Authoritarian capitalism, or illiberal capitalism, is an economic system in which a capitalist market economy exists alongside an authoritarian government. Related to and overlapping with state capitalism, a system in which the state undertakes commercial activity, authoritarian capitalism combines private property and the functioning of market forces with repression of dissent, restrictions on freedom of speech and either a lack of elections or an electoral system with a single dominant political party.
Countries commonly referred to as being authoritarian capitalist states include China since the economic reforms, Hungary under Viktor Orbán, Russia under Vladimir Putin, Chile under Augusto Pinochet, Singapore under Lee Kuan Yew, and Turkey under Recep Tayyip Erdoğan as well as fascist regimes and military dictatorships during the Cold War. Nazi Germany has also been described as authoritarian capitalist, especially for its privatization policy in the 1930s.
Political scientists disagree on the long-run sustainability of authoritarian capitalism, with arguments both for and against the long-term viability of political repression alongside a capitalist free-market economic system.
History
Early development
As a political economic model, authoritarian capitalism is not a recent phenomenon. Throughout history, examples of authoritarian capitalism include Manuel Estrada Cabrera's and Jorge Ubico's respective reigns in Guatemala, Augusto Pinochet's reign in Chile, Suharto's New Order in Indonesia and the People's Action Party's early administration in Singapore. During World War I, the ideological divide between authoritarian and liberal regimes was significantly less pronounced as both were aligned to capitalist economic models. Moreover, the Axis powers of World War II have been described as possessing totalitarian capitalist economic systems, acting as examples of the early developments of authoritarian capitalism.
From the end of World War II, various authoritarian capitalism regimes emerged, developed and transitioned into a liberal capitalist model through East Asia, Southern Europe and Latin America. It has been argued that the change of these early regimes was predominately due to the dominance of liberal capitalist countries such as the United States as opposed to a natural transition, suggesting that modern authoritarian capitalist regimes may further develop the system.
Recent prominence
While having been a relatively unknown system due to the failure of authoritarianism within the First World during the Cold War, with the transition of authoritarian countries such as China and Russia to capitalist economic models, authoritarian capitalism has recently risen to prominence. While it was initially thought that changing to a capitalist model would lead to the formation of a liberal democracy within authoritarian countries, the continued persistence of an authoritarian capitalist models has led to this view decreasing in popularity. Furthermore, some have argued that by using capitalist economic models authoritarian governments have improved the stability of their regimes through improving the quality of life of their citizenship. Highlighting this appeal, Robert Kagan stated: "There's no question that China is an attractive model for autocrats who would like to be able to pursue economic growth without losing control of the levers of power".
Moreover, authoritarian capitalist regimes have experienced notable growth in their economic production, with the International Monetary Fund stating that authoritarian capitalist countries experienced an average 6.28% GDP growth rate compared to the 2.62% of liberal capitalist countries. In addition, many have argued the inability of liberal capitalism, with the global financial crisis and the slow response of the United States government, to quickly respond to crisis compared to more authoritarian systems has been bought into prominence. In fact, many argue that authoritarian capitalism and liberal capitalism have or will compete on the global stage.
State capitalism
Overlap
Authoritarian governments often seek to establish control within their borders and as such will use state-owned corporations, therefore state capitalism will emerge to some extent within countries that practice authoritarian capitalism, manifesting from the ruling authorities desire to exercise control. The prominent use of state owned corporations and sovereign wealth funds within authoritarian capitalist regimes demonstrates such a tendency, with Russia decreasing its private ownership of oil from 90% to 50% while transitioning to a more authoritarian model under the leadership of Vladimir Putin.