Democracies are on track to lose their global economic dominance as ‘authoritarian capitalism’ rises

Jim suggested that we post this article. Good idea, Jim. This article is courtesy of CNBC

Within five years at current trends autocratic countries will account for more than half of global income for the first time in more than a century, according to a recent analysis.
Trump may seem an unlikely representative for this American rediscovery of its global purpose. His critics condemn his closeness to autocrats like Xi, Putin and Kim Jong Un.
However, Trump’s record also includes supporting efforts to democratically replace Venezuela’s dictator, his targeting of China’s unfair trade practices and his opposition to Iran’s mullahs and their Revolutionary Guard Corps.

This week’s mini-drama over President Donald Trump’s Fourth of July speech, with all its military accompaniment, shouldn’t distract anyone from the far more significant story of global democratic decline on this 243rd anniversary of American Independence.

Dangers are accelerating to the democratic ideals that the American Revolution inspired. If no unanticipated shock disrupts current trajectories – say a democratic uprising in China, a Russian regime change or, still significant, a Venezuelan dictator’s decline – autocratic powers will surpass democracies in their economic size and influence within the coming decade.

And history has shown prosperity often precedes political dominance.

What’s been broadly reported by now is that global democratic freedoms are in their 13th year of decline, a result both of surging autocracies like Russia and China, fraying freedoms in liberal democracies and Western complacency about both. “The overall losses are still shallow compared with the gains of the late 20th century, but the pattern is consistent and ominous,” Freedom House reported in its 2019 assessment

Less recognized, but perhaps ultimately more decisive, is that within five years at current trends autocratic countries will account for more than half of global income for the first time in more than a century. That’s based on an analysis of International Monetary Fund figures by political scientists Roberto Stefan Foa and Yascha Mounk.

That would mark a stunning reversal in fortunes.

Back in the 1950s and 1960s, when the Eisenhower and Kennedy administrations responded successfully to the pioneering Soviet launch of the Sputnik satellite, the U.S. and its democratic allies in Europe and Japan were producing some two-thirds of the global economy. As recently as 1990, countries rated “not free” by Freedom House accounted for only 12 percent of global income. Now they produce a full third, matching the level authoritarian-run economies achieved during the rise of European fascism in the 1930s.

That raises some unsettling questions.

How much of democracies’ success came from the attraction of Western values like free speech and individual rights? How much instead was a result of new democracies wanting to hitch their wagons to American and Western European prosperity and extract themselves from the bankruptcy of the Soviet and other, similarly constructed, state-controlled systems?

It was certainly a product of both – but democracies will struggle more in a contest with autocracies if they produce less comparative prosperity over time.

“If the West is to navigate this new world successfully, it will need to understand how the scales tipped so rapidly from democratic dominance to authoritarian resurgence,” write Foa and Mounck. They conclude the more important factor than weakening democracies has been the rise of “authoritarian capitalism.”

Previously, they write, autocratic regimes whose income increased substantially either stopped growing, like the Soviet Union, or became democratic, like South Korea, Spain, Portugal and Greece and other formerly military regimes. The outlier was Singapore, a non-democracy that continued to grow, yet of insufficient size to shape history.

“But a growing number of countries have learned to combine autocratic rule with market-friendly institutions,” write Foa and Mounck, “and they have continued growing economically well beyond the point at which democratic transitions used to occur.”

If there were any doubt that today’s autocrats consider themselves locked in competition with liberal democracies – and believe they are winning – that was dispelled by last week’s ground-breaking interview by Lionel Barber and Henry Foy of the Financial Times with Russia’s Vladimir Putin.

On the eve of the G-20 summit in Osaka, Japan, Putin said “the liberal idea” had “outlived its purpose.” Said Putin, ”(Liberals) cannot simply dictate anything to anyone just like they have been attempting to do over the recent decades.”

That said, Putin knows better than anyone else that this history isn’t yet fully written.

First, autocracies’ fundamental weaknesses and inflexibility will continue to make them fragile and prone to regular, popular attempts to stretch individual freedoms beyond what their government systems can sustain.

Frida Ghitis in Politico points to three recent events, which though far from decisive, made June a bad month for autocrats.

Chinese leader Xi Jinping has faced massive and persistent Hong Kong protests staged against an extradition bill China had wanted to impose on Hong Kong residents. Putin’s Russia dropped all charges against investigative reporter Ivan Golunov following an outpouring of public and media support for the detained journalist.

Beyond that, Turkish democracy showed new life after a rerun of Istanbul mayoral elections produced an even larger, landslide victory for opposition candidate Ekrem Imamoglu, which Ghitis sees as a blowback against President Erdogan’s increasingly authoritarian rule and his slowing economy.

Second, the scales could tip again toward democracies should major countries like India, Nigeria and Indonesia not only stabilize as prosperous democracies but also come to identify themselves more as part of a global community resisting authoritarianism.

Finally, the United States again could embrace its historic role in inspiring, sustaining and expanding democratic rule. That began with its 18th century emergence as a lonely, revolutionary democracy, having thrown off the shackles of monarchical rule, to its role as the post-Cold War leader with Europe of a democratic community of countries that for the first time in history made up the global majority of nations.

Trump may seem an unlikely representative for this American rediscovery of its global purpose. His critics condemn his strongman tendencies and his closeness to autocrats like Xi, Putin and North Korea’s Kim Jong Un. However, his record also includes supporting efforts to democratically replace Venezuelan dictator Maduro, his targeting of the unfair trade practices spawned by Chinese state leaders and his opposition to Iran’s mullahs and their Revolutionary Guard Corps.

On the steps of the Lincoln Memorial this week, he said the right thing.

“As we gather this evening, in the joy of freedom, we remember that we all share a truly extraordinary heritage,” Trump said. “Together, we are part of one of the greatest stories every told – the story of America.”

Democracy was born in Athens in 508 BC, but it was relatively dormant for two thousand years. Robert Kagan reminds us that the U.S. emerged in the 1700s as a democratic republic with “radical liberal principles” that were viewed with alarm in “a world dominated by great power revolutionaries.”

Since then, the U.S. has been at the center of democracy’s story. The U.S. inspired democracies’ expansion following World War I. It then stood by as they declined in the face of European fascism ahead of World War II. It fought for their survival in World War II and for their Cold War victory that was to have democracies’ final triumph.

This new struggle need not be zero sum. That said, if autocratic countries form the largest economic and political bloc, don’t expect them to allow others to write the rules that regulate the future.

Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.TRENDING NOW