The Heroes of Autocratic Capitalism

Hard-working autocrat Vladimir Putin, headed to to the Kemerovo coal mines.

Photographer: Sovfoto/UIG via Getty Images

Hard-working autocrat Vladimir Putin, headed to to the Kemerovo coal mines.

Bloomberg’s Brian Bremner and David J. Lynch write about the triumph — at least for the moment — of state-supported capitalism. Russia and China have stymied the widespread expectation that they would somehow transition to full-fledged democracy. On the contrary, in recent years they’ve stretched their authoritarian musculature, and given more power to giant state-sponsored enterprises.

As Bremner and Lynch note, that model seems to be gaining new adherents, most recently Hungarian Prime Minister Viktor Orban, who voiced his support for a “illiberal democracy” [sic]. Indeed, the temptations of authoritarianism are understandable these days: China’s economy is the envy of the world, and Russia’s economy has done well, despite Vladimir Putin’s expansionist adventures. Meanwhile, a number of democracies have edged closer to insolvency.

There’s a fair amount of research on dictatorship versus democracy. Much of it is positive for democracies. One factor here, as this paper argues, may be that while authoritarian governments may look good at first, they tend increasingly toward ever more baroque and economically damaging corruption. The academic research may not be the final word on this. Academics — and frankly, journalists — have a measure of bias here. Few of them are looking very hard to prove the great value of authoritarian regime.

One hypothesis worth considering is that authoritarian regimes look good because they tend to come to power in times of disturbance and dislocation. Autocrats come to power when the economy has nowhere to go but up. For some evidence, consider the chart below. It shows GDP growth in Russia compared to its much smaller satellites Latvia, Lithuania and Estonia (full data here). All have followed roughly the same path since 2000. The Baltic states had a harder crash in 2009 — but they also haven’t benefited from rising oil prices like Russia. All four countries have a similar story of strong economic growth. Only one them has a strongman taking credit for it.

EasternEurope2


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