USSR and China, post-1989

June 7, 2011 at 12:25 am (Development)

I’ve been wanting to write about the prospects and possible consequences of democracy in China for a while, but every time I find myself hopelessly ignorant of too many things and end up retreating to the books. I think it is very difficult in general for any reasonable and honest writer to make any particular claim about politics which he would be willing to defend strongly. The more you know, the more uncertainly there seems to be. Hence why I refuse to profess any particular political belief (though I hold many) beyond a few general guiding principles: religion is undesirable, war is almost always bad, and nationalism is a disease.

I think I will concede, then, that I don’t have any particular opinion on Chinese politics that I am willing to defend and debate about. I will, however, offer some specific but illuminating (I hope) bits of statistics in this post that often seem overlooked in contemporary debates. For the period 1945-1991 the PRC is often lumped together with the Soviet Union as the “Second World” by Western observers, and while I think they are a lot less similar than most people realize, it is nonetheless very useful to compare the economic growth of the Soviet states and China from 1989 to today. Here is a link to a graph of GDP per capita (PPP/inflation-adjusted) over time for several post-Soviet states and the People’s Republic of China. Here is another link showing instead GDP per capita growth. Both graphs are from around 1982 to present. The data is from the World Bank. The graphs are reproduced below for convenience (but try out Gapminder nonetheless, if you haven’t):

A few comments on the data first:

1) Both graphs somewhat understate the economic performance of China compared to post-Soviet States. In Graph 1, China started off poorer than most post-Soviet states and hence the difference in growth is not as apparent. One could compensate for this by either using log or looking at the growth rate in Graph 2. But Graph 2 can also be misleading – I think humans have a cognitive blind spot in that we are generally not able to comprehend the power of exponential growth (and contraction).

2) Note that both graphs depict GDP per capita growth, not total GDP growth. This, I think, is a fairer metric of prosperity. I will note that if we used total GDP growth instead, post-Soviet states will look a lot worse, since their population growth was either minimal or negative for much of the post-1989 period*. I think some people (in particular libertarians) may feel very strongly about this disparity in population growth while others won’t give a damn. Personally I do not think that greater population is by itself a highly desirable thing (but I might be biased because I do not think that humans in general are desirable things).

Now, onto interpreting the data:

It is quite obvious that China performed a lot better than the post-Soviet states economically after 1989, particularly during the 1990s. And while this is a somewhat well-known fact, the sheer magnitude of the difference is rarely recognized. Even the best-performing post-Soviet states (such as Russia – which got the better end of the deal considering that it took control of most of the industrial area and natural resources) would have been better off today had they maintained the stagnation of the 1980s; while on the other hand the average income of China grew eight times.

One could infer from the almost universal failure of the transformation of post-Soviet economies that China might have suffered the same fate had they liberalized politically following the events of the Soviet Union. In particular, one could argue that the Tian’anmen incident was crucial to China’s rise out of poverty. This is, of course, a contentious (and politically incorrect) claim to make. One particularly strong argument against it would be that it is quite inaccurate to compare the Soviet fall with what might have happened in China. For one, much of the Soviet Union was highly industrialized, whereas China was (and still is) a mostly agricultural country. In addition, China had little risk of suffering from political disintegration and ethnic rivalries. Finally, differences in culture and social conditions have to be taken into account. A much better “control” might be states like the Republic of China or South Korea during their respective periods of political liberalization.

Still, we are not speaking of a small difference of 1 or 2% in economic growth. The rapid contraction of income in all of the post-Soviet states – across different continents, societies and degree of industrialization – presents strong empirical evidence against the likelihood of a successful rapid transformation in China from an authoritarian system to a liberal democracy. Furthermore, while one can certainly present an argument for political liberalization based on non-economic factors – things like freedom that are hard to quantify – I think we (the middle-class of developed countries) tend to significantly overestimate the liberal desire for democracy** and similarly underestimate the desire for a simple livelihood in low-income countries. Besides, very few of the post-Soviet states can be regarded as well-functioning democracies today.

The one good thing that came out of the disintegration, I think, is that the there are fewer violent conflicts in the world for two main reasons: The USSR and the U.S. no longer have to compete for influence in the Third World; and the United States now has less of an excuse to overthrow any regime that it does not like. Given the recent trend in Iraq and Libya, however, one can hardly remain optimistic.

*See this for Russia’s estimated population from 1980 to 2030. Some “historians” have come up with estimates of 50 million deaths for the Great Leap Forward based on what they call “constant-growth approximations”, i.e. drawing a straight line from the population graph before an event happens and calculating the difference with the actual population after the event happens, and then calling the difference “murders” that occurred due to the event. This is, of course, quite stupid. I can do the same thing here and claim that the introduction of capitalism “murdered” 80 million people in Russia.

**I emphasize liberal here since there are strong reasons to support democracy besides liberal (or negative) freedoms. These are mainly economic factors, such as ending corruption and bringing about effective governance. But that is the main thesis of this post – democracy did not seem to have done much good for the economic situation in post-Soviet states, while a lack of it did not hurt China. To summarize, transformation into liberal democracy is usually good because it brings about liberty and economic growth, but in post-Soviet states it generally failed to do both while in China a lack of democracy still gave us the latter (which might very well accelerate the path to liberty as well).


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