According to Higgs, Rothbard et al. the state has a natural tendency to grow and transcend its limit. This is borne out by evidence in Western countries like the US, UK and Australia where government has grown greatly over the past 100 years (despite the brief period of liberalization in the 1980s).
But how to explain why authoritarian nations like China, Singapore and Hong Kong are allowing greater economic freedom? Why don’t the governments there resist loosening their power and influence over the economy?
Are they really allowing greater economic freedom? Or is it controlled to get that GDP up for national, meaning, communist party pride and if the gov’t mandates are not met then what happens to the person?
I’d read this post by somebody that lives there and offered excellent insight.
Also check out this thread, including the video on gov’t mandates to keep GDP’s up so empty cities are built, etc…, and also that thread OP shows how China has mandated a ‘no selling of land for housing’ temporarily.
A big part of it is because it has the net result of enhancing their power. They give up some power over their domestic economy in order to gain more power in relation to other states.
It is the same reason that motivated the monarchs of old to grant city charters.
When the smart vampire sees that his victim is about to die from loss of blood, he eases up a little to let him recuperate. That way he can keep on getting blood.
Well, saying that the State doesn’t like to kill the goose that lays the golden egg would be far form the whole story and, in this case, wrong. For the too would like not to kill the goose, and so would the EU. Why than they keep sliding deeper and deeper into socialism, while has at the very least a stable degree of economic freedom?
The argument that States would like not to kill the goose that lays the golden egg would explain economic freedoms only if we make the assumption that the States can actually be controlled by someone. That was true of Absolute monarchies (hence, as already noted in the thread, Chartered Cities), but is far from being true in the Res Publica, where no one controls the state. It’s just an amorf mechanism alive with the clashes of petty interests of a thousand groups. So, yes, every state would like not to kill the goose, but republics (to mean impersonal states) cannot act out of rational impulses: they follow their own internal dynamics.
Thus, to East Asia: first of all, and HK are very easy to explain. They are small, leaving is easy, the beaurocracy is limited, and hence they can be plausibly controlled. Economic (but not personal) freedom is the best choice for the local rulers.
As for and those countries have touched the bottom somewhat recently and when that happens you get a chance to begin anew. So, and too are running uncontrollably towards socialism, but they are at the very beginning of their run. Neither will keep its impressive growth rates into the next decade, I’m afraid.
Question is innacurate. There is no rise of capitalism in Asia. I live in the Philippines and intellectual culture here is so statist. Currently, all the Southeast Asian countries strive to model themselves after the European welfare state. They don’t know that the reason European welfare states survive is because of the capital accumulation from previous free market.
The reason why Asia has become richer over the past century is because they had a chance to develop some sort of free market upon independence from Western colonialists. Africa had independence but continued receiving foreign aid, that is why their economy still in shambles while Asian economies skyrocket.
Hong Kong and China are special cases. Hong Kong is controlled by China and is in a state of ‘benevolent neglect’. Free market is relatively intact because people cannot vote. No politics, no interventionism. Chinese is also politically stable because it is NOT a democracy. Politicians have nothing to fear from the population. Chinese political arrangement is close to that of a traditional monarchy. In contrast, India is a democracy and not nearly as prosperous as China. India is very unstable, property rights are not certain.
In conclusion, Asia moved to free market because of freedom from colonizers. Now that they have accumulated a little capital, they are moving towards welfare statism. Exceptions are the non-democracies like China and Hong Kong.
I bet there is loads of people in the Philippines and in the Philippine government who believe that having a regulated welfare state is a part of how you become prosperous though.
They do not do it solely because of politicking and because they would want power over welfare recipients.
India does make China look like a free market paradise, and only made a few reforms in the 1980s with more substantial ones in the early 90s but only when on the brink of a financial and foreign exchange reserve crisis. It wasn’t as a result of any change in ideology on the part of the ruling class or populace. I would say the market reforms have had a long term effect in shifting the mindset of the populace however, especially the youth, in a capitalist direction(kind of like a change in rolemodels).
Also, despite all the interventionism I’d say there is hope in India given how divided and devolved its power structures are, especially compared to the United States, the central government is much weaker, and has to bargain and broker a lot of deals with the states to get anything done. Gurcharan Das has pointed out further advantages pointed out the longer standing and more developed legal and judicial system, along with the fact India has the intellectual capital and commercial tradition with many established, longstanding private firms still in existence and thriving today over China. Not sure, if it would be fair to say property rights are better protected though…