Under Aulhoritarian Rule-Is a Superior and Proven Slralegy.53 to Be Sure

34 China's Trapped Transition Why Transitions Get Trapped 35 under aUlhoritarian rule-is a superior and proven slralegy.53 To be But Evans's explanation of why some states are nurturers while oth- sure, in the Western academic community, the concept ofan East Asian ers are predators addresses only part of the puzzle. His formulation of model is a subject ofdebate, especially because of the controversy over the "embedded autonomy" of the state-the idea that developmental the efficacy and degree of state intervention in East Asian countries. states gain autonomy and efficacy only when they are "immersed in a For some scholars, the East Asian experience is proofofthe centrality of dense network of ties that bind them to societal allies with transforma- II' state intervention in the rapid growth of late-developers.54 For others, tional goals"-provides a useful answer, but appears to restate the well- right public policies were the key to East Asian success. 55 known: states counterbalanced by strong societal coalitions are less Unfortunately, most leading scholars ofEast Asian political economy likely to be predatory.61 Such explanations, built on the perspective of have skirted the issue of regime and development. Only Robert Wade, state-society relations, fail to probe the internal organizational dynam- author of one of the most influential studies on the role of the state ics and norms of the state. While few would deny the desirability and II in East Asia's economic development, explicitly identified the develop- benefits of having strong societal forces committed to economic devel- ment "of effective institutions of political authority before the system opment, the most important challenge in the real world is that, in the is democratized" as a key to East Asia's success. 56 Within the Chinese overwhelming majority of developing countries, such forces are ex- political and intellectual elite, the East Asian model has been essen- tremely weak or absent altogether. The transformative project has to i! tially reduced to a simple formula: strong government authority + pro- begin inside the state. [I market policies = superior economic performance. It has further been Yet, there is another conundrum: as some scholars have argued, no argued that strong government authority would be difficult to obtain evidence exists to show that institutions can be devised to make the under democratic political systems.57 In fact, when asked about his state an effective protector ofproperty rights, but at the same time pre- views on neoauthoritarianism by Zhao Ziyang in a private conversation vent it from abusing its power. In other words, there is no guarantee in 1988, Deng admitted ,that such a strategy, "relying on a political that the same helping hand will not become a grabbing hand.62 strongman to maintain stability and develop the economy," was exactly Indeed, as the experience ofmost developing countries shows, states lit' what he was advocating even though "it is not necessary to use the term as helping hands are the exception. Sustained developmental successes (neoauthoritarianism)."58 probably number fewer than ten, with most of them concentrated in 11 Such a preoccupation with the efficacy of the state in the context of the East Asian region.63 At the same time, predatory states have caused r economic development overlooks One crucial issue: the relationship disastrous failures in a majority of poor countries, the most egregious 111 between economic growth and the predatory behavior of the state. In examples being the Philippines under Marcos, Zaire under Mobutu, other words, the real East Asian puzzle is not how sustained rapid eco- and Haiti under the Duvaliers. As the collapse of the Indonesian econ- III 1,1 nomic development occurred under strong states, but why and how omy in 1997-1998 demonstrates, without adequate institutional Con- the predatory practices of the state were held in check. Based On the trols imposed on predatory states, even initial successes could end up r ,assumption of the state as a "helping hand," much of the literature as catastrophic failures. , on the political economy of development in East Asia has all but ig- nored the possibility that a strong state can also be a "grabbipg hand."59 The Theory of the Predatory State Peter Evans's influential Embedded Autonomy: States and Industrial Trans- II formation may be the only exception. By identifying the nature of the In its simplest formulation, the theory of the predatory state is based on state as the critical variable in explaining the variations in the success of a conception ofthe state as a grabbing hand. It envisions the central role ,f industrialization in developing countries, Evans shows that a predatory of the state as tl1e expropriation ofwealth from society through taxes for 54 II' state is incapable of nurturing new engines of growth (in his ca.<;e, the the preservation ofthe state's own power. The recent growing appeal of ' information industry).6o the theory is due, in large part, to the application of the institutionalist iii') '1\:1 ,fill 'WI''I f 1 36 China's Trapped Transition Why Transitions Get Trapped 37 ,:1 'I Ii approach to the research on the relationship between political institu- i In both theory and practice, centralized predation can spiral out of fi5 I II:'1111 tions and economic performance. The revival of institutionalism has control. The ruler's encompassing interest may diverge fundamentally . again elevated the role ofthe state in economic development.66 from that of the state. For example, the ruler's personal greed may be- To be sure, the institutionalist perspective on the state differs from come insatiable. He and his close cronies may lootwealth, not to provide that of the developmental state, which, as popularized by scholars of public goods, but to line their own pockets, thus creating a kleptoc- East Asia, has a direct role in correcting market failures. Institutional- racy.70 The ruler's encompassing interest may also become too ambi- ists see the state as the provider and enforcer of rules and norms that tious for his nation's good. Desire to acquire a larger territory (hence underpin market transactions. This distinction is significant because tax base) or international prestige may motivate the ruler to extract ex- the perspectives on the state behind it are fundamentally different. Un- cessively from society to build a strong military.71 In addition, the like the helping hand envisioned in the developmental state perspec- ruler's monopolistic position is always insecure because a domestic or tive, the state is seen by institutionalists as a force both for good and foreign rival can seize his monopoly by force.72 This structural insecu- II:; evil. Douglass North puts it, "The existence of a state is essential for rity affects the ruler's time horizon and the rate of discount on future ,Ii economic growth; the state, however, is the source of man-made eco- revenues, incentivizing behaviors that result in short-term gains but nomic decline."67 Although the state may be a helping hand that spec- long-term revenue losses.73 Finally, the absence of a third-party en- II: ifies and protects efficient property rights, it can also be a grabbing forcer makes the ruler's commitment to self-restrained predation not hand that expropriates the wealth ofits people.68 credible. Temptations for the ruler to break his promise and increase 'Ui"I The grabbing-hand perspective appeals to students of development predation always exist, and most rulers have honored their promises in :Il because the theory of the predatory state provides a persuasive expla- the breach.74 il: nation for the weakness of the state and the overall poor performance In the theoretical literature on decentralized predation, the emphasis II; ofgovernment. In applying this perspective, however, we need to make is on predation by agent.. ofthe state. Although agency costs have been .11'Y.!, the distinction between centralized predation and decentralized preda- identified as ,a constraint on the ruler's ability to maintain a desired tion because such a distinction is crucial to understanding the differ- level ofextraction, the effects ofsuch costs on state predation have not I! ent dynamics behind a state's institutional performance. In the earlier been explored until recently.75 Scholars who focus on the role ofagents I, '·1' formulations of the theory ofthe predatory state, the focus is on the ag- in state predation see decentralized predation as more harmful to the 'I,' gregate level ofstate predation and treats predation as the political im- interest of the'state. Andrei Shleifer and Robert Vishny demonstrate !II perative of the ruler. There is no distinction between the principal and that centralized corruption, which is a form of monopolist predation, the agent. As a result, predation is conceived as an act of the principal. generates higher aggregate revenue for the state-because the state 'ilI, This formulation assumes, first, that state predation is universal. Be- keeps its rate of extraction at the optimal level-than decentralized IIi cause rulers are monopolists of both violence and public goods, state corruption (a form ofpredation by state agents acting as independent II' predation, in the form oftaxes, is simply the price private producers of monopolists), which not only raises the overall level of theft (that is, I Jt I wealth pay for such monopolistic services. Second, the most important making corruption more widespread), but also reduces the aggregate '.'" factor that limits the level of a ruler's predation is his self-interest. To amount ofincome for the state. Since predatory agents simultaneously 11. use Mancur Olson's colorful analogy. a self-interested ruler behaves like compete with one another for the same revenue, they have the incentive a "stationary bandit" who is unlikely to risk his future revenue streams to steal everything, behaving essentially like Olson's "roving bandits."76 by looting the current stock ofwealth of his subjects.

Load more