Maybe Economic Freedom DOESN'T Lead to Political Freedom (But it Probably Does)

From August 26, 2019

Just a very quick thought to wrap up the current string of pieces inspired by what is going on in Hong Kong….

As long as I have been intellectually engaged in international issues and political philosophy, it has been an unchallenged presumption that economic prosperity and development led to political liberalization. If not directly, then by the creeping demands of the population. A person with wealth and property seeks to protect both and looks to the rule of law to assist him. Without the law, the only methods of protecting one’s place and person is violence or persuasion, and neither is a reliable guarantor. The rule of law, provided either by independent courts or the government, provides the foundation for (economic) civil society.

But once the rule of law is enshrined to protect economic interests, it isn’t a long step toward protecting political interests. For that matter, it isn’t difficult to point out that most “political” matters are, in fact, economic. Jobs, taxes, health care, food, trade. All these are economic issues. James Carville was right when he said, “It’s the economy, stupid.” If you’re an exploited peasant working on farm in Maoist China or compelled to labor in a tractor factory under Stalin, your primary concern is protecting yourself and your family from arbitrary execution or imprisonment. The best way to do that was to keep your head down. But once you have a plot or your own land, or a home — let alone a bank account, TV or smartphone — you suddenly want to protect those things as well. Traditionally, we have seen such impulses as consistent with growing political participation.

The recovery of post-war Japan, followed by the political developments in East Asia and Eastern Europe in the 1980’s and 1990’s reinforced this belief. Nations with no real history of democratic government all turned to it. Particularly in Asia, where military dictatorships in places like South Korea and Taiwan became functioning (and vibrant) democracies in short order, this sequence was seen as the natural order. Fukiyama, more or less, wrote a whole book on it.

While the illustrations of the past 50 years are most relevant and most fresh in our minds, this pattern isn’t new. In fact it can be seen going back centuries, if not millennia. The English Civil War wasn’t a popular uprising, but rather the new commercial class, represented by Parliament, demanding a new deal from entrenched landed aristocracy, represented by Charles I. That very landed aristocracy was able to wield that power because they pinned-down King John at Runnymede four centuries before that. Despite the headline grabbing mob activity of the Bastille and the Women’s March, the French Revolution between 1789 and 1791 was driven by the demands of an economically mature bourgeoise looking for commensurate political rights, only to see the effort hijacked by radicals and psychopaths.

But look around the world today and while the economic development didn’t stop, there aren’t that many more democracies than in 1995. In fact, without consulting the statistics, I would wager there are slightly fewer. Russia can no longer honestly be considered democratic in any real way. China, most notably, never took the leap that we all thought was right around the corner. These two nations, perhaps, realized that there was an alternative “step 2” in the Underpants Gnome theory of economic development. If Step 1 is “provide economic opportunity” and Step 3 is “a content population,” for decades we have simply assumed that Step 2 must be “protect via rule of law.” China and Russia have demonstrated that Step 2 can also be “provide stability.”

The problem with that new “step 2,” and why I still subscribe to the belief that economic advancement ultimately leads to political participation, is the “provide stability” is easier said than done. And as economic development advances, that price of stability increases. Russia has maintained it through a fortuitous surge in energy prices and the recent memory of economic chaos in the 1990’s. China has maintained it through an astronomical and sustained growth in GDP. Both those conditions are beginning to fail. When the governments in Moscow and Beijing can no longer provide stability by buying-off discontent, their options will be limited.