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What is Authoritarian Capitalism?

An introduction to the concept of authoritarian capitalism, which means economic freedom with political oppression and is most often found in East Asia.

Authoritarian capitalism is a government system that combines a capitalist economic system with some form of authoritarian or despotic political regime. Examples of this kind of government are most commonly found these days in East Asia: for example, China, Vietnam and Laos and, in the past, South Korea, Taiwan and Singapore. The government of such countries makes a social contract with the people that it will permit and indeed encourage them to become rich, so long as they do not question the political arrangements of the state or ask for problematic concessions such as democracy, freedom of speech and rights in the workplace.

States might choose to have an authoritarian capitalist system for various reasons. In the case of South Korea, Taiwan and Singapore, for example, the governments involved were threatened with existential threats: South Korea was faced with renewed aggression from North Korea and its allies at a time when the North was richer (or at least less poor) than the South; Taiwan feared the threat of being invaded by mainland China; Singapore was faced with the possibility of annexation by what is now known as Malaysia. In these cases, the governments realised their best options were to try to develop their economies as rapidly as possible so as to provide strength and resources to deter any would-be attackers. These efforts were successful and, as the external threat diminished, the governments involved were able to manage (not without being prompted by the people) to introduce some political concessions to democracy and free speech, to some extent. This suggests that authoritarian capitalist states can change or transform themselves in certain circumstances.

More recently, China and Vietnam have abandoned the Communist economic system but retained the political aspects because of the failures of the former (as signified by the collapse of the Soviet Union) and the need to improve economic conditions to prevent an economic and total state collapse. It is yet to be seen how long such a state can be maintained but, after a decade of economic growth, the governments involved hope that this will remain a sustainable situation at least for the medium-term (and, as Keynes observed, in the long-term we will all be dead). Insofar as these states are using the export-oriented manufacturing paradigm based on low labour-cost competitiveness, the authoritarian element is advantageous. This is because the easiest way for a state to keep labour costs low is to threaten violence to restrict freedom of association, the ability to join a labour union and to protest against unsafe working conditions. Such a method was previously employed in Thailand and, indeed, certain elements of suppression remain in place there.

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