‘You cannot achieve an inclusive economy with an authoritarian regime:' Nobel Economist says repressive systems will not surpass democracies and that the Chinese model will eventually have to change
‘You cannot achieve an inclusive economy with an authoritarian regime:' Nobel Economist says repressive systems will not surpass democracies and that the Chinese model will eventually have to change
The economist and political scientist from the University of Chicago rejects the idea that repressive power structures will surpass the success of democratic systems, predicting that the Chinese model will eventually have to change
cross-posted from: https://feddit.org/post/4157628
cross-posted from: https://feddit.org/post/4157529
James Robinson, along with Daron Acemoglu and Simon Johnson, has been awarded this year’s Nobel Prize in Economics for his research on the critical role institutions play in fostering national prosperity. In [this Q&A session]l with EL PAÍS, he explains that his work also seeks to highlight how the legacy of colonialism has impeded economic development in certain regions, particularly in Latin America and Africa.
James Robinson: [...] we make a simple division, focusing on the presence of inclusive institutions or extractive institutions. Inclusive institutions create broad incentives and opportunities for all people equally, while extractive institutions concentrate benefits and incentives in the hands of a few. Many economists say that development comes from entrepreneurship and innovation, but in reality it comes from people’s dreams, creativity and aspirations. To be prosperous, you have to create a series of institutions that can cultivate this talent. However, if you look at countries like Colombia or Nigeria, talent is wasted because people do not have opportunities.
[...]
Institutions can be an obstacle to competitiveness. However, one should consider the impact that European integration had on countries such as Spain, Portugal or the former Soviet countries. These are remarkable success stories. There has been an almost unprecedented transition. It is true that there may be too much regulation or inefficient rules, but broadly speaking the effects of European institutions has been largely positive over the past 50 years.
[...]
[Immigration] is one of the big questions we have to solve. [...] it can be difficult. It is not easy to quickly incorporate the millions of people who cross the Mediterranean [trying to reach Europe]. One of the possible ways is to help them develop in order to improve the terrible situation in their own countries. However, one of the biggest complications is that the policies recommended by Western institutions are not in tune with what is happening in these [developing] countries. At the World Bank, for example, you cannot talk about politics. How do we expect them to solve real problems when you cannot talk about them? Frankly, it doesn’t make sense. If we really want to change the world, we have to have honest conversations. I see that as a long way off.
[...]
The reality is that democratic countries have shown that they are better at managing public services and achieving rapid growth. You can find impressive examples like China among autocratic countries, but you cannot achieve an inclusive economy with an authoritarian regime and a model like the Chinese one.
[...]
I don’t think the Chinese model can continue. If you look at other authoritarian regimes, like Iran or Russia, they are incredibly weak economically and technologically. The economy cannot flourish in an authoritarian regime. Right now, technological dynamism is concentrated in one such country and in the Western world. However, one has to consider that, with Donald Trump, the institutions that have made the United States great are being seriously questioned. This could affect the context, and that is why the European Union and NATO are so important.
[...]
[Populism is linked to the growing disconnect between governments and citizens] and an example of this is Latin America. Democracy promised too much and did not always deliver. People’s lives did not change, and they sought new alternatives. There are various factors why democracy has not achieved transformations, such as clientelism and corruption. [...] Venezuela was governed in a deeply corrupt manner, and Hugo Chávez was clever in taking advantage of it. You also see this with Donald Trump, who has gone far because he realized there was widespread dissatisfaction with traditional politics. The failures of democratic institutions are real, and that is why we have to think about how to make them more empathetic to what people need.
[...]
Artificial intelligence can be wonderful, but like all technologies, it depends on how it is used. If artificial intelligence is used to create replacements for humans, that could be devastating. [...] It is all about how it is used, and that depends on our governments. I think that these decisions should not be left to the tech gurus. They only think about what makes them the most money, even if this is not related to the general well-being of society. In the case of artificial intelligence, it is very important, because it could have a tectonic impact on the world.
I would really love to have a conversation about how the Nazis had a great economy, capable of going from rebuilding from WWI to starting WWII in 20 years.
I feel like worshipping the economy, and having it be the sole measure of society, inevitably leads us to the far-right. China is not going to magically crumble, and economic prosperity is achievable without societal progress.
We need to have societal progress as the goal, not some magic by-product of line go up.
I would really love to have a conversation about how the Nazis had a great economy, capable of going from rebuilding from WWI to starting WWII in 20 years.
Okay. 14 years under a relatively liberal democratic regime, and then 6 years of a fascist government seizing the property of anyone who was against the state, followed by another 6 years of a fascist government plundering nearby countries in order to fuel the war machine, all without providing a decent standard of living to its population. But hey, they had lots of guns, so I guess that's success.
The only competent Nazi economist of note was sidelined less than 3 years into the regime's rule.
Don't get me wrong, I was not advocating for nazism. I know you by reputation to be knowledgeable about history, so if you could recommend some literature into it, I'd love that.
What I'm saying is more a kind of fear I have instead of a statement, I just saw that nazi regimes seemed like able to channel economic productivity into some societal goal - even though that goal was utterly despicable and evil, like a war - instead of just having the economy grow as a cancer.
I would really love to have a conversation about how the Nazis had a great economy, capable of going from rebuilding from WWI to starting WWII in 20 years.
I mean more than two thirds of those 20 years were the Weimar republic, so if anything the credit goes to Weimar Germany here. The only contributions Nazis made to the economy were plundering Eastern European and Jewish wealth.
The economy assigns a quantifiable amount, a number, to things and unimaginative people will know how much value it brings. Ask an unimaginative person to ascribe value to beauty, joy, contentment, they will find them worthless without a number.
The economy is a guide for helping people who can't empathize or imagine. It has a purpose so we can't get rid of it. But we can give a stated value to the things we cherish as inalienable rights. And that value isn't a number, it is a priority. For example, I will turn down money if I am offered free time. No set amount of money would sway me, it would change day to day like market pricing, but I value time more than money.
I agree that we should dismiss "line go up" as a culture. Chasing money has only shown corruption. But we can shape the economy by giving priority to unvalued things.
I guess that's my point, the economy should be a means to societal progress, and I feel a lot of people pretend it works the other way around.
Corporations should be slaves to bettering our lives, instead of our lives being slaved to bettering corporations.
Germany didn't build up middle class as much, more the lower class (that was saved from starvation), the added a lot to national wealth & common everyday lives via accessible public infrastructure (all of it basically, not just the roads & railroads).
And China is curbing it's economical growth, and societal changes are happening, the first gens with mandatory education are now retired already.
I can't really say how much and what directions it's taking them, but no-one can prob - time will tell.
Alfred Nobel never created a Nobel Prize for Economics.
Instead what there is is the Swedish Central Bank Prize For Economics In Honor Of Alfred Nobel, which is not a Nobel Prize but they convinced the Nobel Committee (using a lot of $$$) to treat it as one.
Now, I don't know if this guy is right or if he is wrong, but trying the whole Appeal To Authority thing using a "Nobel Prize" which is no such thing to throw some generic criticism on other Political models has a strong whiff of Propaganda.
PS: Also his arguments are very much cherry picking. For example I'm Portuguese and calling European Integration a "remarkable success story" for Portugal is hilarious - the actual reality was that Portugal grew massively when it kicked out Fascism (and the country was very Leftwing back then, so for example invested massively in Education and created a National Healthcare System) accelerated a bit when it joined the EU (because the money the EU sent to help with integration of what was then one of the poorest countries in the EU added up to a significant fraction of the GDP), then braked hard when the EURO came to be, culminating in the aftermath of the 2008 Crash with the country's Economy significantly shrinking and the Troika coming over and forcing Austerity (which later even Cristine Lagarde admited was "the wrong thing to do") and forced Privatization of actual profit-making state companies creating veritable anchors around the neck of the Economy in the country (for example, Telecoms are compared to average incomes very expensive in Portugal, a "rent" borne by the rest of the Economy which pulls down for example small businesses and kills business opportunities that rely on widespread digital access). Looking back all the best things that were done for Portugal were very much Leftwing such as investment in quality Public Education, a National Health Service and large programs of public housing (which were stopped decades ago, so now we have a giant house price bubble).
It wasn't Capitalism that pulled Portugal out of the shitter, it was kicking out the Fascists and basically Social Democracy (and I don't mean in the Portuguese Social Democrat Party, who are hard right with have nothing at all to do with the actual ideology in the name of the party), topped up with charity from the EU (in a way good while it lasted but then again went into all the wrong things, so the country has disgracefully bad rail-service everywhere but the North-South between the two main cities but lots and lots of underused highways built with that money).
Now, I get the appeal to authority, and the arguments against it. Obviously they wanted the cachet of the Nobel name for their economics prize, but economists often worry about the wrong thing. Yes, stagnant capital is bad for the economy, and a stagnant economy is bad for society, but having a vibrant economy doesn't necessarily mean society is benefiting. Most economists don't worry too much about that, and many businesses don't, either. And that's where the problems come in.
While companies are going about making profits, they rarely worry about the world or society they operate in. This is why they will happily pollute the planet, underpay their employees, or produce goods and services that maximize profits rather than better suit their customers', and society's, needs. Hence, fossil fuel companies desperately hanging onto their current profit model while storms rage and cities flood, or light bulbs being made to burn out (or, in the case of LEDs, just a certain component so they can be easily 'recycled'). And this is where society needs to have strong government to step in and curb the ravenous hunger of capitalism and direct that energy in ways that help society.
So, for good or ill, more housing needs to be built, even if that means housing prices are stagnant or even drop. Food has to be affordable, or people with less income need to be supported so they aren't starving. People need to be educated well, so they don't make imprudent choices and have better opportunities in life. Healthcare needs to be accessible, so society is happier, healthier, and can also further drive that economy.
Keep capitalism for what it is good for (or find a way to replace it with something better, preferably without burning civilization down), which is finding innovative ways to get things done, and looking for new and interesting things to make society better. And use government to set limits and direction, such as incentivizing needed housing that isn't profitable.
Couldn't agree more.
The Economy (namelly GDP) is a deeply flawed metric when what one wants is The Greatest Good For The Greatest Number (the basic Leftwing principle), since it's a Trade-centric metric hence measures just one part of the human experience and even that done in a pretty unrepresentative way - either countrywide numbers that ignore the proportion of it per people are used or when we do get per-capita numbers they're based on mean values (that suffer from the "if 1 guy has 10 chickens and 9 have 0 chickens, then in average each has 1 chicken" problem) never the mode which is the one that best covers most people's experience.
The point about housing is especially puignant because it's how a lot of GDP "growth" was fabricated during the last couple of decades: house prices go up which is counted as more raw GDP but the house price Inflation (which is the entirety of that price raise, as there was no actual improvement of the houses themselves) is not counted in the Inflation index used to Deflate the raw GDP to create the supposedly inflation-free Real GDP (the official one) so house price increases make that figure which has been made politically important look good whilst the thing is not at all good - the value of a house has no utility value for those who live in it (who would have to sell the house to realize it but also buy another one at equally inflated prices so ultimatelly gain nothing from high prices) whilst it presents a massive problem for those who don't own their own house (also because rent prices follow house prices) with, for example, the situation in Portugal that the average age a person leaves their parents' home is 34 and half the people who graduate with a Degree leave the country because salaries are low and cost of living (which for a recent graduate is more than half housing) are very high in proportion to it, something that's also causing lower birth rates in one of the most aged countries in the World since people have children later and don'thave as much available money to pay for the costs of them, hence have fewer (in average below the number that's necessary to keep the population number steady).
GDP goes up but homeowners saw no improvement since their house is not in fact any better and in some cases are even worse of because if they want to get a better house - say, to get a room for their children - the difference they have to pay in price between the old one and new one is larger, whilst those who do not own their house have to pay larger rents, so have less free money for other things since salaries have not gone up anywhere as fast. Only "investors" are better of from this, and they're a tiny fraction of Society (and here in Portugal a large part, if not most, don't even live here, so they're not even in this Society).
And this is just one thing were The Economy and how it's measured is unrepresentative. Don't get me started on Ecology and how Nature is treated in this has having little or no value for people.
There's a lot in there I agree with and a lot I find unconvincing, but the thing that really jumped out to me was this line:
Elites seek to concentrate profits. In our book Why Nations Fail, we compare Bill Gates and Carlos Slim. In the book, we point out that while Gates made his fortune through innovation, Slim did so by forming a telecommunications monopoly thanks to his close relationship with the government. It is an example of the link between monopolies and clientelism that has been seen throughout history in Latin America since colonial times.
I'm sorry, what? Does he not remember Microsoft losing perhaps the most famous successful American antitrust case of the last fifty years?
I don't think this guy is dumb, but I don't know how to fully take him seriously when he says something like this in passing.
I think perhaps you are misunderstanding what is being stated here. Billionaires everywhere are the same—they will maximum their wealth whether it helps or hurts others. The difference is that the US, with its stronger democratic elements, is much more likely to reign that power in than Mexico is. And that’s exactly what happened. In Mexico there never would have been an anti-trust case against Microsoft, or it would have been killed in the early stages.
That doesn't sound at all like the point he was making, but I haven't read the book so I'll withhold further opinions.
Yes, I too find that irritating. Maybe what he means is that Microsoft was innovative in the very beginning of the company's history, before PCs were part of everyone's household. But Gates' Microsoft soon started to pursue a very monopolistic policy. And it has been doing so to this day. (I can't compare that to Carlos Slim's conglomerate, though, due to a lack of knowledge about that.)
Income equality is just one of many other factors to assess a just society as we know. But as many focus on China's GDP growth in its recent history, here are just numbers:
Between 2014 and 2022, in China the share of the bottom-50% income group (pre-tax) in the national income fell from 14.4% to 13.7%. In the same period, the shares of the top-1% and top-10% income groups rose from 13.7% and 41.5% to 15.7% and 43.4%, respectively. In a nutshell: the Chinese rich got richer, the poor got poorer.
For Western-style democracies, the numbers are diverse:
In European democracies like Germany and especially Norway, top income groups lost while the bottom-50% gained, while in countries like Finland all three mentioned groups gained, suggesting that the 'middle class' paid the bill. In other countries like Sweden, Denmark, and the U.S., the numbers show gains for the top at the cost of the bottom half.
And in Australia, top income groups lost significantly more than the bottom-50% gained, suggesting the middle class benefited, while in countries like Canada and Japan there appear to be only slight or even no significant changes in the period between 2014-2022.
But as I said, we must also focus on other factors that make a good society (the four freedoms come to my mind: freedom of speech and expression, freedom of worship, freedom from want, freedom from fear). Given the fact that some in this thread cite China's growth of GDP and national wealth as a factor of societal success, it is clear that this argument does not hold, though.
[Edit typo.]
A lot of people who have never actually been to China don't understand just how poor the rural areas actually are. Chins has invested a ton in major urban infrastructure but has largely let the countryside languish. The worst part is that you are born with something called hukou which makes it very difficult to establish permanent residence in these new cities, reinforcing what is effectively a regional caste system.
They also haven't seen the shantytowns on the outskirts of the cities.
I absolutely agree with that.
Strangely enough, I think the CCP is a lot more of an inclusive institution than Robinson and his coauthors are happy to admit. A lot of the decisions the Chinese government makes are aimed at increasing national wealth and power. Narrow extractive behavior -- siphoning wealth away to benefit the elites -- definitely does happen in China, but not significantly more (and maybe less) than nominally democratic countries at a similar stage of development.
There's plenty of scope to dunk on the CCP, e.g. human rights. But Acemoglu/Robinson political economy framework, based on inclusive/extractive institutions, isn't the right argument for this.
Yes, exactly this - the first half of the title I was sure it was a comment on western economies.
And I do think that, we live under economic dictatorship.
When production is high enough that scarcity is only planned/artificial, and when you have (such excessive) inequality in labour compensation, it's not in the overall economical systems interest to continue such nonsense (but ofc it's in the elites, which have to constantly change and maintain the system in such a state).I think it superficially seems inclusive because the overwhelming majority, over 90%, of Chinese citizens are the same ethnicity of Han Chinese.
There are plenty of countries that are similarly ethnically homogenous, and labor under clearly extractive institutions that are hindering economic development: Egypt, Philippines, some African and Latin American countries. To my eyes, at least, China under the CCP is quite clearly different.
That's like saying the pre-bellum south was very inclusive because it strongly encouraged the ownership of the means of production among all citizens.
The means of production in this case being slaves.
What democracy? Is he talking about the oligarchy that rules the US?
Oh boy, ml is going to be real mad about this one. 🫳🍿
Why would anyone be mad at an unsourced opinion piece from a person that got a feels prize in a non scientific category?
Yes, the person that dedicated their life to simping for capitalism to massively enrich themselves is going to say anything but their ideal version of capitalism will fail.
I wonder what that person who I talked to yesterday who was telling me that monarchies were superior to democracies would say about this?
I asked them who got to be king if the democracies were replaced with monarchies, but they wouldn't tell me.
Hopefully not a Habsburg.
I've been watching The Great on Hulu. It's an explicitly fictionalized account of Catherine the Great in Russia, and I generally recommend it as long as you keep its subtitle of "An Occasionally True Story" in mind.
Anyway, the actual Catherine the Great was one of the Enlightened Despots of Europe. For the sake of argument, let's say everything she did was absolutely amazing, and raised millions of people out of serfdom and into education and opportunities that were completely closed off before. Basically, the absolute best case you can ever make for the monarchy.
6 generations later, Russia is ruled by Czar Nicholas II, and there's no other way to put it: it's a fucking disaster. Russia hadn't been industrializing the way other powers had in the 100+ years between then and Catherine, but Nicky drags the country into a war against a country that had. The inevitable happens, and it gets so bad that Nicky gets shot by revolutionaries in a basement along with the rest of his family. As brutal as that execution was, it's hard to say the Bolshoviks were wrong for doing so.
So even in the absolute best case scenario, better than any monarchy could ever do for real, it doesn't last. It can't last. You may get a good one once in a while--and even that is a stretch--but the next one could easily be a monster that undoes everything.
We can also look at the Habsburgs to see why bloodline rule leads to serious inbreeding.
Here's Charles II of Spain.
Since this is a portrait, not a photo, this is the best they could make him look.
And his issues went beyond the physical. He was also significantly intellectually disabled. But he was part of that royal bloodline, so...
Did they give you any reasoning?
Not reasoning I could understand. It was in the context of saying that democracy was a bad thing. They originally said that UBI was, somehow, the alternative to democracy. After pointing out more than once that you need people in charge to keep things running, even just to distribute the UBI, they settled on a king.
Democracy is a fundamental value, but you still have to be able to take action on big stuff. There’s a time to gather all the best information possible and a time to make an actual decision that has consequences. Unfortunately, by not taking that lead, democracies are outsourcing the big consequential stuff to undemocratic corporations.
I suspect that democracy is a "good times" system. It works well enough when the problems are either low-stakes or widely agreed upon.
When you get into a world of hard choices-- for example, anything where we have to devalue some existing wealth -- suddenly there's going to be both a lack of consensus (likely manufactured) and leaders too afraid of losing the next vote to pull the trigger.
That's why I expect to see China solve its climate change and housing problems faster than the West. Without the almighty polls lurking in the shadows, they can say "petrol is 100 yuan a litre to discourage its use" or "we're nationalizing second homes and disbursing them to schoolteachers."
that's just rehashed fukuyama
From what I can see, their whole Nobel is just claiming to have discovered things everyone in many other disciplines has known for decades (at the last). Maybe economists are just a bit slow.
Neoliberal hacks gonna hack I guess.
I feel bad for Fukuyama, dude got seriously Nietzsche'd.
He said some dangerous things, but it's more like they took his editorialized thesis statements and said: "Welp, guess I never have to worry about morality anymore because we're past that now!"
Who believes that authoritarian regimes care about inclusivity?
Libs: There is no way to avoid genocide. You must vote for genocide!
Also Libs (accepting "nobel prize in econ"): Enjoy your democracy!
But not too democratic because then the economy suffers amirite? Like, in the democracies, the poors must always be kept on a leash otherwise they might start getting ideas, right? RIGHT?
See Hong Kong circa 2019
☂️<-pretend it's yellow
In a piece published in November 2022, Nobel Economist Daron Acemoglu argues that China’s economy is rotting from the head.
For a while, [China's leader] Xi, his entourage, and even many outside experts believed that the economy could still flourish under conditions of tightening central control, censorship, indoctrination, and repression [after Xi secured an unprecedented third term (with no future term limits in sight), and stacked the all-powerful Politburo Standing Committee with loyal supporters]. Again, many looked to AI as an unprecedentedly powerful tool for monitoring and controlling society.
Yet there is mounting evidence to suggest that Xi and advisers misread the situation, and that China is poised to pay a hefty economic price for the regime’s intensifying control. Following sweeping regulatory crackdowns on Alibaba, Tencent, and others in 2021, Chinese companies are increasingly focused on remaining in the political authorities’ good graces, rather than on innovating.
The inefficiencies and other problems created by the politically motivated allocation of credit are also piling up, and state-led innovation is starting to reach its limits. Despite a large increase in government support since 2013, the quality of Chinese academic research is improving only slowly.
[...] The top-down control in Chinese academia is distorting the direction of research, too. Many faculty members are choosing their research areas to curry favor with heads of departments or deans, who have considerable power over their careers. As they shift their priorities, the evidence suggests that the overall quality of research is suffering.
Xi’s tightening grip over science and the economy means that these problems will intensify. And as is true in all autocracies, no independent experts or domestic media will speak up about the train wreck he has set in motion [...]
So I worked there during the mid-10s, basically when it was surging the most.
It was rotting from the everywhere back then, it just had enough core to push through. Unfortunately they balanced all the bad things on top of each other and pretended they didn't exist (most of their GDP was split between manufacturing and construction, and the latter was unsustainable).
China was one of those things that: When something went wrong, it all goes wrong.
He's right, but it can take a long time and people will suffer in the mean time. Would be nice to skip ahead.
So when china eventually surpasses all other countries economically and the BRICS countries prosper as a whole, will this guys ideas be disproven or will he have excuses?
I mean Chinese GDP per capita is below the worldwide average so I'm not sure what you're talking about. China has a mildly conscientious government so they're doing well for an autocracy, but make no mistake they're not coming close to Western countries if you account for population differences. Also don't forget that China is one mad dictator away from completely falling apart (remember Mao?) so statistically they're not gonna survive long enough in their current state to beat the West.
I also have hopes and dreams.
Anyone who mentions BRICS like it's a coherent organisation disqualifies themselves from being taken seriously.
Agreed. The economy and well-being of countries definitely suffer from authoritarian regimes in the long term, but...
What about their armies?
Their armies suffer too. Authoritarian regimes rely on repression, which rely on the military. This means that the military cannot be allowed to be staffed by competent men at all levels, or they might realize that THEY are the true power in the state, and overthrow the oligarchs to institute their own oligarchy. This is why so many long-lasting authoritarian regimes have massive armies that absolutely dissolve the instant pressure is put on them. They've been hollowed out by years of political maneuvering by rightfully-paranoid oligarchs.
You sure about that? China and Russia hiked their way up to the top 3 in what... 15 years?
what‘s this inclusive economy he‘s talking about?
Seems like common sense.
OK, so show me this democracy, that had 30+ years f double digit economic growth.
I'm all for democracy, and will oppose anything else, but let's not make our ideals cloud our vision of reality.
China is not succeeding despite or because of a 1 party rule, but because they've had economic policies that stimulated growth.Economies prefer open markets and stability and predictability, whether it's delivered by a democracy or not is probably irrelevant.
Democracies tend to be the best guarantee for the conditions that benefit economy, but China has done a very good job at it too.