Even before the worldwide spread of the Covid- 19 pandemic, the GDP of all the democratic countries put together was less than that of the non-democracies. It is now virtually certain that after the outbreak of pandemic the gap would widen as most of the economies of democracies are shrinking and would take a longer time to recover. China has made a quick recovery and by June 2020 was able to reach 80 per cent of its normal target. The singular importance of China is because it is the largest manufacturing economy and exporter of goods. It is also the largest growing consumer market and second largest importer of goods.
The IMF projection for China is that its economy would grow by 1 per cent for the rest of 2020 as compared to 6.1 per cent in 2019. In 2021, it is expected to grow at 8.2 per cent and unlike most other major economies would be able to make up for lost time quickly. The US economy in comparison has contracted by 8 per cent in 2020. In 2019, its growth rate was 2.3 per cent and would be 4.5 per cent in 2021. The Asean economies have contracted by 2 per cent in 2020. In 2019, they grew by 4.9 per cent and in 2021, are expected to grow at 6.2 per cent. India has contracted by 10.3 per cent in 2020. In 2019, it grew by 4.2 percent and is expected to grow by 6 per cent in 2021.
The challenge for democracies to catch up or surpass the economic challenges of non democracies gets more complicated by the fact that when the present affluent democracies embarked on industrialization and experienced impressive growth and prosperity, they were mostly non-democracies. But even then, their growth rate was much less than China’s astounding rate of 10 per cent sustained over a period of forty years in contrast to the US’ growth rate at 3.5 per cent and Great Britain which was 1.5 when they were industrializing.
This view was further vindicated by the rise of Asian Tigers whose success led China to emulate them and change its own course. Japan’s Meiji restoration that took place following Commodore Perry’s expedition in 1853 was within an authoritarian structure. Moreover, when Japan debated about the adoption of a suitable constitution in 1868 it accepted the Prussian model, an authoritarian model, over the British, as it considered the latter as unsuitable for the then prevailing situation, despite it being the best. This economic miracle of authoritarian nations in the contemporary world is unexpected. It defies Fukuyama’s categorical assertion in the early 1990s about the triumph of liberalism and its uninterrupted march without challenge. Fukuyama’s arguments were accepted momentarily as universal in the background of the collapse of communism in East Europe and the deindustrialization process in the erstwhile Soviet Union and in its successor state, Russia.
This deindustrialization process in Russia continues even today. Like many countries of the developing world, Russia continues to be primarily a raw-materials exporting nation and because of trade restrictions imposed on it by the West, is increasingly dependent on China for manufactured goods and even for upgrading its primary export of natural gas and petroleum products.
It is mainly the rise of China, with its own characteristics and its ability to sustain a continuous growth, currently the number one manufacturing exporting nation and projected to surpass the USA as the largest economy of the world within a decade, that has made policy makers think otherwise. Even in the Western European heartland, Italy, Portugal and Greece are signatories to China’s Belt and Road initiative. Many critics of democracy also point out that the EU itself is not a democratic body.
The US with its policy of ‘America first’ has indicated its intention to its allies and friends of withdrawing from its overseas responsibilities weakening the process of democratic expansion and collective effort at economic coordination. This indicates that another Marshall Plan or something to match China’s Belt and Road initiative is inconceivable at the present juncture.
It is also no coincidence that the Chinese economic relationship with other nations is more pragmatic and less ideological, similar to the US led containment theory after the Second World War in which authoritarian Pakistan was preferred over democratic India. Given these facts democracies have to prove that the system is as important for politics as for economics. In attempting to achieve this stupendous task liberal democracies will have to acknowledge China’s unprecedented success both in its domestic and external economic priorities and work out a remedial and a better democratic project.
China has impressively mitigated abject poverty as it has uplifted about 800 million of its people and has also reduced the number of people involved in agriculture to 7 per cent of its population. Simultaneously it has also ensured it has enough surplus to export. China has been able to achieve it with less arable land than India.
All these are because of China’s pragmatism and non-ideological stance while a serious limitation of democratic orders has been their compulsion towards populism in order to retain electoral support base and to create a winning coalition. These worked well during the heydays of growing prosperity after the Second World War when western democracies had access to an unlimited supply of cheap oil.
However, this was drastically altered with the rise of OPEC in 1973, the four-fold increase in the price of oil and a silent revolution, in which the third world became increasingly exporters of finished goods rather than being primarily raw materials exporting countries.
The Chinese allege that electoral mechanisms in democracies lead to compromise with merit. Timothy Garton Ash observes that many Chinese students who come to Oxford and Cambridge are critical of China but they also find the West chaotic and disorderly as demonstrated by the recent racial riots in the USA and a lax work culture. The most important lesson that democracies have to imbibe from authoritarian China is state competence and efficiency and keeping corruption at a manageable level.
It is not to argue that there is no corruption in China as it is quite widespread but it does not affect the basic structure and function of the state, namely its phenomenal success in eradicating poverty, spread of quality education, health care and building excellent infrastructure, with highways of more than 10,000 miles without potholes. In the 1960s, Gunnar Myrdal analysing the economic situation of South Asian nations described them as soft states where lofty policies were announced but never implemented.
The difference between well established democracies and the newly emerging ones is not the wide gap in GDPs but the fact that the former has been partially reformed while the latter continue to be unreformed. With little commonality between the elite and the masses there does not exist a common denominator to define their common nationhood.
To remedy this, the democratic world would have to have a common minimum agenda of democratic governance which would ensure an average citizen access to resources, justice and education to provide life and content to democracy. Democracies are to overcome their structural shortcomings not only to meet the authoritarian challenge to economic development but also to outwit it.
The writer is retired Professor of Political Science, University of Delhi