Authoritarian capitalism
Authoritarian capitalism,[1] or illiberal capitalism,[2] is an economic system in which a capitalist market economy exists alongside an authoritarian government. Related to and overlapping with state capitalism, a system in which the state undertakes commercial activity, authoritarian capitalism combines private property and the functioning of market forces with repression of dissent, restrictions on freedom of speech and either a lack of elections or an electoral system with a single dominant political party.[1][2][3]
Countries commonly referred to as being authoritarian capitalist states include China since the economic reforms, Hungary under Viktor Orbán, Russia under Vladimir Putin, Chile under Augusto Pinochet, Singapore under Lee Kuan Yew, and Turkey under Recep Tayyip Erdoğan as well as fascist regimes and military dictatorships during the Cold War. Nazi Germany has also been described as authoritarian capitalist,[4][5][6] especially for its privatization policy in the 1930s.[7]
Political scientists disagree on the long-run sustainability of authoritarian capitalism, with arguments both for and against the long-term viability of political repression alongside a capitalist free-market economic system.[1][3]
History[edit]
Early development[edit]
As a political economic model, authoritarian capitalism is not a recent phenomenon. Throughout history, examples of authoritarian capitalism include Manuel Estrada Cabrera's and Jorge Ubico's respective reigns in Guatemala, Augusto Pinochet's reign in Chile, Suharto's New Order in Indonesia and the People's Action Party's early administration in Singapore.[8] During World War I, the ideological divide between authoritarian and liberal regimes was significantly less pronounced as both were aligned to capitalist economic models. Moreover, the Axis powers of World War II have been described as possessing totalitarian capitalist economic systems, acting as examples of the early developments of authoritarian capitalism.[4]
From the end of World War II, various authoritarian capitalism regimes emerged, developed and transitioned into a liberal capitalist model through East Asia, Southern Europe and Latin America. It has been argued that the change of these early regimes was predominately due to the dominance of liberal capitalist countries such as the United States as opposed to a natural transition, suggesting that modern authoritarian capitalist regimes may further develop the system.[4]
State capitalism[edit]
Overlap[edit]
Authoritarian governments often seek to establish control within their borders and as such will use state-owned corporations, therefore state capitalism will emerge to some extent within countries that practice authoritarian capitalism, manifesting from the ruling authority's desire to exercise control. The prominent use of state owned corporations and sovereign wealth funds within authoritarian capitalist regimes demonstrates such a tendency, with Russia decreasing its private ownership of oil from 90% to 50% while transitioning to a more authoritarian model under the leadership of Vladimir Putin.[10]
It has also been noted by individuals such as Richard W. Carney that authoritarian regimes have a strong tendency to use their economies as a method to increase their influence heavily investing in their economies through state owned enterprises. Carney describes the intervention of authoritarian states occurring through means he describes as extra-shareholder tactics, including regulations, government contracts and protectionist policies alongside the state engaging in shareholder activism. Moreover, he focuses on the use of state owned funds to engage in take-overs of key assets in other countries such as Khazanah Nasional's takeover of Parkway Pantai in 2010.[11]
Differences[edit]
Within countries that practice authoritarian capitalism, state capitalism is generally also present to some extent and vice versa. As such, there is a widespread confusion between the terms with them at times being treated as synonymous by individuals such as former Australian Prime Minister Kevin Rudd.[12] However, there remains a fundamental difference with state capitalism being a system in which government owned entities engage in for-profit activities while authoritarian capitalism is a system where an authoritarian regime co-exists with, or at least attempts to adopt aspects of, a market economy, highlighted in countries such as Hungary by the Transnational Institute.[3]