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Russia and China: Illiberal Capitalism

Posted by Author on January 15, 2008

By Gideon Rachman, The Financial Times, Jan. 09, 2008-

During the cold war it was natural to lump Russia and China together. They were the two great communist powers – the leading ideological adversaries of the west.

Then came 1989 – the year of the crushing of the students’ revolt in China and the collapse of the Soviet empire. Communism had failed. Free markets and democracy seemed poised to sweep all before them. The spirit of the time was captured in Francis Fukuyama’s famous article on “The End of History”, published in Washington’s National Interest magazine that summer. Mr Fukuyama did not argue that history had ended in the sense that there would be no more great events. Rather he claimed ideological victory for the west, suggesting that “liberal democracy may constitute the end point of man’s ideological evolution”.

Even though it swiftly became fashionable to dismiss Mr Fukuyama, a variant of his thesis has powerfully influenced US foreign policy ever since. The chain of thinking works something like this. Communism failed as an economic system. Russia and China have had to embrace free markets. Economic freedom will, in time, produce political freedom. A liberalised economy will generate new forces and tensions that will make it impossible to maintain an authoritarian political system.

The emergence of new technologies, allied to the globalisation of the world economy, gave another dimension to this argument. In 1993 Rupert Murdoch, the media mogul, contended that advances in communications technology had “proved an unambiguous threat to totalitarian regimes”. In 2000 Bill Clinton suggested that liberty would be spread inexorably “by cell phone and cable modem”.

Yet 19 years after the “end of history”, Russia and China are not falling into line with the confident predictions of the liberal, democratic determinists. On the contrary, their political elites are pursuing an alternative to the prevailing western model. The new Russo-Chinese model is authoritarian rather than democratic. It attempts to marry capitalism with a large state role in the economy. It holds out the promise of western consumerism for a rising middle class, while rejecting western political liberalism. American rhetoric about human rights and democracy is dismissed as naive – or a deliberate effort to sow chaos. Rather than relying on democracy or communist ideology to create loyalty to the political system, the Russian and Chinese elites increasingly stress a combination of economic growth and nationalism. The two ideas are related because rising prosperity not only offers individual citizens new comforts – it also holds out the promise that the nation will be more respected around the world.

The international manifestation of this shared ideology is the Shanghai Co-operation Organisation – a regional body formed in 2001 that brings together Russia, China and four Central Asian nations. The SCO preaches absolute respect for national sovereignty and has sought to limit American influence in Central Asia. The Russians and Chinese conducted joint military exercises in 2005 – their first since their 1969 border war. Last year these exercises were repeated under the auspices of the SCO.

At the United Nations, the two countries both frequently oppose western efforts to exert pressure on repressive governments – whether in Iran, Iraq, Sudan or Serbia. Robert Kagan, an American foreign-policy analyst, has argued that “an informal league of dictators has emerged, sustained and protected by Moscow and Beijing”.

As during the cold war, it would be a mistake to think of Russia and China as embracing a monolithic world view. The Sino-Soviet split revealed the intense rivalries between Mao’s China and the Soviet Union. Today, there is still a strong element of mutual suspicion and strategic rivalry, with the Russians wary of the potential expansion of China into sparsely-populated, mineral-rich Siberia.

The starting points of the two countries are also very different. China’s economic boom has been going on for a generation and is broadly based on manufacturing. Russia’s rapid expansion is more recent and more fragile – driven as it is by the rising price of oil and gas. After a helter-skelter period of economic and political liberalisation in the 1990s, the Putin years have seen a re-assertion of the power of the Russian state. The process of Chinese economic liberalisation has been more orderly and linear.

In politics, the Chinese Communist party is still in charge. The Russian Communist party is now formally in opposition. But former Soviet officials still dominate the Kremlin, albeit wearing new political clothes.

In foreign policy, Russia still thinks like a global power – while China is only just beginning to flex its muscles outside of Asia. A senior Chinese diplomat says: “When there is a major world event, the Russians always react immediately. We often have to think about it for a couple of days.” Nonetheless, Russian military power is widely believed to be in decline, while the Chinese have embarked on a sustained military build-up.

But for all these differences, there are also increasingly strong similarities between the official ideologies of Russia and China. This is no longer because they both pay lip-service to a common set of Marxist-Leninist texts. Instead, it looks as if their ruling elites have arrived at similar ideas in reaction to similar economic and political pressures. The end product is a new, quasi-authoritarian ideology which – allied with economic success – could attract adherents. Writing in a recent edition of Foreign Affairs, Azar Gat, an Israeli academic, suggests that if western democracies run into economic problems, a “successful non-democratic Second World could then be regarded by many as an attractive alternative to liberal democracy.”

In both Russia and China, official spokesmen are ambiguous in their statements about democracy. They will often argue that liberal democracy remains a valid long-term goal – but that their countries must be given time. Yes, they will be “democratic” – but they will not allow that idea to be defined for them by outsiders and foreigners. “Russia will find its own way to democracy,” is the refrain in Moscow.

Dmitry Peskov, Vladimir Putin’s spokesman, likes to say that there are no perfect democracies in the world. Russia has its problems, but so do the democracies of the west. President Hu Jintao of China has called democracy “the common pursuit of mankind”. However, the official Chinese line tends to be that small steps are being taken towards a more democratic system – through village-level elections or contested elections within the Communist party – but that it is vital to avoid the “chaos” that could be unleashed by a naive rush towards democracy.

In both countries, fear of “chaos” is frequently stirred up to fend off demands for political liberalisation. In China, the word evokes the horrors of the Cultural Revolution, when the established social order was turned on its head. The fear that if the Communist party loses control, violence and social disorder could follow is also associated with the student revolt of 1989. In conversation, many Chinese seem to fear that democratisation could lead to separatism and civil war.

In Russia, Mr Putin’s followers link the democratisation of the 1990s to falling living standards, lawlessness, national decline and the capture of the state by a small group of ultra-rich oligarchs. Opinion polls show that these arguments have considerable popular resonance.

Yet, for all the talk of gradual democratisation, the reality in both Russia and China is that the space for political freedom and dissent seems to be shrinking rather than expanding. There is still considerably more freedom of expression in Russia than in China. But national television – which is by far the most powerful media outlet – faithfully reflects the Kremlin line. Dissenting intellectuals are not sent to the Gulag these days. But they find it very difficult to get their views widely exposed. A series of mysterious murders of investigative journalists has also had a chilling effect on the media.

China, by contrast, never experienced the flowering of independent media that Russia saw in the 1990s. Even so Mr Hu has overseen a significant tightening of controls over the media. The Committee to Protect Journalists, a New York-based non-governmental organisation, lists more journalists jailed in China than in any other country it monitors – with several cases in 2007. Chinese controls over the internet – through the “great firewall of China” – have also proved surprisingly effective. Mr Clinton’s confidence that it would be impossible to prevent the internet spreading subversive ideas has so far not been vindicated.

Optimists point to some contrary indicators, such as outbreaks of environmental activism – organised over the internet or by mobile phone. It is true that the network of social activities not directly controlled by the state has expanded, as the Chinese economy has grown and become more complicated. This has created new pressures to which the Communist party needs to respond. But the overall trend seems to be towards less media freedom rather than more; and therefore less scope for political expression and activism not approved by the party.

Access to political power remains tightly controlled in both countries. Russian elections are now widely seen as a way of legitimising prior decisions. Analysts of Russian politics are having to revert to Kremlinology to understand how the country is governed. The Russian presidential elections are in March – but it seems that the crucial decision has already been made, with Dmitry Medvedev anointed as Mr Putin’s favoured candidate. In China, there was no hint at the recent Communist party congress that the party has any intention of surrendering its monopoly on political power.

Indeed, in both Russia and China the ruling party and political elites have been strengthening their power base by expanding into business. In Russia, the all-important energy sector is regarded as a foundation of national power – as well as the personal wealth of the ruling elite. Tellingly, the putative new president of Russia, Mr Medvedev, is currently chairman of Gazprom, the state-controlled gas monopoly. In China, hopes that a flourishing private sector might provide an alternative source of power to the Communist party have so far not been realised. On the contrary, the party’s stake in large, cash-generative state monopolies has led some to joke that it is now “the world’s biggest holding company”.

In both Russia and China, the ruling authorities are using their newfound wealth to polish up and rediscover aspects of national culture that were discouraged in the heyday of communism. The Russian Orthodox Church is back in favour and the government is paying for the refurbishment of cathedrals. Mr Putin, a former Soviet intelligence agent, now says he reads the Bible. The Chinese government is sponsoring the building of Confucius Institutes around the world.

The re-discovery of national culture seems a benign enough development. But there is also a potentially dark side to the use of nationalist ideology in both Russia and China. President Putin’s increasing assertiveness on the international scene has proved popular in Russia. Nationalist youth groups have been sponsored by the Kremlin and have been used to harry political opponents – and even foreign diplomats. A new manual for teachers of Russian history – praised by Mr Putin himself – is strongly nationalistic in tone. The need for national strength to ward off a scheming west is a central theme of the book.

In China, school pupils are also exposed to a strongly nationalistic curriculum – which paints the country as a perennial victim of outside interference, first by western colonialists and then by the Japanese. The need to recover national strength and for China to regain its rightful place in the world is a constant theme. One western professor at a Beijing university – who is generally very positive about modern China – cannot help worrying that many of his students “seem to have been taught that an eventual war with America is inevitable”.

Yet while their rhetoric sometimes suggests that China and Russia once again see the west as a rival, western companies are also vital business partners. The economies of both countries depend on trading relationships with Europe and the US. Gazprom is eager to expand across western Europe. China’s new sovereign wealth fund recently bought a $5bn (£2.5bn, €3.4bn) stake in Morgan Stanley, an investment bank and one of the biggest names on Wall Street.

The creation of mutual interests in a global economic system should help limit any new rivalry between the west and Russia and China. But hopes that the two countries would embrace the western political model now seem outdated and naive.

– Original report from The Financial Times: Illiberal capitalism

One Response to “Russia and China: Illiberal Capitalism”

  1. Derek Xu said

    France in 1789 had no hope of achieving democracy, and in fact it did not harbour such ambition for another century and half, but the Great Revolution still went ahead, and despite all its folly, heralded and began to establish among Men such ideas that until this day we are still benefiting from.

    Too much negative energy among the repressed would inevitably erupt. Only one Voltaire and one Rousseau are needed to spark it off. I do not intend to play down the influence of their contemporaries and all past sages to them, but these two men were chiefly responsible for the event’s happening then, unless you prefer to believe that our collective HUMAN history was created by the invisible hand of one kind or another, I myself have too much a child in me to entertain that Marxist crap. And in any event, the conditions in present day Russia and China are not dissimilar from the Ancient Regime in France. Let’s not wish for more revolutions in Russia or China.

    But surely, if anyone still would read John S Mill, as he put it then, those two nations’ seemingly never-abating refusal to changes brought from without is but the product of their respective shibboleths that harbored, and are still promoting, such ideas of despotism being good and individuals are cogs and the state the machine, the end as oppose to the means to enable every man, woman and child to try to have better life, and of more direct relevance to the West, that of their perspective uniqueness as a people vs. the West – which surely would be hard to propagate/sell in Russia than in China.

    Education of the people, rather than money or PPP as you put it, along could affect real changes. before that happens, prepare yourself for international chaos, as there is today, isn’t there? And the West must be/remain active in bringing changes to both nations. Western companies must, per force if necessary, restraint their greed for the present, and look ahead for only a few years into the future. Rather than trying to , in cahoot with their Masters, take advantage of Russia’s oil and China’s peasant laborers, internationalist compassion need to prevail before the persisting dangers of Russia and China continue to pose to Civilisation can be alleviated. Anything else short of full democracy for these two major nations could at best provide an interruption to universal agony, worse giving them more time to build up.

    Let’s it be accepted that changes should come form within, the international community still need to help to serve as the Catalyst of change. Hope is still there, and we can achieve it. Once these two nations are permanently pacified, they will bring their lot to the west’s aid. The problems of Africa and relating to religious fanatics can only then be resolved.

    Copyright 2008 @ Pamanush

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