Authoritarian Governments

Is democracy a requirement for a Capitalism to flourish? I think a good example of an authoritarian government that created a successful Capitalist system would be Chile. Chile elected a socialist Allende who was overthrown by a CIA led coup by General Pinochet. Over the next 17 years Pinochet allowed a free market economy using the teachings of Milton Friedman. Even after Pinochet returned power to democratic rule the government has not reversed many of his reforms.

Another example comes to mind would be Great Britain who after World War II adopted a socialist form of government. It became know as the “British Disease” (Boyson). British productivity by the 1970’s had fallen behind the rest of Western Europe by 30-40% while inflation for the period of 1972-77 was 120% (Boyson). It was only after the reforms of Margaret Thatcher that the economy began to recover.

Democracy is a messy business with people having the ability to vote themselves programs and authoritarian regimes have created market economies. I think the question becomes can a nation like China sustain a market economy over the long haul? I can think of no regime that has been both authoritarian and capitalist over the long run. I guess one question I would like answered is how can a nation whose political system requires centralized planning, China is communist, allow the long term growth of a free market system without giving up its political power?

Boyson, Sir Rhodes and Antonia Martino. What We Can Learn from Margaret Thatcher, The Heritage Foundation. November 24, 1999,
http://www.heritage.org/Research/PoliticalPhilosophy/HL650.cfm