Why China's Economic Growth Outpaces Its Political Freedoms

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© 2018 Robert Osburn

Economic growth does not produce political freedom. That just several hundred Chinese Communist Party leaders will make Xi Jinping president for life confirms China’s citizens lack political freedoms, even while they become richer.

Most scholars imagined that growing wealth would generate political freedom. When citizens accumulate wealth, they develop a hunger for, as well as the ability to utilize, political freedom and citizen participation.  Why? Wealth purchases the time needed for citizen engagement while also unleashing innate human aspirations for self-government. Countries like South Korea, Chile, and Taiwan demonstrate, in the words of University of Chicago economist Gary Becker, “economic freedoms over time typically push societies toward political freedoms.”

But, this hasn’t happened in China, as I almost forecasted nearly a quarter century ago during Friday evening discussions with international students after dinners sponsored by my former employer, International Students, Inc.  My notes for the March 4, 1994 meeting read, “I think that China will continue to grow economically, in the short run, but that in the long run the resulting social instability will choke off further growth, unless…China modernizes politically.” My mistake was that I under-estimated the Chinese government’s ability to both manage anarchy and the economy.

While I heartily agree with Professor Becker’s advocacy for economic liberty, his mistake is that he is an economic determinist.  Like his ideological opposite, the communist Karl Marx, he believes economics determines the political trajectory of a society.  

Could it be that the example of China demonstrates that both Becker the capitalist and Marx the communist have confused causation with correlation? Does economic development cause political development or are political and economic development merely associated with one another by some third factor? 

To answer this question, we need to realize there are three possible conditions:

  1. Political freedom occurs without economic development (e.g., Congo)
  2. Economic development occurs without political freedom (as is the case in China)
  3. Economic development is paired with political freedom (e.g., USA)

The Democratic Republic of Congo’s (DRC) gross domestic product per capita (the standard measure of economic development) in 2015 was $474 (versus $616 in 1978).  By contrast, China’s GDP per capita in 2015 was $8,069 (versus $156 in 1978), and USA’s was $56,207 in 2016 (versus $10,587 in 1978).  By most accounts one of the richest nations on earth in terms of natural resources, DRC’s stunning economic failure takes one’s breath away, even though it technically has a form of democracy (more a sham than a reality). Anarchy is a better word for DRC’s politics. In any case, democracy has not purchased prosperity.  Why?  The primary cause is a culture of animism that treasures the spiritual instead of the material world. 

China is the opposite case:  Massive growth in prosperity with few political freedoms. Rather than anarchy, China’s system is closer to tyranny, or an enlightened despotism (like non-Communist Singapore) that promises stability, infrastructure development, regulatory environment, and vigorous state-sponsored capitalism.  The result?  Prosperity purchased at the expense of freedom.  China’s robust economic development minus political freedoms is the direct result of a pragmatic Confucian-based culture. That culture supremely values harmony, along with efficiency, hard work, organization, and family-sponsored micro-economic development.  At the same time, it demands unyielding obedience to a hierarchy of relationships that chokes off political freedoms and promotes authoritarianism.  Other Confucian-based societies (e.g., Japan, South Korea, and Taiwan) are economically vigorous for the same reason of culture, while tolerating Western political and cultural influences (like Christianity) that have nudged them towards political freedoms otherwise unknown to Confucianism.

What about those nations, like the USA, that largely marry political freedom and economic development?  Once again, the basic explanation is cultural.  A culture marked by the four founding virtues (described by Charles Murray’s 2012 book Coming Apart) of honesty, marriage, religion, and hard work will thrive both economically and politically.  When I speak with international students, I often note that it is the historically Protestant Christian countries that have the highest levels of prosperity, lowest levels of corruption, and strongest commitment to the rule of law (a measure of political freedom).  

If it is true that Christianity creates both desirable outcomes (freedom and prosperity), why would that be?  Because, to put it simply, Christian culture values personal freedom and love for neighbor simultaneously: Love serves as a brake on freedom, which is an economic and political accelerator.  In the Apostle Paul’s immortal words, You, my brothers, were called to be free, but do not use your freedom to indulge the flesh; rather, serve one another in love (Galatians 5:13). As the USA abandons its Christian heritage, increasing political and economic chaos are on the horizon.

While culture is not the only factor that shapes political and economic outcomes in societies, it is the best and simplest explanation for why China is an economic shining star that sinks political freedoms at the same time.  The only question is whether making Xi president for life will undermine China’s culturally-determined prosperity.