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The Fourth Revolution: The Global Race to Reinvent the State

Sina Odugbemi's picture

Can liberal constitutional democracy run the state in a manner that is both responsive and accountable to citizens without succumbing to incurable elephantiasis precisely because it is democratic? Does democratic governance inevitably lead to government as an ‘all-you-can eat- buffet’ (allegedly per Lee Kuan Yew of Singapore), and, therefore, bloat, fiscal crises and collapse? These crucial questions are taken on in an important new book by two of the leading minds around the Economist Magazine: John Micklethwait is the Editor of the Magazine, and Adrian Wooldridge is the management editor, who also writes the Schumpeter column. The book is: The Fourth Revolution: The Global Race to Reinvent the State.

The authors argue that there have been three and half revolutions in governance in the West, and each one is linked to an emblematic political thinker/economist. The first revolution was the rise of the nation-state, and the paradigmatic thinker is Thomas Hobbes, author of Leviathan. The second revolution was the rise of the ‘liberal state’, and the focus thinker here is John Stuart Mill. (Objection from a Bentham scholar: the authors do not do justice to the role of Jeremy Bentham).  The third revolution was the rise of the welfare state, and the authors discuss the ideas and efforts of Beatrice Webb.  According to the authors, these first three revolutions in governance were completely successful. The fourth revolution, the effort to roll back the bloated welfare state – the focus here is the economic thought of Milton Friedman – was only partially successful. The authors argue, I believe, that this revolution needs to be completed.
 

You will ask: what is wrong with the state in the West today? The authors declare bluntly: ‘The Western state is in the throes of a midlife crisis’. (p.228). Using California as an example, the authors introduce us to the ‘seven deadly sins’. Government is out of date. It is useless at making its public sector more efficient. Small, determined lobbies are able to block a major public interest anytime they want. And the state is doing too much and doing it badly. There is more: governments deliberately practice fuzzy maths in order to hide fiscal crises. Sadly, ‘government spending cascades towards the old and the relatively well off.’ (p.122) Then, there is the fact of hyper-partisanship and gridlock. And the biggest problem? Citizens. People want governments to do more and more but are not willing to pay more taxes to fund it.

The authors then take the reader on an admiring tour of the East, to explore the Asian alternative to liberal constitutional democracy. The alternative is what they call ’authoritarian modernization’. Singapore and China are discussed in detail. Do the authors recommend the model then? Apparently not. They move on to explore what is happening in Sweden and other Scandinavian countries. Their conclusion is as follows: ‘Both Sweden and Singapore demonstrate something beyond doubt: government can be made slimmer and better’. (p.187) Here, the authors have an ideological position familiar to any reader of the Economist. And they admit it. They say: ‘Our starting point is liberal: We want the state to be smaller and individuals to be freer. But we are not libertarians. Even in its current lopsided form, the modern state has a lot to be proud of.'

The relentlessly ideological stance of the authors is the first challenge you face as you read the book. Although the authors try to be even-handed with regard to culpability for the bloated condition of the state in the West (for instance, attacking the Right for the inordinate growth of the security apparatus and special tax deals and subsidies for the rich and powerful), their ire is clearly and vigorously directed at ‘the Left’. Again and again, they say things like: ‘The progressive agenda has become self-defeating’. (p. 229). I believe that this one-sidedness is a mistake. If the authors wanted to be heard by all, if they wanted to promote the kind of open-minded discussion that will help find solutions, their denunciations of ‘the Left’ are likely to prove counter-productive.

The second challenge you face as you read the book is that it makes you feel that you are eavesdropping while members of a troubled family are having a blazing row. If you are not from or of ‘the West’ you wonder if you should pay attention to any of this. That is regrettable. I think the authors could have been more self-consciously ‘global’. For instance, I decided to buy and read the book because I saw the authors on the Charlie Rose Show here in the United States a couple of months ago, and I felt that the book they were talking about would be of interest to someone like me who is keen on solutions to problems of governance in developing countries.
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So, it is time to ask: why should you read this book even if you are not from or of ‘the West’? I offer four reasons:

  1. The best bits of the book describe riveting examples of ongoing experiments in effective, affordable and responsive governance from all over the world. This is the most global part of the book and well worth the purchase price. They are the stories that I will keep going back to.
  2. For developing countries, the book is one long cautionary tale, not just with regard to the mistakes of the Western state but also regarding the very clear limits (and depredations!) of authoritarian modernization. Buyer Beware.
  3. There is a ‘solutions’ section towards the end of the book, and it brims with ideas about the power of transparency, the information revolution, the role of active citizens, of naming and shaming and so on.
  4. Finally, the history of ideas about governance, the three and half revolutions. As a student of political thought, I found the history chapters a bit rushed, and there is much that the authors omit that kept me wondering, but I know that for a non-specialist audience they probably have it about right. The history is important. It helps to explain where we are.
For all these reasons, then, I recommend the book. It is a bracing read. It is written like the Economist: confident, informed, opinionated, and often rude.



Book Cover by Ben Wiseman (jacket design) and Mirabeau Answering Dreux-Breze, at a National Assembly Meeting, June 23, 1789, 1830, Fragonard, Alexandre Evariste (1780-1850)/Louvre, Paris, France/Giraudon/The Bridgeman Art Library

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Comments

Submitted by Colin on

Dear Mr Micklethwait and Mr Wooldridge,

I refer to the 16 Aug 2014 Straits Times review of your new book “The Fourth Revolution: The Global Race To Reinvent The State”.

Productive governance on leanest budget

According to Dr Goh Keng Swee, Singaporeans’ undisputed No. 1 most respected post independence leader, Singapore owes its productive governance on the leanest of budgets to our British colonial government. He wrote:

There are four reasons which enabled Singapore throughout her history as a British colony, and today as an independent republic, to survive and even prosper in the face of apparently insurmountable difficulties … The second reason must be ascribed … to Sir Stamford Raffles’ great vision of the island growing into a great emporium founded on the Victorian belief in the virtues of free trade. Successive colonial governors zealously nurtured the port, maintained lean and efficient administrators, and allowed merchants and bankers full scope for the exercise of their talents. In the modern idiom, the Victorians who governed Singapore established and maintained an infrastructure at minimum cost with maximum efficiency.
[Goh Keng Swee, The Practice of Economic Growth, Chapter 1: Why Singapore succeeds, pages 6-7]

The so-called Singapore Fourth Revolution is merely the Victorian era Second Revolution that we inherited from the British.

Creating founding father

Singapore’s creating founding father was Sir Stamford Raffles, not Lee Kuan Yew. It was Sir Stamford Raffles who created this beautiful and prosperous port city when he founded Singapore in 1819. Lee Kuan Yew merely inherited Singapore and inheritance cannot be considered founding.

Greatest economic miracle

There are four East Asian economic miracles, not just one. There is no reason to overly praise Singapore for what is essentially a common East Asian success story that includes South Korea, Taiwan, Hong Kong, Singapore and many parts of China.

Between 1945 and 1959, Singapore recovered from the devastation of the war under the guiding hand of our British colonial government. To include those years as part of our supposed 70 years of greatest economic miracle would compel us to also thank and praise the British for their involvement in 20% of those 70 years.

But as far as data is available, the earliest comparison we can make is 1960 since that is the earliest year Singapore GDP figures are available in the Penn World tables. The table below constructed using data from the Penn World tables shows that besides Botswana and Equatorial Guinea which struck diamond and oil respectively, South Korea outgrew every other country from 1960 to 2011 and should be the undisputed No. 1 greatest economic miracle followed by arguably Taiwan which takes 2nd and 3rd place respectively for output and expenditure per capita GDP growth. Singapore takes 3rd place, a very good position but not good enough to be considered the greatest economic miracle.

Country 2011 over 1960 per capita real GDP (output) Country 2011 over 1960 per capita real GDP (expenditure)
Korea, Republic of 27.1 Equatorial Guinea 32.2
Botswana 22.1 Botswana 30.9
Equatorial Guinea 21.6 Korea, Republic of 25.6
Taiwan 14.7 Singapore 21.4
Malta 11.1 Taiwan 15.1
Romania 10.3 Hong Kong 11.6
Japan 9.8 Romania 10.6
Singapore 9.4 Cyprus 9.4
China 8.8 China 8.7
Cyprus 8.7 Egypt 8.6
Thailand 8.5 Thailand 8.6
Zimbabwe 7.7 Japan 7.8
Egypt 6.9 Malta 6.6
Ireland 6.9 Ireland 6.5
Hong Kong 6.0 Portugal 6.1

CPF

The CPF is fast becoming a farce as more and more Singaporeans realize their CPF won’t be able to see them through retirement. Instead of the “all-you-can-eat” buffet, we have the “eat-yourself” cannibalism.

China learnt from Singapore

China’s capitalism isn’t merely copied from Singapore but from South Korea, Japan, Hong Kong and Taiwan too. During Deng Xiaoping’s famous Southern tour in 1992, he called for China to learn from South Korea, to catch up with the four dragons, to build several Hong Kongs along the coast. In other words, China didn’t just copy from Singapore but from the rest of prospering East Asia as well. If China capitalism is predominantly a Singapore copy, how could they have such promising home grown technology firms as Lenovo, Xiaomi, Huawei or Baidu while we don’t (excluding the has been Creative)? The great many Taiwanese and Hong Kong firms that have invested in China probably left a larger footprint on China’s economy than Singapore did.

The copying of Singapore style social governance by communist countries like China or Russia is not something Singaporeans are particularly proud of. China president Xi Jinping recently espoused the wisdom that blind pursuit of GDP doesn’t equate to a nation’s success, a clear deviation from copying Singapore but learning from Singapore’s mistakes instead.

The First Revolution

We hardly have Hobbes’ First Revolution. Too many of our rights have been unfairly restrained. We can’t even walk in a group of five in the streets without risking being hauled to jail for illegal assembly. We don’t have a single independent newspaper. Too many of our politicians have been locked away without trial, one of them Chia Thye Poh for longer than Nelson Mandela had been. Too many of our politicians have been bankrupted or forced to leave Singapore for reasons any First World nation would deem ridiculous.

Yet on the other hand, we don’t get much protection for the sacrifices we make. Most of the old folks retiring today cannot depend on their CPF for retirement. An old folk honored by our prime minister during a recent National Day rally committed suicide because she didn’t want to burden her family with stupendous medical expenses. Many old folks are reduced to picking up old cardboard pieces to sell for a living. So correction please, Singapore, not created by Lee Kuan Yew but ruthlessly ran by him, has next to zero parts Hobbes.

Nordic big government

The following books show that both the Danish and Swedish crises were the result of financial market deregulation, not due to big welfare systems.

• IMF, World Economic Outlook – Crisis and recovery, April 2009, Chapter 3 “From recession to recovery: how soon and how strong?”, page 135

• Lessons from the Nordic Financial Crisis, Lars Jonung, Lund University Department of Economics, 29 Dec 2010

The Nordic crises have their roots in the process of financial liberalization ... In the 1980s, the financial systems of Finland, Norway and Sweden underwent major deregulation. Financial liberalization set off a sustained lending boom, capital inflows, rising asset prices ... The boom turned into a bust around 1990, with capital outflows, widespread bankruptcies ... systemic banking crises ... Eventually, the central banks of Finland, Norway and Sweden were forced o move to flexible rates in the fall of 1992 in order to avert the depression.

Conclusion

• Our so-called 4th revolution lean government is actually our 2nd revolution inheritance from the British.

• Lee Kuan Yew isn’t our creating founding father, Sir Stamford Raffles was. Lee Kuan Yew went to a school named after Raffles.

• Singapore isn’t the greatest economic miracle in the last 70 years. According to Penn World Tables, the greatest economic miracle since 1960 should be South Korea.

• China didn’t just learn from Singapore but from the rest of East Asia as well.

• Singaporeans sacrificed too much and got too little in return to be considered to be enjoying Hobbe’s First Revolution.

• The Nordic economic crises, as with most modern day crises, is financial sector triggered, not triggered by big government.

Assuming Straits Times’ review of your book is accurate, the chapter on Singapore contains critical falsehoods and misrepresentations that diminish the credibility of your book.

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