Tai Lieu Chat Luong This page intentionally left blank Liberalism, Democracy and Development Many commentators have assumed a close connection between liberal democracy and economic development. Sylvia Chan questions this as- sumption and suggests a new theoretical framework, in which liberal democracy is ‘decomposed’ into economic, civil and political dimen- sions that can be combined in different ways, allowing for a range of ‘institutional matrices’. She then shows, in a case study of Japan and the Asian newly industrialising countries, how these seemingly less democratic countries have enjoyed a unique mix of economic, civil and political liberties which have encouraged economic development with- out the need to share the institutional structures and cultural values of the West. Chan’s model therefore provides a re-evaluation of the institutional capacities needed to sustain a competitive economy in a globalising world, and develops a more sophisticated understanding of the democracy–development connection.
SYLVIA CHAN is a Visiting Scholar at the University of California Berkeley. She was previously Lecturer in Globalisation and International Relations at Birkbeck College, University of London. Liberalism, Democracy and Development Sylvia Chan The Pitt Building, Trumpington Street, Cambridge, United Kingdom The Edinburgh Building, Cambridge CB2 2RU, UK 40 West 20th Street, New York, NY 10011-4211, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia Ruiz de Alarcón 13, 28014 Madrid, Spain Dock House, The Waterfront, Cape Town 8001, South Africa http://www.org © Sylvia Chan 2004 First published in printed format 2002 ISBN 0-511-02946-2 eBook (Adobe Reader) ISBN 0-521-80883-9 hardback ISBN 0-521-00498-5 paperback Contents Acknowledgements page vii List of abbreviations ix Introduction 1 1 The question: is ‘liberal democracy’ good for economic development? 10 1.2 The pro-‘liberal democracy’ and anti-‘liberal democracy’ camps: situating the democracy–development debate within the general debate about ‘liberal democracy’ 22 1.3 Focusing on the democracy–development connection 27 1.4 Focusing on Asia 30 Part I The present context of democratisation and decomposing ‘liberal democracy’ 37 2 Decomposing ‘liberal democracy’ 39 2.1 ‘Economic’, ‘civil’ and ‘political’ liberties 39 2.2 The three-fold architecture 44 2.3 A summary of points 52 2.4 Advantages of the new framework 53 3 Democratisation: between the ‘liberal’ and the ‘democratic’ 57 3.1 The possibilities, limits and conditions of democracy: the three stages of theorising on democratisation and the five factors 59 3.2 Thinking in terms of ‘converging’ and ‘diverging’ forces and noting their effect on the ‘liberal’ and ‘democratic’ content 77 3.3 Further differentiating these forces 99 Part II The democracy–development debate: old problem, new thinking 113 4 Constructing an empirical explanation 117 v vi Contents 4.1 Macro vs micro 117 4.2 Using cases to explain 125 4.3 Using the Asian cases to explain the democracy–development connection 127 5 The democracy–development debate reconsidered 130 5.1 Some preliminary points 130 5.2 The ‘goodness’ of ‘liberal democracy’ for economic development 132 5.3 The counter-argument: ‘trade-off’ 154 5.4 Between the two sides 188 6 Reconstructing an explanation of the Asian success 191 6.1 Setting the agenda I: towards a more inclusionary institutionalism 191 6.2 Setting the agenda II: a different mix of liberties and a different set of institutions – institutionalisation of ‘economic’, ‘civil’ and ‘political’ liberties in Japan and the East Asian NICs 199 6.3 Setting the agenda III: achieving ‘security’, ‘stability’ and ‘openness and information’ in Japan and the East Asian NICs 212 6.4 Towards a wider conception of state strength 219 6.5 The democracy–development relationship in the Asian case 228 7 Conclusion: moving beyond the question of ‘liberal democracy’ 230 7.2 Towards a new Asian model? 235 Bibliography 237 Index 271 Acknowledgements This book has the distinction of being perhaps the longest commitment of my life so far, a seven-year project. I feel so privileged to be writing it, to have the luxury of writing about something that is so interesting and fascinating, as well as having important implications for countries worldwide.
My first debt is to Geoffrey Hawthorn, my research supervisor at Cambridge, from whom I have profited much during those years of con- versations, conversations about interesting ideas and interesting ‘facts’. Although at times I exasperated him with my less than coherent thinking and writing, his belief in me, his scholarship and his generous support made it possible for me to get through the years that it took (at times with a lot of laughter, at times with some grief ) to finish this research and book. He knew almost better than I did myself what it would have meant to have left this book unfinished. He was also forever supportive while I ambitiously took upon myself the Herculean task of tackling such a grand topic.
Thanks are also due to Sunil Khilnani and Laurence Whitehead, who gave me many helpful suggestions and criticisms on the manuscript. Their own work has also been inspiring and thought-provoking. The process of producing this book would have been so much more dif- ficult if not for those friends, often similarly interested in ideas and schol- arship, who sustained me not only through conversations but through their example. Those conversations in the University Library courtyard and tea-room have a very special place in my life.
Thank you, Ikuko, Ken, Atsuko, Jun, Uta, Véronique, Nigel, Patrick, I-chung, So-Hee, Mike, Aki, Yuko, Mari and Yannick. Thank you also to Rodney, whose constant sup- port helped me believe I could and should be engaged in this task. I also want to thank Professor D’Aeth, who read the manuscript from start to finish and gave me both intellectual and emotional sustenance through the different stages of writing it. John Barber first made it possible for me to study Social and Political Sciences at Cambridge, while Istvan Hont was always there to give me vii viii Acknowledgements advice, with his brilliant mind.
Helen Thompson supported me in a real way by reading my manuscript throughout, and engaged me with inter- esting thoughts. Colleagues at the Department of Politics and Sociology at Birkbeck were willing to take me on during the year 1998/9, during which I met with many interested (and interesting) students and was also able to finish the manuscript. My editor John Haslam helped me throughout the publication process in a gentle and professional way, patiently answering my innumerable questions. Most important of all, of course, was his belief in this book.
Thanks also to my ex-colleagues at McKinsey, who sustained me with their interest in my ‘project’, as well as to Sun-Sun Chan and to William Overholt, both of whom read my manuscript and provided useful criti- cisms from the viewpoint of the business world. In terms of financial support, I wish to record my gratitude to Cambridge Commonwealth Trust, which supported my PhD research, as well as to Trinity College, Cambridge, which on various occasions provided much-needed financial assistance to enable me to do research in Beijing and Shanghai and to attend the American Political Science Association conference in San Francisco. This book started its life in Cambridge, and from there it has travelled through many places: Florence, Toronto, San Francisco, Hong Kong, Shanghai, Beijing, Tokyo, Kuala Lumpur, Melbourne and London. My friend Mim made it possible for me to finish it, appropriately, in Cam- bridge, which was a great joy.
Finally, to my parents and my sisters, who overlooked – most of the time – the fact that I was some unusual human being working so hard on such a thing as a book. My father in particular encouraged all of us to express different opinions and argue our case from a young age, usu- ally during dinner conversations that often resulted in long post-dinner debates. I hope to make you proud. How I ended up writing this book is an unusual story.
In fact, twelve years ago, I was still studying mathematics and could not distinguish Marx from Weber. The story is perhaps too long to recount here, but I dearly hope that this book bears the distinctiveness of its unusual origins and the unusual journey. Abbreviations CCP Chinese Communist Party ECLA Economic Council of Latin America EFF Extended Fund Facility (IMF) FDI foreign direct investment GATT General Agreement on Tariffs and Trade GDP gross domestic product IMF International Monetary Fund ISI import substitution industrialisation KMT Kuomintang (Taiwan) LDC late developing country LDP Liberal Democratic Party (Japan) MITI Ministry of International Trade and Industry ( Japan) MNC multinational corporation MOF Ministry of Finance (Japan) NATO North Atlantic Treaty Organisation NGO Non-Governmental Organisation NICs newly industrialising countries (South Korea, Taiwan, Singapore, Hong Kong) ODI Overseas Development Institute OPEC Organisation of the Petroleum Exporting Countries PAP People’s Action Party (Singapore) PR proportional representation TNC transnational corporation WTO World Trade Organisation (successor to GATT) ix Introduction Yet another book on ‘liberal democracy’? I wrote this book to present an original argument, an argument that is aimed at a better understanding of why and to what extent ‘liberal democracy’ is a good system that delivers ‘economic development’: Does democracy really cause development? How tight is the connection? How does it do so? What really is the connection? What are the limits of that connection? In other words, in this book I ask a series of questions that few people seem to be asking any more. By examining how ‘liberal democracy’ can or cannot contribute to ‘economic development’, I challenge readers to think about what ‘liberal democracy’ really is, what it can be, and espe- cially what it can do – how, and under what circumstances.
These are important and long-overdue questions. Since the late 1980s and throughout the 1990s to now, ‘liberal democracy’ has been celebrated and ‘democratisation’ seemed ‘the only game in town’. The universal goodness of ‘liberal democracy’ is almost always assumed: it will bring economic development, social harmony, enhancement of human rights, etc. In this atmosphere of triumphalism, there is little critical reflection on the concept of ‘liberal democracy’ itself.
The original argument presented in this book is constructed around a ‘2 × 3 + 1’ axis: the first set of three concepts are ‘economic’ liberalism, ‘civil’ liberalism and ‘political’ liberalism (achieved by ‘decomposing lib- eral democracy’, in chapter 2); the second set of three concepts are ‘security’, ‘stability’ and ‘information and openness’ (achieved via a top- down overview of liberal democratic theories, rendered in chapter 5). These six concepts interact together and are embedded in a particular ‘institutional matrix’, the seventh concept, which I use to explain the democracy–development connection in Japan and the Asian newly indus- trialising countries (NICs) (chapter 6). In the course of examining and questioning this assumed connection between ‘liberal democracy’ and economic development, therefore, I use 1 2 Liberalism, democracy and development a set of cases to underscore some of the points. These countries have not strictly followed the path of ‘democratisation’ but have at the same time achieved the ‘economic development’1 that Western ‘liberal democracies’ are often said to bring (some call this the ‘Asian miracle’).
It is com- mon to explain this success by some variants of ‘authoritarianism’, ‘state autonomy’,‘strong government’, whether these were culturally predi- sposed or not (‘Asian values’, Confucianism, etc. This type of autho- ritarianism-was-responsible-for-the-economic-development-of-the-Asian-NICs argument, I assert, needs to be unravelled; at the same time the ‘liberal democracy’-goes-hand-in-hand-with-economic-development argument needs also to be unravelled. Having set up the three-fold framework of ‘liberal democracy’, and then having unravelled some of the theories that purported to explain democracy–development, I ask the questions that really need to be asked about Japan and the Asian NICs: in what way and to what extent were ‘liberal’ and ‘democratic’ elements involved (or not involved) in their economic development, and what may this in itself say about ‘liberal democracy’ and about theories that connect it with economic development? My concern in this book is not so much to describe the Asian suc- cess story as to bring into focus the theoretically interesting things the Asian success story reveals about ‘liberal democracy’ – its historical and theoretical underpinnings and the inter-connections as well as the contra- dictions amongst some of these.