On developmental states, Arab springs, and democracy’s discontents

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I'm spending a few months based in South Africa – so it's been principally through the lens of that country's vibrant newspapers that I have been viewing the Arab spring, watching as a seemingly frozen authoritarian political order undergoes a thaw.

The coverage here has been comprehensive, but most days the front page headlines have focused on local news: the daily drumbeat of new procurement scandals; ad hoc appointments to senior public service positions; polarized political disputes among different segments of society, including within the ruling party; jockeying for position as local elections draw near; and the endless dissatisfaction with poor service delivery. 

The juxtaposition of the Arab spring and South Africa’s noisy democracy has brought to mind a seminar I presented to South Africa’s business community back in 1991 on options for the country’s industrial policy. At first my SACOB (South African Chamber of Business) hosts greeted me warmly, confident that a World Bank staff-member would recognize their prowess as proud captains of industry. But the reality was that most of them had been isolated by apartheid’s walls, international opprobrium, and high levels of domestic protection against imports. The thrust of my recommendations – incrementally expose domestic industry to greater competition – was not appreciated.“But why can’t we do it the South Korean way?” one of the executives asked, “They had lots of protection”.

I had become somewhat irritated by the smug self-satisfaction of the audience, so I decided to throw caution to the wind. Keep in mind that in 1991 South Africa was still under white minority rule; it had not yet negotiated its constitutional democracy; the African National Congress  had ‘suspended’, but not relinquished, armed struggle; and Nelson Mandela had only been released from jail the previous year, still regarded by the majority of white South Africans as a dangerous communist.

“Yes”, I responded, “it’s true that Korea protected its industries, but it also set itself very high expectations. Let me describe how it began in the early 1960s”. Here I can do no better than quote from pages 69 and 70 of what remains the most vivid blow-by-blow description of Korean policymaking in the 1960s and 1970s, Leroy Jones and Sakong Il’s “Business, Government and Entrepreneurship: The Korean Case”.

“One of the first acts of General Park’s new government was the passage of a ‘Law for Dealing with Illicit Wealth Accumulation’. Under its provisions most of the country’s leading businessmen were arrested and threatened with confiscation of their assets. Soon thereafter, ten of the country’s leading businessmen were summoned to a meeting with Park, then Vice Chairman of the Revolutionary Council. A deal was struck whereby government would exempt most businessmen from criminal prosecution….existing assets would not be confiscated… businessmen would pay off their assessed obligations by establishing new industrial firms, and donating the shares to government...Though [the details] were not implemented in this way… the basic pattern was set, with businessmen in a decidedly subordinate role.”

An outspoken member of the audience finally broke the stunned silence by asking whether I was a communist!

How does this story – and South Africa’s realities two decades later – shed light on the Arab spring? Four points come to mind.

First, though it’s hardly what my South African audience was looking for, there’s no gainsaying the seductive power of decisiveness. Korea’s stunning transformation during a quarter century of authoritarian rule (and its continuing success as a democracy since the latter 1980s) demonstrates this potential. Vietnam and China (at a vastly greater scale), plus a variety of African aspirants (Ethiopia, Uganda and Rwanda come to mind) appear to be aiming at a similar path. (However, keep in mind that, notoriously, Ferdinand Marcos of the Philippines, and Zaire’s Joseph Mobutu, made similar claims.)

Second, the everyday politics of democracies often is extraordinarily messy – as anyone reading the daily headlines in India (or for that matter, the United States) can attest. Perhaps in part for this reason, democracies rarely produce the mega-growth rates of East Asia’s development tigers.

Third, democratic institutions provide containers for negotiating, managing and sometimes even resolving difficult social conflicts – and hence, as Dani Rodrik has shown, generally have less volatile performance than autocracies. South Africa’s ‘democratic dividend’ did not result in economic growth at East Asian levels, with poverty, unemployment and inequality remaining outrageously high. But it did bring legitimacy and stability –including through redistributive fiscal policies, and through sector-level charters which foster black economic empowerment. 

Which brings me to my fourth and final point: From a development perspective, democratic and authoritarian states can be mirror images of one another. While the former often appear messy in the short-term, they are designed to adapt over time; but the opposite is true for their authoritarian counterparts. Their promise is a short-term growth ‘sprint’ – but, as the ‘Arab spring’ underscores, the ‘shelf-life’ of this promise is limited. Where the growth sprint is successful (and, as Ishac Diwan has emphasized, many of the Arab states fell short in this regard), there can emerge  a middle class with a stake in stability, and a private sector with a stake in rule-bounded institutions. Although, even then there will be large institutional shortfalls – whose consequences are likely to be repressed (often literally) until they emerge with urgent immediacy.

South Africa’s ongoing challenges (and those of India, Bangladesh, and many other settings too) signal that there is no place for democratic triumphalism. Even so, the Arab spring and its likely difficult aftermath underscore that most developmental states wait too long to address their institutional challenges. Early moves to complement their growth sprint with the marathon of building institutions capable of negotiating conflict and facilitating adaptation are likely to yield substantial benefit over the long-term. 
 

Photo credit: Flickr user Celso Flores

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Brian Levy

Professor at SAIS and University of Cape Town

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