Academic Director, YouGov

State-capitalists beware: the’ creative lag’ of market-authoritarian models

Is state capitalism a good model for the world’s poorest countries? The immediate short term answer in many cases arguably seems to be yes. But this answer comes with heavy caveats and the certain knowledge that the question must be addressed in stages.

In today’s parlance, the China model is primus inter pares; it demonstrates the strengths and weaknesses of market authoritarianism, allowing us to see how tremendous growth and targeted social benefits also lead to longer term dysfunction that ultimately comes to cloud the model and suppress national potential over time.

Of course, Chinese growth has approximated between 8 – 10% per year for over two decades and millions have been lifted out of poverty. But it is the ideational challenge that concerns us here.

China provides the example of a polity in which the public square is closed; in which freedom of religion and assembly are sharply restricted and in which political participation may be exercised only through the Communist Party.

The Party, in turn, is closely integrated with state enterprises and many private enterprises, which dominate the exploitation of natural resources, infrastructure development, industrial production, trade and commerce, all in an arrangement that, in another era, would be termed ‘classical fascism’, namely a system in which the state and large enterprises operate together to reach national goals in the most efficient way, but without the voice of working men and women or a broader civil society.

Does this produce rapid growth? Yes. Does it allow for the development of civil society in ways that promote and reflect genuine, national potential? Not really, beyond the binary calculus of winners and losers in an export-led growth miracle. For the poorest nations, authoritarian government may be an effective and fast methodology for developing basic infrastructure, basic levels of health and literacy or agricultural production. But when such societies proceed from subsistence to distributing benefits coincident with an emerging middle class, ‘creative lag’ is manifested in extensive corruption, a struggle to impose the rule of law, difficulty in achieving a national identity and vast underutilization of individual talent, creativity and innovation in many areas of life.

These limitations help to account for why Chinese exports are still better known on the world stage for being made ‘in’ China rather than ‘by’ China. As editor of Newsweek Fareed Zakaria notes, uniformity is often the enemy of innovation.

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