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IN A CLASH OF POLITICAL IDEALS,
IS AUTOCRACY SUPERIOR TO
DEMOCRACY FOR STIMULATING
ECONOMIC GROWTH?
Yi Song
JULY 31, 2016
WILSON’S SCHOOL
In a clash of political ideals, is autocracy superior to democracy for stimulating economic growth?
Yi Song
In a clash of political ideals, is autocracy superior to democracy for
stimulating economic growth?
In 1989, hundreds of Chinese students protested in Tiananmen Square, Beijing, in an attempt to
force the government to concede to democratic reform. They were brutally crushed by the military
sent in by the Communist Leader Deng Xiaoping as a means of reinforcing the party’s autocratic rule
over China (BBC News). In the same year, a series of revolutions led to the fall of the Berlin Wall and
subsequently the reunification of Germany; it marked a huge victory for democracy and freedom,
eventually resulting in the dissolution of the Soviet Union and the communist dictatorship that
presided over it. These two contrasting events within the same year shows the conflict between
political ideologies that have raged on for decades as people pursued a system that could bring
lasting success. Autocracy or Democracy. In this essay, I will examine these two broad ideals with
respect to economic performance, using case studies, past and present, to determine an answer to
this clash of policies which has resulted in so much bloodshed in the quest for prosperity.
The two countries: Russia and China, have since diverged in their paths since the events of 1989.
China has remained a communist dictatorship whilst Russia, after the breakup of the USSR, has
instead embarked on a democratic system of sorts. In 1989, the USSR, of which Russia was the main
entity, was the second largest economy in the world (CIA Factbook, 1991), China was not even in the
top 10 (IMF, 2015). Fast forward to the present day however, and their economic fortunes have
diverged in a similar fashion. China is now the world second largest economy, while Russia is the one
to drop out of the top 10 (14th). Both these countries were once communist dictatorships and now, it
appears that China, who crushed any inclination towards democracy, made the better decision,
enjoying levels of economic growth on an unprecedented level (averaging nearly 10% a year since
1979) far surpassing the comparative ‘snail’s pace’ at which Russia grew. That being said, Russia is
not the most suitable case for a comparison of performances between a democratic and autocratic
country, given that Russia’s democracy is merely a political façade behind which an autocratic
President Putin controls the electoral system as he deems fit.
Instead a comparison between China and India provides a better representation of the impact of
political systems on economic growth. These two neighbouring countries share a great deal in
common, demographics, natural resources to name a few. Indeed they are only separated by an
ideological difference, with India adopting a democratic regime after gaining independence in 1947
(Banerjee). Both countries under their respective governments progressed with economic reforms
and both posted impressive economic growth figures since 1978. By 2007, India’s GDP had almost
doubled, but China’s increased seven-fold (The Economist, 2013). Undoubtedly, China’s regime has
been much more successful (the diagram below depicts the huge gulf in growth), as Yasheng Huang
explains in his TED talk (‘Does democracy stifle economic growth?’) this can be attributed to the
autocratic system in China which can rule above the law and pass controversial policies in pursuit of
their long term plan (the One Child Policy for example). Whereas, in India, such sweeping reforms
are impossible; public opinion matters. Democratic rule gives people autonomy and a political
standing, as a consequence, the degree of control the government has over the economy is
diminished, as Vivek Dehejia (Professor of Economics) states “You need to have some sort of political
control, you cannot have a free for all, and get marshalling of resources and savings rate and
investment rate that high growth demands."
Marshall Society Essay Competition 2016
Wilson’s School
In a clash of political ideals, is autocracy superior to democracy for stimulating economic growth?
Yi Song
Furthermore, the ability of autocratic governments to implement necessary reforms much swifter
than democratic governments have reaped great success not just in China but in many other
countries as well. East Asian ‘Tigers’ such as Singapore and South Korea also benefitted from the
one-party governance (similar to China) which brought the countries into economic prosperity
within a generation (Vivek Kaul, 2012). Outside of Asia, the ‘Miracle of Chile’ is another example of
the merits of having a strong autocratic ruler. In the early 1970s, the economy of Chile was suffering
badly, experiencing chronic inflation of around 140% as a result of the socialist government of
President Salvador Allende. This provoked a military coup d’état led by General Augusto Pinochet in
1973, which resulted in the establishment of a military junta with Pinochet at the helm.
Subsequently, he adopted drastic economic reforms such as liberalising the economy and welcoming
foreign investment in an attempt to stabilise the Chilean economy. These reforms occurred against a
backdrop of violence as opposition to the party was brutally vanquished. Although at the time his
actions were deeply condemned, by 1990, after democracy had returned in Chile, the majority of
Chileans agreed that Pinochet’s economic model was necessary; per capita income had increased by
66% since his policies were imposed (Pennar, 1993).
From the examples I have outlined, it is clear that an autocratic government with an aim to improve
economic growth can firmly propel the economy in the right direction and appears to be far more
effective than democratic governments. According to William Easterly (Economics Professor at New
York University), fast growing countries are 90% of the time autocracies as well. Autocracies can
focus on a longer term economic model, whereas, in democracies, politicians are under pressure to
appeal to voters through popular policies which are often short-sighted and ineffective. For example,
the ‘Triple Lock’ policy for pensions in the UK, which was wildly popular to the electorate (old people
tend to vote more) but came at a huge opportunity cost to the UK government, preventing spending
in other critical areas of the economy. To paraphrase Tom Friedman (New York Times Columnist),
autocracies can be incredibly successful if led by a driven group of people, imposing politically
difficult policies that can bring a society into modern times.
However, autocracy is not without flaws and democracy should not be considered a dysfunctional
method of generating economic growth. The reason is that despite all the successful examples that
are used to justify autocracy there are matching failures of dictatorships. Although South Korea was
Marshall Society Essay Competition 2016
Wilson’s School
In a clash of political ideals, is autocracy superior to democracy for stimulating economic growth?
Yi Song
prospered, North Korea faltered; Taiwan succeeded, the Philippines did not (Yasheng Huang, 2011).
India may have grown slowly compared to China, but the democratic-led growth was still faster than
the vast majority of other autocracies. Africa is filled with dictatorships which have destroyed their
respective economies. Whilst autocracies perform well under enlightened leadership, often this is
not the case.
Autocratic governments have unrivalled control over a country and with such great power comes
great responsibility. Unfortunately, the allure of power and wealth is difficult to resist and many
governments have succumbed to the temptation and allowed corruption to run rampant. Corruption
is a deadly ail to economies, it discourages foreign investment, increases political instability and
worsens social inequality. If unsolved, corruption can destroy an economy. In an autocratic
government, there is very little government accountability as the public cannot control politicians
and influence outcomes (Adserà, Boix and Payne, 2003), this only encourages corruption. On the
other hand, in a democracy, such problems are quelled by a democratic system of elections which
places the public in charge. In Transparency International’s Corruption Perception Index 2008, which
covered 180 societies, 90% of the 60 least corrupt societies in the world are democracies (Pei,
2009). Evidently, democratic countries may not experience the same levels of economic growth as
autocratic countries, but they establish much healthier governments, less likely to consist of greedy
politicians who lavish at their own wealth. The threat of corruption to autocratic economies can be
illustrated by the dictatorship in Zimbabwe under Robert Mugabe which led to negative double digit
growth and caused the economy to nearly halve between 2000 and 2008 (World Bank, 2016).
In addition, autocracy as a political system is unsustainable and eventually will give way to
democracy. The prevailing opinion is that once people reach a certain level of affluence, the pursuit
of non-material goods become more important such as political choice (The Economist, 2016). After
South Korea enjoyed its economic boom under autocratic rule, the public soon demanded for
political freedoms. The other East Asian ‘Tigers’ and Chile have also gone through the same
transition as South Korea. China is now at a similar stage. Its average income per capita is at the
same level as in South Korea before it became a democracy, and its growing middle class (around
225 million households) are becoming increasing dissatisfied with the lack of political rights and the
degree of intrusion into their private lives by the government. As I have already mentioned, previous
protests for democracy in China were mercilessly crushed and the public acquiesced to autocratic
rule in return for vast increases in wealth. However, China has reached the limits of growth without
reform, combined with a growing class of young Chinese who demand more autonomy, there is a
building threat to the ‘China miracle’ that was founded upon a one-party dictatorship. As Douglass
C. North (Washington University) commented "Over the short run, dictators can always get good
growth," the issue arises in the long term, a lack of democratic reform could see political turmoil,
protests and a reversal of fortunes. While China begins to face these issues, India, who have already
implemented these democratic reforms, maintains the right institutional conditions for lasting
economic growth (recently overtaking China in terms of economic growth). The Chinese dragon may
have raced into an early lead but the Indian elephant is catching up.
Finally, in all the examples of successful or even unsuccessful autocracies I have given, a clear theme
emerges: all of them were poor when they adopted autocratic rule. Similarly, when countries have
finished developing they adopt democracy. This follows the Classic Modernisation Theory which
predicts that democratic systems are more likely to emerge as a country grows richer. This means
that autocracy naturally has an advantage; it is generally agreed upon that poorer countries will
grow at much faster rates than richer countries due to them having greater potential to exploit
capital and their comparative advantages e.g cheap labour. However, in richer countries the impact
Marshall Society Essay Competition 2016
Wilson’s School
In a clash of political ideals, is autocracy superior to democracy for stimulating economic growth?
Yi Song
of ‘diminishing returns’ suggests that it is more difficult for them to generate additional output with
the same inputs. Autocracy simply sped up the growth process that many poorer countries like China
would have gone through regardless, and while it may be useful for economic growth in poor
countries, it would be counterproductive in developed nations. Likewise, while democracy may not
be suitable for developing nations, research has shown that democratisations are associated with
larger increases in GDP per capita in countries with higher levels of secondary schooling which are,
by and large, richer countries (Daron Acemoglu et al, 2014).
Decades ago, democracy was heralded as the most successful political idea of the 20th century and
the notion of a strong autocratic economy would have been ridiculed (A question like my title would
not have existed). Presently, the situation is in stark contrast to before, a string of successful
economies emerging as a result of autocratic regimes like Singapore and China have pushed for
serious consideration as an alternative model to democracy. At the same time, democracy in the
Western world has been languishing. Growth in the Eurozone has flat lined and the emergence of
characters like Donald Trump in America clearly show the disillusionment many people have with
the Western political system. Even though democracy is struggling currently, the prosperity it has
brought globally cannot be underestimated. It is estimated the global rise in democracy over the
past 50 years has yielded 6% higher world GDP (Acemoglu et al, 2014).
Throughout this essay, the merits and flaws of both ideals have been examined and there are
successful examples on both sides. Robert Barro, a famous economist, once stated: “The first lesson
is that democracy is not the key to economic growth”, I disagree. If economic growth refers to the
accumulation of wealth and greater income per capita, than undoubtedly autocracy is a much faster
vehicle with which to attain it. However, growth should not simply encompass increased economic
prosperity but also sustained economic development: improving the quality of life, security and
autonomy of its people. This is still the ultimate goal of all regimes and democracy, albeit with its
many flaws, is still the best means we have to reach it.
Marshall Society Essay Competition 2016
Wilson’s School
In a clash of political ideals, is autocracy superior to democracy for stimulating economic growth?
Yi Song
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Marshall Society Essay Competition 2016
Wilson’s School