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Papers >> Business & Economics >> Does Economic Liberalization lead to Democratization

Modern China is an enigmatic country by today’s standards concerning economic values and political ideals. The “communist” government that Mao Zedong brutally sculpted and administered has gone through an intensive transformation. The days when Marxism and Socialism supposedly provided guidelines for Chinese economic policies have passed. Now the government exists as a quasi-communist authoritarian regime supported by a market economy.
Economic progress is commonly associated with democratization, and in many cases this theory holds true. Taiwan is the exemplary East Asian model of a formerly authoritarian regime turned democratic due in part to economic development. Yet some nations, Singapore for example, maintain healthy economies and high standards of living despite the presence of authoritarianism within the government. Although China has experienced noteworthy economic development over the past twenty years, its government has not made any significant progress towards democracy.
The Chinese economy stagnated during the social-oriented rule of Mao in the 1950’s. Instead of focusing on the modernization of the country’s agricultural-based economy, China’s leader intended to install the many values and doctrines of communism into Chinese society. It was evident that economics took a back seat to Mao’s greater vision of a communal society, “…Stalin emphasized only technology, technical cadres. He wanted nothing but technology, nothing but cadre; no politics, no masses…Stalin speaks only of the production relations, not of the superstructure, nor of the relationship between superstructure and economic base…Stalin mentions economics only, not politics.”1 The chairman of the People’s Republic believed that once communism had grown deep roots in his country’s society, economic development would inevitably follow.
The failure and disastrous aftermath of “The Great Leap Forward” brings to light many aspects of the precarious relationship between economic progress and political policy in pre-reform China. One possible conclusion that can be derived from this disaster is that communism, because of its lacking emphasis on capitalism, cannot nurture economic development. As Nicholas Lardy stated, “The Maoist ideology of self-sufficiency, pursued most vigorously in the Cultural Revolution years of the mid-and late-1960’s, had left China largely isolated from the world economy.”2 Communist doctrines decreed capitalism as inequitable because the elite prospered while the commoners languished. Thus China’s market economy was scrapped in favor of one that promoted self-reliance. Instead of striving for economic development, China sought to stabilize their economy. Communist nations have a history of playing minor roles in the world market, and China under Mao was not an exception, “At the outset of its economic reforms in the late 1970’s, China was an insignificant participant in international markets for goods and capital…prior to the late 1970’s, China also was barely a participant in world capital markets.”3 Many critics argue that China’s communist ideals limited its participation in extensive markets, and thus the country’s economy was doomed to falter from the outset.
Another possible conclusion that can be derived from the relationship between Chinese communism and the country’s dormant economy is that Mao failed to administer government policies wisely. In effect it was not communism that derailed China’s economy, but rather the errors of an individual in a position of power. Mao was too theoretical concerning communism in the wake of the 1949 revolution. The Chinese leader envisioned a perfect communal society modeled strictly after the doctrines and theories of great socialist writers. By following the guidelines presented by such writers as Marx and Engels, Mao sacrificed economic development in favor of the possibility of social reform. As Dwight Perkins says,

Mao Zedong, during the last decade and a half of his life, dedicated his energies to creating a new “socialist man” who would work selflessly within a society devoid of class distinctions and motivated by the social good rather than personal material benefits. Mao was not opposed to economic growth, but after the failure of the Great Leap in 1960, he no longer saw social goals as completely consistent with rapid growth in the short run and his clear priority was on the social goals.4


Mao based his knowledge of communism upon the theories of others, and thus never grasped the spirit of the political system that he intended to institute. Instead of criticizing Stalin because of his concern for the economy, Mao probably should have paid more attention to the Soviet example.
The turning point of Chinese economic development came in 1978 when Deng Xiaoping became the unofficial leader of the nation. In an effort to encourage economic growth and increase the standard of living among Chinese people, Deng instituted a series of reforms that overhauled Maoist policies concerning China’s economy. It was during these reforms that China moved away from the traditional communist style command economy and began to participate in world markets. International trade along with foreign investments invigorated the Chinese economy and brought revenue to the starving nation. The Chinese dual track economic system, in which state owned companies cooperated with privately owned enterprises, promoted technological advancements and the diversification of industry. Deng’s move to a market economy, “…was one of the most powerful demonstrations of the bankruptcy of the command economies that at the time still prevailed in the Soviet Union and most of Eastern Europe.”5 China had removed the burdensome yoke of Mao’s communist ideology from its economy, but its autocratic government was far from democratized.
The increasing sense of economic freedom among the Chinese people did not transfer over to government officials in the wake of Deng’s reforms. Although the government played a smaller role in the management of the nation’s economy, “…the Leninist-style system of party dictatorship, constituting perhaps the most essential of Deng’s four basic principles, was carefully maintained.”6 As China’s leader, Deng was unwilling to allow economic development translate into political freedom. Any reform that challenged one-party rule could be detrimental to the Chinese government in the long run. With the exception of their differing economic views, Mao and Deng essentially used the same authoritarian rule to control the Chinese people.
Critics argue that economic development inevitably leads to democratization. Antonio Chiang, for example, states that:

This public confidence is very important. It means that
people on the mainland are starting to challenge authority,
so that the party loses prestige, loses control. This cultural
change, this economic base, is very important….the
authoritarianism gradually rots, from the inside out. It
erodes. Its not an explosion, it just melts down. It melts
like ice cream in the sun.7


China has the potential to be a developing economic nation that deviates from the “Taiwan Option” described by Chiang. There are two major factors that support authoritarianism in China: scarcity of information and a stratified class structure. Oddly enough it is the Tiananmen Square movement that most clearly shows how these conditions help maintain China’s dictatorship. The leaders of the pro-democracy rally in Beijing were mainly upper class college students who resided in urban areas. The doctrines and ideas put forth by the democratic leaders caught on in China’s major cities, but the commoners of the countryside received little news of the uprising. The Chinese government made sure that relatively little information about the demonstration spread to the countryside. Due to the stratified nature of Chinese society, the urban intellectuals and the peasants did not cooperate in the Tiananmen movement. As Tatsumi Okabe says, “The radical democrats focused primarily on the group interests of the intellectuals, and the neo-authoritarian regarded the uneducated masses as unready for democracy.”8 With relatively no middle class emerging in China, the chasm between the upper class and lower class will continue to grow as the nation experiences economic growth.
By studying China we see that it is possible for any type of government to promote economic development without experiencing a change in the political system. China’s government instituted reforms that gave economic freedom to the nation’s industries, yet it made sure not open any loopholes that could possibly compromise its power. Authoritarian regimes lose control when they allow democratization to follow in the wake of economic progress. Deng did not change the political system of China when he instituted his economic reforms, and thus he kept democracy from creeping into the government. Instead of destroying China’s authoritarian regime, economic development prolonged the government’s existence by instilling a sense of financial freedom in the people.



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