In a long and thoughtful article in the Jan/Feb 08 issue of Foreign Affairs, John Thornton, a former head of Goldman Sachs and now professor at Beijing's Tsinghua University, details the evolution of democracy in China. Along the way, Thornton describes two striking examples of the way "technologies of freedom" (in my colleague Adam Thierer's phrase) are making a big difference.
In the past several years, the Internet and cell phones have started to challenge traditional media by becoming channels for the expression of citizen outrage, at times forcing the government to take action. One celebrated instance was the "nail house" incident in the sprawling metropolis of Chongqing, in central China. For three years, a middle-class couple stubbornly refused to sell their house to property developers who, with the municipal government's permission, planned to raze the entire area and turn it into a commercial district. The neighbors had long ago moved away. The developer tried to intimidate the couple by digging a three-story canyon around their lone house, but the tactic backfired spectacularly. Photos of their home's precarious situation were posted on the Internet, sparking outrage among Chinese across the country. Within weeks, tens of thousands of messages had been posted lambasting the Chongqing government for letting such a thing happen. Reporters camped out at the site; even official newspapers took up the couple's cause. In the end, the couple settled for a new house and over $110,000 in compensation. The widely read daily Beijing News ran a commentary that would have been inconceivable in a Chinese newspaper a decade ago: "This is an inspiration for the Chinese public in the emerging age of civil rights. . . . Media coverage of this event has been rational and constructive. This is encouraging for the future of citizens defending their rights according to the law."
In another example of the marriage of new technology and citizen action, last May angry residents in the southern coastal city of Xiamen launched a campaign to force the city government to stop the construction of a large chemical plant on the outskirts of the city. Their weapon was the cell phone. In a matter of days, hundreds of thousands of text messages opposing the plant were forwarded, spreading like a virus throughout the country. Xiamen authorities, who had ignored popular opposition to the plant before, suddenly announced that construction would be suspended until an environmental impact study could be completed. Dissatisfied with this half measure, citizens again used message networking to organize a march of some 7,000 people to demand a permanent halt to the construction. Although local party newspapers blasted the protest as illegal, it was allowed to proceed without incident, marking one of the largest peaceful demonstrations in China in recent years.
I think capitalism is more important than democracy. Liberty and voting are not the same thing. Representative democracy is thought to be one of the best ways to guarantee liberty, but we should not confuse the two. Democracy can offer the illusion of a distribution of power, but in fact often ends up centralizing and entrenching power.
Capitalism, on the other hand, distributes power, money, resources, ideas, and incentives. Capitalism means competition and innovation. Capitalism means technology, change, and a positive-sum outlook where people are more interested in the growth of their own lives, families, and businesses than they are in politics. China, therefore, can have an undemocratic one party system politically, but its unleashed and decentralized capitalism has created numerous power centers and power people (entrepreneurs) all around the country. The CCP therefore operates in a constrained environment where disparate factions and decentralized forces impose reasonable consensus decisions at the top of the pyramid.
Conversely, India since 1948 has been a democracy -- and it enjoyed important blessings like free speech -- but for most of this time it was a sclerotic, heavily socialist, corrupt, bureaucratic, and very poor country. Without capitalism, democracy becomes a zero-sum war in which 51% of the people can vote to confiscate a nation's fixed or dwindling resources. China's boom has now forced India to open its economy bit by bit, with positive results, but India's "democracy" still prevents it from undertaking the bold reforms it should.
China still has huge challenges of its own and a very long way to go, as Thornton's authoritative article makes clear. But it provides a common-wisdom-shattering exhibit for economists and political scientists everywhere.
In the end, I favor political openness and free speech. I favor representative government. But more than those things I favor capitalism.
CORRECTION: As several people have reminded me, "technologies of freedom" is the phrase not of Adam Thierer but of Ithiel de Sola Pool, who wrote Adam's "favorite technology policy book of all time," entitled Technologies of Freedom. Adam is so prolific, it is easy to accidentally attribute smart phrases and insights to him. My apologies.