Sort of like jumbo shrimp and a working vacation, we could say that an authoritarian market is an oxymoron.The chief economist of the World Bank, Justin Yifu Lin, would disagree.
As described in a recent New Yorker Magazine profile, Dr. Lin has an unusual background. Born in Taiwan, he defected to the mainland, studied economics at the University of Chicago, and ran a think tank at Peking University. As chief economist at the World Bank, he occupies a position once held by Nobel Laureat Joseph Stiglitz and former Treasury Secretary, Harvard president, and Obama economic advisor Laurence Summers.
The profile was so very fascinating because of its inherent contradictions. Dr. Lin, attended the University of Chicago, the center of free market studies, in order to become an expert on China’s authoritarian capitalism. Discussing China, he says that government is necessary for the success of its market. At the World Bank, he suggests that China’s successes can serve as a prototype for other developing nations.
Recent headlines about Chinese currency manipulation, about Chinese acquisitions of western firms, about the Chinese economy becoming #2 in the world all return us to authoritarian capitalism. Is it working?
I suspect Adam Smith would say “No”. Your opinion?
The Economic Lesson
When he described an 18th century market economy, Adam Smith cited several basic characteristics. 1) Self-interest propels economic activity. 2) Competition controls self-interest. 3) Division of labor facilitates efficiency, invention, and mass production. 4) Except for justice, money, and defense, government should adhere to a laissez-faire policy.