Category Archives: Risk

Is China’s Authoritarian Capitalism Better Than Liberal Democracy?

(No it isn’t: just like trying to earn a living by gambling is not better than having a salary, even if potential returns are much higher)

Is China’s authoritarian capitalism better than liberal democracy (as “the condition and motor of economic development“)? That’s more or less what Slavoj Žižek, co-Director of the International Centre for Humanities at Birkbeck College, asks in the Letters section of the London Review of Books (Vol. 30 No. 8 · Cover date: 24 April 2008), at the end of a singularly even-handed description of the Tibet-China relationship (that by the way only victims of their respective propaganda machines will believe to be a story of good guys vs. bad guys).

Fareed Zakaria has pointed out that democracy can only ‘catch on’ in economically developed countries: if developing countries are ‘prematurely democratised’, the result is a populism that ends in economic catastrophe and political despotism. No wonder that today’s economically most successful Third World countries (Taiwan, South Korea, Chile) embraced full democracy only after a period of authoritarian rule.

Following this path, the Chinese used unencumbered authoritarian state power to control the social costs of the transition to capitalism. The weird combination of capitalism and Communist rule proved not to be a ridiculous paradox, but a blessing. China has developed so fast not in spite of authoritarian Communist rule, but because of it.

There are a few i’s to dot, and t’s to cross in Mr Žižek’s discourse. First of all, Taiwan, South Korea and Chile became “today’s economically most successful Third World countriesafter getting rid of “authoritarian rule“. So from those examples it appears that dictatorship may gestate a successful economy, but more often than not “Authoritarian Rule” transforms itself into a suffocating mother, if not an evil stepmother.

More importantly, China itself is in a sense only the last manifestation of a truism: an (economically) enlightened dictatorship can be much more efficient than the collection of dirty tricks known as democracy. Voltaire likely believed in that, just as Plato and countless others, and even if it does sound like an elitist concept, it is obvious nevertheless. An intelligent, caring, politically and economically wise Prince can decide for the best of everybody in minutes, rather than wasting months trying to convince, negotiate, win over people, perhaps in interminable parliamentary committees.

Such a Prince can also guarantee decades of good governance, truly a blessing for his (or her) people.

There is a small matter though. Say, your Prince is Octavianus Augustus and peace and prosperity is for everybody. Then comes Tiberius, and things start out ok: only, to worsen with his increasing paranoia.

Then you’re stuck with Caligula. And Nero is not too far away either.

Things haven’t changed much in the intevening 2,000 years. The trouble with authoritarian rule, hence with authoritarian capitalism, is not its ability to generate prosperity: rather, its perfectly equivalent capacity to degenerate, quickly because almost without control, thereby hampering the growth of that prosperity if not killing it off entirely.

Speaking the language of the financial world: just like a new CEO can resurrect or destroy a Company, so a despotic Prince (or committee of Princes, aka the “Communist Party of China Central Committee“) is a recipe for increased earning opportunities and, for the very same reasons, for an increase in risk.

And that’s something that should definitely be factored in in any judgement about what to choose as “the condition and motor of economic development“. After all, who wants to continuously gamble all of one’s wealth?

Ride a Bike, Save the Planet (get killed in the process)

Fancy “Cyclehero” video on YouTube shows people riding towards sunset in a bid to save the planet from Climate Change.

The metaphor may be more apt than originally intended. As (push-)bike riding kills you 3.54 times more than walking, by switching to pedals you’ll be soon riding into the sunset for good…

…towards an untimely death, that is!

Perception of Risks, Social Networks and Globalization

A radical rethink of the concept of risk is needed in light of globalization and the availability of social networking and communications tools

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There was a time when big news would happen only to complete strangers on TV. Then came e-mail, and Usenet, and groups: and so when TWA800 exploded on July 17, 1996 I knew the brother of one of the dead. Time moved on, and on September 11, 2001 an acquaintance of mine was working in one of the World Financial Center’s buildings (he survived)

When the tsunami arrived at Phuket in Thailand on December 26, 2004, a very close friend of mine was there (he survived too). Finally during the attacks in London on July 7, 2005 one of the dead was Colin Morley, fellow member of Ecademy, the online social and business networking site I belong to since 2003.

Sounds ominous doesn’t it? But it should not be seen as a sign that there is an aura of bad luck around me.

Rather, as per Jeremy Waldron’s great insight in this week’s The New York Review of Books (“Is This Torture Necessary?“, Vol 54, N. 16 · October 25, 2007), the point is that security “is not just an individual good, enjoyed by each of us as a matter of [individual] statistical probability“.

Security must be rethought as a group’s, not just a person’s. Even if on 9/11 “99.999 percent of the US population […] were not killed“, the fact that 2,974 did was a hit on the sense of security of all that could imagine themselves being in the WTC, at the Pentagon or on United 93.

That’s why the fear of a major terrorist attack or any other large catastrophe appears superficially absurd, given each one of us’s infinitesimal probability to be involved. In reality, it’s not “how bad is the risk for me?” but “how bad is the risk for ‘my group’?”

This concept can be expanded further. The first ports of call for one’s feeling of belonging to a group are obviously family, friends and acquaintances/colleagues (in contemporary terms, one’s “active social network”, to the exclusion of the people one is not in touch any longer).

What may or does happen to one’s “active social network” will affect one’s sense of security.

This means in turn that the more people one knows and stay in touch with, the lower the sense of one’s own security. Actually, the cumulative chance of anybody in one’s active social network to be involved in a large catastrophe gets higher and higher as time goes by.

And in a globalized world where people travel around, and the possibility to get to know more people increases, things can only get worse. As something “bad” is bound to happen to somebody sometime, having a big enough active social network will guarantee a hefty supply of tragedies.

If we could be acquainted with every other human being, life would be very very hard to bear.

This is a rather unfortunate, unintended consequence of social networking tools, including basic e-mail.

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Anyway, there are two silver linings to that.

First of all, just as tragedies will be in plentiful supply, so will causes of celebrations. We just have to work out a way to make those travel as fast as bad news already do.

Second, the more we know each other, the less we will be able to just harm each other. As all genocidal Dictators know, it is much harder to kill people when they are people, instead of faceless enemies.