Is China Becoming a Paper Leviathan?
Some Scattered Thoughts from The Narrow Corridor by Acemoglu & Robinson
“Under our constitution, the president of the republic is like the Sun, immovable at the center of the universe, radiating life. This supreme authority should be permanent… a fixed point around which magistrates and citizens and men and events revolve…Give me a fixed point, said an ancient, and I will move the earth. For Bolivia, this point is a president for life,” Simon Bolivar.
I want to briefly caveat this entry by emphasizing that it is NOT a serious work of sinology or even comparative politics. But as I was reading little bits like the above quote from The Narrow Corridor, the sequel to Daron Acemoglu and James Robinson’s Why Nations Fail, I had an idea that took hold which compelled me to write about it here.
The Narrow Corridor According to the World Bank
When they were discussing their case studies from Argentina to Turkey of “Paper Leviathans”1 to contrast with genuinely “Despotic Leviathans” with strong state capacities that also lack well-organized societies, I could not help but notice that the traits they attributed to these states, such as lack of legibility, increasingly resemble those of China, which the authors emphasize is firmly in the despotic category. They explicitly note that China’s growth would have been impossible with an intentionally hamstrung state like those administered by the gnocchi (patrimonial government officials) of Argentina and Colombia:
The Despotic Leviathan can enforce laws, resolve conflicts…control looting, and, if it wishes, provide public services. On this basis, it can unleash despotic growth, as most recently illustrated by China’s spectacular rise. Not so with the Paper Leviathan. It doesn’t have the capacity to do many of these things…So the toll of the Paper Leviathan in Latin America and Africa has been…a corruption-ridden, inefficiently organized economy exhibiting little growth.
Their point is well-taken. The World Bank’s Worldwide Governance Indicators (WGI), first developed by the economist Daniel Kaufmann in the mid-90’s, demonstrate that the differences between Despotic and Paper Leviathans are often substantial. For example, when you isolate for the specific factor where Paper Leviathans under-perform, government effectiveness2, you can clearly see the difference. Also note, the difference between Paper and Absent Leviathans. A chart containing the countries I plan to discuss in this entry, case studies I highlighted from A&R’s book, is included below for reference.
Despotic Leviathans do quite well according to these well-defined metrics.3 The downsides are revealed in other WGI indicators that are not so easily defined, primarily the ones that attempt to gauge the balance of a strong state with strong society, including rule of law and control of corruption. On these alternative metrics, the Paper Leviathans often do better. While both state and society are often too weak to enter the corridor, the balance of state and society is often in favor of the Paper Leviathans. They are therefore closer to the corridor and better candidates for democratic transitions. Drawing from his own two-volume macrohistory4, Francis Fukuyama emphasized this point reacting to the relative ease President Xi scrapped term limits in 2018, foiling it with one textbook Paper Leviathan, Colombia:
The seemingly casual abolition of term limits in China shows why constitutional government is a good thing. The Chinese Constitution is written by the party’s top leadership and does not constrain them. By contrast, Latin America is full of constitutional democracies with judiciaries that are often surprisingly independent. Presidents in Argentina, Venezuela, Ecuador, Colombia and elsewhere in the region have tried to extend their terms in office but they actually have to spend political capital to do so, and they have not always been successful.
Former Colombian President Álvaro Uribe, for example, hoped to add a third term to his presidency in 2009 but was stymied by the constitutional court, which ruled the extension unconstitutional.
In the special case of limited despotism, where the leviathan has less state power at its disposal but also lacks society partners, the logic about balance and being closer to the corridor is often the same. Of course, this is only true so long as it does not follow the despotic path that spirals away from the corridor (see both Turkey’s position relative to China and the path depicted by the arrows in the chart below).
The Chinese Red Queen is also Running, but Outside the Corridor
My criticism of the A&R framework, is it focuses on the transitional states close to the corridor as where all the action happens. In a country like Turkey, it can either consolidate state power and move in the direction of the archetypal despotism of China, promote pluralizing reforms that push into the corridor, or society is pulled away by the state. But at the same time, the state can’t quite put the genie back in the bottle such that power generally devolves across state and society. In other words, the final possibility is despotic path in reverse such that what was once an admired and feared despotism suddenly finds that it is an orangutan dressed in a tuxedo. Leaders may continue to wear the tuxedo in that they find the trappings of state sovereignty useful, but like the orangutan discover they are increasingly inept at performing its functions.
While their emphasis is understandable because both pristine state formation in cases like the Tiv suffocating in the “cage of norms”5 and pristine democratic transitions are rare, they treat archetypal cases like China as too static. As Orville Schell’s book on modern Chinese intellectual history from the Qing era self-strengtheners to Liu Xiaobo underscores, there is perhaps greater appreciation (and anxiety) that absent constant corrective action that fortifies the power of the state, power can devolve. Neo-authoritarians thinkers that have President Xi’s ear like Wang Huning have taken up this task and occupy their time with questions like how to re-balance cultural software with hardware and break from the straitjacket of dynastic cycles. They have no illusions about being far outside the corridor.
From this clear-eyed domestic realpolitik, the Chinese leadership at zhongnanhai double down on their analogue Red Queen. This is the principle of both physics and social science Alice learned in her encounter with the Queen in Alice in Wonderland. They too have to constantly run to progress, because Schumpeter’s insight, a nation in repose is a nation in decline, is a universal principle. Alice may occupy a different country from the Queen, but her belief that her laws are different is ultimately mistaken.
That is not to discount the fact that the strategic orientation of the Chinese state as one that consolidates around a fixed point6 is a significant departure that has already bent the arc of history. In spite of the conventional wisdom inherited from the Cold War that autocracy is a barrier to innovation, a view endorsed by A&R in the book, recent research indicates that the Chinese can rely on positive feedback effects between political retrenchment and frontier innovation.
In the age of AI, the lesson appears to be both countries need to run as much as they can merely to keep their respective systems in place. Unlike the prior era of the Cold War, neither system can rest easy knowing that it has the advantage and merely needs to wait out another End of History. As the authors warn in the introduction, unless the contemporary Free World takes concerted action to reduce polarization that makes living in the corridor so precarious, technology may favor tyranny after all.
Asabiyah as What Drives Dynastic Cycles
Though understandable, I see little reason to interpret Noam Yuchtman and coauthors’ research on AI-tocracy with alarm because the fault line of the strategic competition will not revolve around the technologies but how societies respond to technologies. Wang Huning expresses himself in the language of decadence that would sound familiar to the NYT op-ed columnist, Ross Douhat, for precisely this reason. He is the first to admit that old Marxism is backwards, the cultural software, the superstructure, is in fact the determining structure. Or more accurately, the world is increasingly complex such that everything is connected to everything else in ways that make a mockery of the old Marxism. The Party’s intellectual class find refuge in forgotten post-war sociologists like Talcott Parsons, whose scholarship was neither limited by dogma nor boxed-in by academic convention.
I believe that this is what Kaiser Kuo meant when he remarked in passing that Wang would find a lot to like in the poetic theorizing of Ibn Khaldun. By no coincidence, that 14th century Arab thinker is also central to A&R’s account of the Janus-faced nature of despotic growth. Though Khaldun’s notion of asabiyah, or the tendency for the state to not overreach by only levying just taxes, may seem primarily economic, the catalyst that disrupts this balance is always cultural, A&R explain. “Group feeling” and the belief that “cultural enterprises” promoted by distributed Islamic society were mutually beneficial for state and society prevented the slide into dynastic cycles. When the asabiyah dissipates there is a cultural Minsky moment, the very same dynamics that proved so beneficial on the way up wound great dynasties on the way down, poetically described by Ibn Khaldun, “Like the silkworm that spins and then, in turn/ Finds its ends amidst the threads itself has spun.” And yet this musing is distinct from the refrain of modernization theory that despotic growth is self-obsolescing because Ibn Khaldun believes it is cyclical like the silkworm’s seasonal spinning (or an asset bubble).
Even against the radically different backdrop of modernization, the fundamentals of Khaldun’s notion remain sound. Absent any action on the part of society to sustain movement into the corridor, the natural trajectory is found on the despotic pathway depicted on the A&R chart. At first, there is great pluralization such that “cultural enterprises” multiply. This roughly describes the Chinese economy and society up until 2008, depending on your specific topic of study. Recognizing the self-obsolescing tendency of social mobilization, the rulers lash out against the ruled. Graphically, these actions move the state-society balance away from the corridor.
And the initial lash unleashes a depreciating spiral because there is little government can do to stem the loss of society’s trust, the basis of asabiyah. A&R write that Chinese economic statistics and public health information during the pandemic are Orwellian in their celebratory pronouncements because society is so acclimated to withholding and misrepresenting information:
Legibility, just like controlling corruption, requires cooperation from society. When cooperation is withheld, problems creep in; will businesses seek shelter in the informal, unregistered sector? Will individuals withhold their information from a state they do not trust? Will bureaucrats manipulate data to get ahead? The answer to all three questions is yes, especially in China.
The lethal pitfalls of illegibility are conveyed in Lebanon, which I noted earlier has abysmal state capacity, because ethnic and religious polarization is so ingrained it is grandfathered into the Constitution. Though emanating from a diametrically opposed source, the illegibility of one-man rule is similar in result if not more disastrous, as the inflated grain counts of provincial officials during the Great Leap Forward demonstrated. In terms of the anti-corruption drive, there is more than a little resemblance to the common slogan of Latin American caudillos, who historically relied on personalistic leadership and results-based legitimacy, in reminding followers that they had a choice of pan o palo—bread or bludgeon. Though it is certainly true that Xi is not using anti-corruption as cover for consolidation of one-man rule, there is also evidence that some members of his personal network have been insulated from the palo.
As we saw in my first chart, Chinese state capacity is fully capable of delivering the goods and is not solely dedicated to enriching itself. Access capital and patrimonial relations still abound within the administrative hierarchy, but the stated intention is sound— to apply these personal networks as the raw material to ignite then deepen structural transformation. That mission remains a thoroughly reasonable rejection of the Washington Consensus’ modernization agenda, which left-leaning economists like Joseph Stiglitz emphasize has no real world examples of success. Even if it has fallen short by some measures, the Party-state is not yet stricken with the fatalist management paradigm that supposes ambiguous unpredictability at every moment ensures loyalty, the preferred strategy of Georgian President Eduard Shevardnadze until toppled by the Rose Revolution in 2003. While foreigners may complain of arbitrary administrative loops, lower level functionaries also do not govern through public humiliation like the Argentine gnocchi to keep ordinary folks in line.
A Paper Leviathan Fears Society
Yet the hallmark trait of Paper Leviathans, paralyzing fear of social mobilization, appears to apply to the Chinese state. That point requires special emphasis because contemporary China is nothing like the period American expansion when Henry Clay promoted the American System for a country that was solidly in the Age of Commerce. Instead, like America in the late 19th century, the crisis is one of success. The Chinese equivalent of the Turner thesis is that the model of state capitalism pioneered in the 1990’s to lay more highways and railroads more rapidly than any time in history has finally reached saturation. And whenever the saturation threshold is crossed, countries experience periods of decadent wealth, known as Gilded Ages, as Chang Che wrote in the American Prospect this week.
During the American Gilded Age, there was a proliferation of associational groups that, when coupled with the steady hand of the state for anti-trust and labor reform, revived state-society relations. Critically, unlike the explicitly class character of the SPD during the Weimar Republic or Allende’s Chile, these efforts did not compel elites to quash it through their levers within the state, and it was channeled productively. In his book, the legal scholar, Carl Minzer, has an alternative scenario for authoritarian states that lack these mechanisms laid out in the metaphor of the Three Gorges Dam. The pressure will build up without any way to relieve contentious activity through existing channels, triggering the radicalization of society. Elsewhere around the world, the authors correctly note that radicalization has narrowed the corridor, making liberty more precarious.
Though unfazed by the fate of the corridor in the West, President Xi is concerned about contagion risk situating this polarization as a global phenomenon (QS link in Chinese). Their proposed antidote is to remember “the mission” returning both to ancient Chinese philosophy and the roots of Marxist-Leninism:
As an old saying goes, "As vast as heaven and earth may be, the people must always come first."…We will only have the right view of development and modernization if we follow a people-centered approach, insisting that development is for the people, reliant on the people, and that its fruits should be shared by the people.
Reminding his comrades that they don’t want to go the way of the Soviet Union, he articulates that ‘common prosperity’ is more than an empty slogan. Fail to observe this foundation and we may very well lose the Mandate of Heaven, Xi implies:
Realizing common prosperity is more than an economic goal. It is a major political issue that bears on our Party's governance foundation. We cannot allow the gap between the rich and the poor to continue growing—for the poor to keep getting poorer while the rich continue growing richer. We cannot permit the wealth gap to become an unbridgeable gulf.
President Xi appears to be sincere and competent. But common prosperity has historically depended on neither. Rather, the decisive factor always and everywhere was to expand the opportunity base of common people so knowledge distributed throughout society reliably translates to innovation. A&R’s lesson comes from the Renaissance Italian communes, but they note the pattern was also repeated during the British industrial revolution and through American institutional innovations like rural post offices:
This sort of unequal distribution of economic opportunities isn’t enough to undergird economic prosperity either. You need opportunities to be widely and fairly distributed in society, so whoever has a good idea for an innovation or valuable investment gets a chance to carry it out.
The radicalization of society is further exacerbated when a lid is put on this process allowing pressures to come up from below. Muckraking journalists were one source of relief during the American Gilded Age. The superb financial publication, Caixin has lost its independence, as debt distress from the troubled real estate conglomerate, Evergrande, accumulates. Jeremy Goldkorn also reported Jack Ma will sell another excellent paper, the South China Morning Post, to a state-owned company. China's near term problems in the property sector, to say nothing of the looming environmental crisis, seem like they may require independent thought at these outlets.
Commenting on term limits in Evan Osnos’ New Yorker column, Minzer speculated what could happen if what is left of these checks on authority vanish, “Institutional erosion… leads to the re-emergence of long-established trends…What could happen if China—a country where checks on power are much weaker, and severe political instability of much more recent memory—starts to see its own historical processes begin to reassert themselves?” The neo-Maoist future he invokes is not a literal return to 1966. He only means to say that when state-society relations are no longer based on trust, power simply devolves. Sensing this devolution, leadership would much rather steer the ship from zhongnanhai headquarters. That, in turn, is the tell-tale sign that China may be beginning the downward phase of Ibn Khaldun’s dynastic cycle.
To be sure, spiral doesn't mean collapse. The historical examples of countries in China’s stage with similar state-society balances are clear. Because a repeat of the American Progressive Era seems so out of bounds, there will likely be a gradual drift to the common pathologies of Paper Leviathans .
Perhaps there are other options I do not yet see, because I only dimly understand the dynamics of the authoritarian variant of the Red Queen. It may be the case surveillance technology, possibly AI-tocracy, changes the game, making governance legible without society’s input. And in any case, my commentary with respect to China is not a forecast. The useful reminder I emphasize here is there remains only one reliable bias. We assume things are more immutable than they actually are. Just look at our views about Japan from this 1992 PBS documentary. There is a possibility, however remote, that if China continues to quack like a Paper Leviathan with great uncontrolled anxiety for society, it may become one.
Of course, borrowing Mao’s phrase, characterizing Western imperialism as “paper tigers”.
Defined in the most recent update of the WGI dataset as, “Reflects perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies.”
Because this indicator is well-defined does not mean its components are all perfectly defined, especially involving the criteria that account for the perceived delivery of public services.
Which should go next to Why Nations Fail and The Narrow Corridor in your personal library.
A foil to Weber’s cage of rationality. The motivation of A&R framework appears to be there are these weird symmetries on each side of the corridor, and countries that find themselves outside are faced with equal and opposite quandaries about how to get inside.
What is often referred to as Leninism is part of an older statist tradition. Prussian statesman Frederick the Great would have made for a fine comrade, “A well-run government must have a firmly established system….in which finance, policy, and military all combine to promote the same end, the strengthening of the state and the expansion of state power. Such a system can only derive from one brain.”