Democracy Against Development?

 In “Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization,” Robert Wade examines economic growth in East Asian nations after the second world war. He looks at a couple different theories of economic growth, under the theory that that to understand and have a theory of economic growth, you must take in account the growth of these nations and they must fit your heuristic (4). He looks at theories of complete free market openness and a theory of simulated free markets, but through using South Korea and Taiwan as primary case studies, he focuses on combining  the advantages of markets with “the advantages of partially insulating producers from the instabilities of free markets and of stimulating investment in certain industries selected by government as important for the economy’s future growth” (5).  A guided approach to state development, Wade argues, is superior to a purely market oriented position for developing nations, so that in using these East Asian guides, then “the general recipes for developing countries would need rethinking” (5).

                In the course of the examination, Wade makes multiple prescriptions that would go against a neoliberal theory of the state, from “Use national policies to promote industrial investment within the national boundaries, and to channel more of this investment into industries whose growth is important for future growth” (350) which is explicitly picking winners on an industrial level, and one that could backfire for example, if a nation invests in chemicals and then raw materials costs skyrocket while not being a producer of the primary hydrocarbon. Other prescriptions include “Use protection to help create internationally competitive sets of industries” (358) an idea more in line with Alexander Hamilton than Anne Krueger.        

                What really struck me though was Wade’s eight prescription: “Develop effective institutions of political authority before the system is democratized” (372). My immediate visceral reaction to this was to draw a little frown in the margins of the paper I was reading it in.  Wade further extends this idea that growth will be privileged, such that there might need to be “some curtailment of the political and civil rights of those who oppose the changes, and power of the democratically elected legislatures” (373). He does address the idea that people naturally glom onto the idea of democracy as one of the highest ideals, and that this could hurt his argument, but ultimately for Wade, the priority is growth. He even looks at empirical studies that show “democratic regimens tend to grow more slowly than authoritarian ones” (374). This result is also illustrated in “Reconceptualizing the Developmental State: Public Savings and Economic Growth”, where we saw Jonathan Krieckhaus outline greater growth in Brazil after the military coup because the new government illustrated his thesis that “an equally important component of state-led growth is public sector efforts to mobilize financial resources for investment and growth” (Abstract, 1697).

                So, what we have here is a balance. A powerful state can make things happen, in the exercise of development. For me. Democracy is such an unalloyed good that it almost does not need defending. To take voice and agency away from people in the nation and completely subordinate them to the state actors feels evil, even if done in the best interests of the people of the state. The problem here is that you need an enlightened state actor in the executive if you give that power away. At issue is that there are very few people like Lee Kuan Yew that we can point to. The negative kleptocrats operating at a remove from the voice of the people and extracting the wealth to Swiss bank accounts are the ones we worry about, such as Mobutu’s Zaire that Cypher illustrates (247). What we ultimately have is a question about trade-offs that is not purely economic. If development can proceed faster without democratic checks and balances, is this something that we would want to support? Is there some sort of super-national agency that should provide checks on powerful executives and allow them sanction if the executive is not working for the good of the people, or is this just another colonial reflective removal of sovereignty? Ultimately, I don’t have the answer here, but it is fertile ground for further debate.

Works Cited

Cypher, J. M. (2014). The process of economic development. London: Routledge, Taylor & Francis Group.

Krieckhaus, J. (2002), “Reconceptualizing the Developmental State: Public Savings and Economic Growth”, World Development, Vol. 30 (10).

Wade, R. (1990) Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Introduction, Ch. 10 and Ch. 11.