By Pranab Bardhan
Berkeley, California
The Nation (Thailand)
The lives of two recently deceased nonagenarians, one a brutal military dictator, Augusto Pinochet, and the other a brilliant and influential economist, Milton Friedman, came into brief contact three decades back - and it landed the economist in political controversy.
Friedman met Pinochet in 1975 during a lecture tour to Chile, and critics of Friedman, unfairly charged him, a champion of freedom, with endorsing the military regime. What did soften him somewhat toward that regime was its eagerness to listen to the economic advice of the "Chicago boys" on the value of free markets. Beyond the ephemeral oddities of personal behaviour, there is a substantive issue worth pondering, particularly on the occasion of "Milton Friedman Day", celebrated last Monday.
Friedman openly gave primacy to economic freedom over political freedom. In his 1994 introduction to the 50th anniversary edition of Hayek's "Road to Serfdom", he categorically stated: "The free market is the only mechanism that has ever been discovered for achieving participatory democracy." In this, he seems to have gone beyond his line of thought expressed in the classic 1962 book, "Capitalism and Freedom", where he stated: "History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition."
His 1994 statement implies that economic freedom is a necessary and sufficient condition for political freedom. This important systemic issue in the transition paths of many developing countries today has not been adequately discussed.
Take the two largest countries in the world, China and India. The last quarter century of history in China suggests that while there has been dramatic progress in economic freedom in the sense of expansion of market reform, it has not been sufficient to bring about a substantial expansion of political freedom.
The first four decades of India after independence in 1947 show that a considerable amount of political freedom was quite compatible with what Friedman would consider large restrictions on economic freedom in the form of heavy bureaucratic regulations and control over the economy.
It is possible that a quarter century is not long enough for the effects of economic freedom in China to work out in political liberalisation, and people point to other East Asian countries - South Korea, Taiwan - where capitalism, which thrived under initial decades of authoritarianism, may have paved the way for the eventual ushering in of democracy. But the police state in China shows no signs of loosening its grip soon, despite the dramatic progress in the opening of the economy. While there has been some relaxation in individual expressions of thought, the state never fails to clamp down on political activities that have even a remote chance of challenging the monopoly of power of the central authority.
Some observers have even claimed that the large numbers of reported local disturbances in recent years in different parts of China - mainly around economic issues like land acquisitions, toxic pollution or mass lay-offs from state-owned enterprises - have allowed the central government to scapegoat and punish local officials, localise and diffuse unrest, identify discontented groups before they can coordinate across regions, and retain its tight control over the citizenry as a whole. Elsewhere in Asia, leaders in Singapore, poster boys of economic freedom in the eyes of many, have continued for decades to repress political freedom. Lee Kuan Yew's famed "Asian values" were market-friendly, but not very hospitable to political dissent.
In the Heritage Foundation ranking of countries in terms of their Economic Freedom Index for 2006, India's rank, even after a decade and half of market reform, is much below that of Hong Kong, Singapore, Saudi Arabia, Kuwait, Cambodia, Kenya, Uganda and most of Latin America. Yet over several decades India has proved itself a vibrant, though unwieldy, democracy. Friedman sometimes made a distinction between political freedom and "human freedom". In terms of both, whether you take the well-known scores for political rights and civil liberties assigned by Freedom House, or the overall democracy scores given out by the Economist Intelligence Unit, India performs much better than those countries ranked far superior in economic freedom. Economic freedom does not seem to be a necessary condition for political freedom.
A look at the history of Western Europe does not clearly show that economic freedom, or "Manchester liberalism", brought about the victories of democracy. Theorists of democracy have often pointed to many other political or structural factors. For example, some ascribe the extensions of franchise and other democratic rights for the working class in the 19th century in Britain to the rivalry and conflicts between traditional aristocracy and the rising industrial bourgeoisie.
In India it is arguable that the survival of political and human freedom, against all odds and at a time when government control over the economy was pervasive, had something to do with the fact that the elite was heterogeneous and fractured. No individual group could overpower others, and competitive politics provided a procedural device to keep the contending partners at the bargaining table within some moderate bounds. Democracy served as a resilient mechanism for conflict management in a highly divisive society.
Friedman in recent years had been quick to point out that intensive economic liberalisation in Pinochet's Chile eventually evolved into political liberalisation. But anyone familiar with the transition in Chile knows that the path was by no means smooth, and Pinochet tried his best to obstruct it. In any case other countries have been far less successful in this evolution. One mechanism for this evolution is supposed to work through the rise of the middle class. While economic liberalisation may strengthen the middle classes, these classes have not always been pro-democratic:
It is often the case that market reform tends to sharpen inequality. The resultant structures of political power, buttressed by corporate plutocrats and all-powerful lobbies, may hijack or corrupt the democratic process, sometimes undermining the expansion of mass democratic rights, including the freedom of association of organised workers, and raise barriers to entry into the political arena for common people.
Thus economic freedom may be important by itself, but neither necessary nor sufficient for political freedom.
Pranab Bardhan is a professor of economics at the University of California, Berkeley, and co-chair of the Network on the Effects of Inequality on Economic Performance.
Yale Centre for the Study of Globalisation
Friedman met Pinochet in 1975 during a lecture tour to Chile, and critics of Friedman, unfairly charged him, a champion of freedom, with endorsing the military regime. What did soften him somewhat toward that regime was its eagerness to listen to the economic advice of the "Chicago boys" on the value of free markets. Beyond the ephemeral oddities of personal behaviour, there is a substantive issue worth pondering, particularly on the occasion of "Milton Friedman Day", celebrated last Monday.
Friedman openly gave primacy to economic freedom over political freedom. In his 1994 introduction to the 50th anniversary edition of Hayek's "Road to Serfdom", he categorically stated: "The free market is the only mechanism that has ever been discovered for achieving participatory democracy." In this, he seems to have gone beyond his line of thought expressed in the classic 1962 book, "Capitalism and Freedom", where he stated: "History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition."
His 1994 statement implies that economic freedom is a necessary and sufficient condition for political freedom. This important systemic issue in the transition paths of many developing countries today has not been adequately discussed.
Take the two largest countries in the world, China and India. The last quarter century of history in China suggests that while there has been dramatic progress in economic freedom in the sense of expansion of market reform, it has not been sufficient to bring about a substantial expansion of political freedom.
The first four decades of India after independence in 1947 show that a considerable amount of political freedom was quite compatible with what Friedman would consider large restrictions on economic freedom in the form of heavy bureaucratic regulations and control over the economy.
It is possible that a quarter century is not long enough for the effects of economic freedom in China to work out in political liberalisation, and people point to other East Asian countries - South Korea, Taiwan - where capitalism, which thrived under initial decades of authoritarianism, may have paved the way for the eventual ushering in of democracy. But the police state in China shows no signs of loosening its grip soon, despite the dramatic progress in the opening of the economy. While there has been some relaxation in individual expressions of thought, the state never fails to clamp down on political activities that have even a remote chance of challenging the monopoly of power of the central authority.
Some observers have even claimed that the large numbers of reported local disturbances in recent years in different parts of China - mainly around economic issues like land acquisitions, toxic pollution or mass lay-offs from state-owned enterprises - have allowed the central government to scapegoat and punish local officials, localise and diffuse unrest, identify discontented groups before they can coordinate across regions, and retain its tight control over the citizenry as a whole. Elsewhere in Asia, leaders in Singapore, poster boys of economic freedom in the eyes of many, have continued for decades to repress political freedom. Lee Kuan Yew's famed "Asian values" were market-friendly, but not very hospitable to political dissent.
In the Heritage Foundation ranking of countries in terms of their Economic Freedom Index for 2006, India's rank, even after a decade and half of market reform, is much below that of Hong Kong, Singapore, Saudi Arabia, Kuwait, Cambodia, Kenya, Uganda and most of Latin America. Yet over several decades India has proved itself a vibrant, though unwieldy, democracy. Friedman sometimes made a distinction between political freedom and "human freedom". In terms of both, whether you take the well-known scores for political rights and civil liberties assigned by Freedom House, or the overall democracy scores given out by the Economist Intelligence Unit, India performs much better than those countries ranked far superior in economic freedom. Economic freedom does not seem to be a necessary condition for political freedom.
A look at the history of Western Europe does not clearly show that economic freedom, or "Manchester liberalism", brought about the victories of democracy. Theorists of democracy have often pointed to many other political or structural factors. For example, some ascribe the extensions of franchise and other democratic rights for the working class in the 19th century in Britain to the rivalry and conflicts between traditional aristocracy and the rising industrial bourgeoisie.
In India it is arguable that the survival of political and human freedom, against all odds and at a time when government control over the economy was pervasive, had something to do with the fact that the elite was heterogeneous and fractured. No individual group could overpower others, and competitive politics provided a procedural device to keep the contending partners at the bargaining table within some moderate bounds. Democracy served as a resilient mechanism for conflict management in a highly divisive society.
Friedman in recent years had been quick to point out that intensive economic liberalisation in Pinochet's Chile eventually evolved into political liberalisation. But anyone familiar with the transition in Chile knows that the path was by no means smooth, and Pinochet tried his best to obstruct it. In any case other countries have been far less successful in this evolution. One mechanism for this evolution is supposed to work through the rise of the middle class. While economic liberalisation may strengthen the middle classes, these classes have not always been pro-democratic:
It is often the case that market reform tends to sharpen inequality. The resultant structures of political power, buttressed by corporate plutocrats and all-powerful lobbies, may hijack or corrupt the democratic process, sometimes undermining the expansion of mass democratic rights, including the freedom of association of organised workers, and raise barriers to entry into the political arena for common people.
Thus economic freedom may be important by itself, but neither necessary nor sufficient for political freedom.
Pranab Bardhan is a professor of economics at the University of California, Berkeley, and co-chair of the Network on the Effects of Inequality on Economic Performance.
Yale Centre for the Study of Globalisation
8 comments:
Friedman's analysis failed to take account of the role of culture in the process of democratization. Western values, and more particularly the values of Northern Europe such as the notions of individual equality and basic inalienable rights, are a prerequisite for true democracy, or more precisely, for the social demands without which democracy cannot flourish.
You are right, many Western economists and sociologists for that matter develop their theories for Western cultures. Their theories do not necessarily apply and cannot easily be transferred to Asian cultures and mentalities. Though in modern times, due to the spreading of Western values throughout the world, in both economic and social terms, those distinctions have become less clear. Nevertheless, most western leaders now hold economic freedom will automatically lead to political freedom, claiming that wealth will bring intellectual independence and consequently the downfall of any repressive regime. These leaders point to Latin America where most of the dictatorships of the past three or four decades have been replaced by fledgling socialist democracies. Whether the same process will take place in Asia remains to be seen, as looks to the Philippines, Indonesia, China, and Vietnam demonstrate. Whether it will reach Cambodia any time soon is something many Khmer will be anxious to see. In comparison to the a. m. countries, Cambodia still enjoys a lot of freedom (freedom to travel, to emigrate) despite the repressive tactics used by the current regime. If the western leaders' axiom were to come true, this is bound to be a period of transition even in Cambodia.
Thank for sharing your views;
however, I dissagree that a culture
with hierarchy is repressive. It
may seem that way, but it is not.
Everyone will have equal chance to
decide for the country in time. We
are proud of what we have and we
will not allowed anyone to try
to wipe out our heritage and
destroying our race as a
consequence. We will followed the
wills of our ancestors and
forefathers, not westerners'.
I did not say hierarchy is repressive. I was referring to the current regime, or similar regimes, as in China, Vietnam, etc. or anywhere else.
Well then, clarify how the
regime is repressive for us, will
ya? Also to name the country
because they are not all the same,
despite the culture is virtualy
the same.
My friend, we are talking about Asia in general, and Cambodia in particular. There is no doubt that the current CPP government is repressive, see trade unions, human rights, restricting free speech, ballot rigging, hindering free and fair elections. This is not a question of hierarchy, but simply of people in power abusing it. Again, this has nothing to do with cultural values like respect for your elders, and ancestors.
In case you don't know, Mate, Full
Blown Free Speech could violated
our code of manner. Get it? We got
all of what is needed.
And what Human Rights are you
specifically seeking? I am not
aware of myself lacking any right?
Trade Union is debatable when they
destroyed our prescious jobs.
Ballot Rigging is just a small
part of imperfection in any
election. You are not telling me
that your election are perfect,
are you?
And what election have we hindered?
I understand you are a proponent of the current regime. As for elections, well, I remember the one in 1992, the coup d'etat in 1997, and read KI-Media about the current provincial elections. It would too far to list all human rights violations but there are plentiful U.N. reports available, and so on, and on and on. That other countries aren't perfect either cannot be an excuse for your own imperfections. I don't want to argue with you here. I just see it differently. Why don't we leave it a t that.
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