the long run, authoritarianism not only may not elevate economic growth but even become the obstruction for the development. Although a state-led economy under authoritarianism can utilize its policy preponderance to provide higher capital, it concurrently provides advantageous environment to breed corruption in the long term, which actually impairs the capital used in economy in turn. Unlike democracy, it is hard for authoritarianism to reform itself so as to meet peoples demand, hence over time, corruption will be a severe threat to economic development.Furthermore, authoritarianism usually employed a set of policies following its ideology to form its ruling style. After achieving success at its initial stage, the dictator regime is inclined to continue this style with making little change. However, social and economic environment is constantly changing and peoples demand is also gradually increasing over time. When the development matures, the authoritarian ruling usually fails to update itself and satisfy social and economic changing demand. In this situation, authoritarianism can only act as the impediment of the economic development before it is terminated by democratic power.One illustrative case is Pakistan over the 20th century. Pakistans regime altered for several time between military dictatorship and democracy. More often than not, dictatorship initially functioned constructively to prompt economic growth, but several years later, it was terminated due to corruption and unfitness for social and economic needs. For instance, under the military dictatorship of Pervez Musharraf in the beginning of 21st century, Pakistans GDP quadruples and the foreign direct investment increased from 300 million dollars in 2002 to 3.5 billion dollars in 2006. However, several years later, although ascribe to other reasons, severe corruption and its rigid economic policies began dragging the economy and finally, the authoritarian regime was terminated in 2008. All in all, based on the major analysis in the cases of Singapore, Burma, Pakistan and some other economies, this essay tries to get following conclusions: there is no clear causal link between authoritarianism and economic growth, and the genuine determinant is the concrete policies being actualized; at its first stage, the advent of an authoritarianism is often accompanied by economic boom because it tends to use mercantilist for social stabilization and regime consolidation; authoritarianism usually will hinder economic development in the long term due to corruption and contradiction between rigid ruling style and peoples changing demand. All these arguments although might not well apply to e