Three American scholars have been awarded the 2024 Nobel Prize in Economics for their research proving that democratic systems are more conducive to economic growth. Their work, particularly a publication from twelve years ago, predicted the decline of China’s economy under authoritarian rule. Experts believe that China’s current situation closely aligns with these predictions, indicating an irreversible path towards economic collapse under the Communist regime.
On October 14, the winners of the 2024 Nobel Prize in Economics were announced. The prestigious award went to three economics professors working at American universities (MIT and the University of Chicago) – Daron Acemoglu, Simon Johnson, and James A. Robinson.
The award committee highlighted that the research of these scholars demonstrates the importance of societal systems for a country’s prosperity. It helps people understand why societies with weak rule of law and institutionalized exploitation of the populace fail to bring about economic growth or improvement.
The book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” jointly authored by Acemoglu and Robinson in 2012, had a significant readership in China. The book posits that there exist inclusive institutions and extractive institutions in both the economic and political realms. The best combination being inclusive political and economic institutions, while the worst combination is extractive political and economic institutions.
In fact, Nobel laureate Amartya Sen in 1998 also made similar conclusions based on historical facts, suggesting that no major famine occurred in countries with democratic governments and press freedom.
On October 14, Professor Acemoglu responded to questions from reporters during the Nobel Prize announcement press conference via a live phone call. When asked about explaining how authoritarian China has achieved significant economic prosperity, he mentioned that while countries like China have experienced economic growth through investments in innovative sectors like AI, the stability and sustainability aspects fall short compared to democratic societies.
The insights from “Why Nations Fail” shed light on China’s economic struggles, affirming the predictions made by Acemoglu and Robinson regarding the challenges faced by authoritarian regimes in ensuring long-term prosperity.
Analysts have debated whether the CCP regime in China will collapse or just deteriorate. Wang He, a China expert, believes that under the current economic circumstances, the collapse is inevitable due to the inadequacies of the political system in sustaining growth.
Professor Sun Guoxiang from Nanhua University in Taiwan noted that the China’s economic miracle over the past thirty years can be attributed to a partial transition of its economic system from highly extractive to a more inclusive model. However, the authoritarian and extractive nature of China’s political system makes long-term economic growth unsustainable, aligning with the predictions of Nobel laureates in Economics.
As discussions on the fate of China’s economy continue, it becomes evident that the roots of economic stagnation lie in the structural deficiencies of authoritarian regimes. The need for comprehensive reforms to address these deep-rooted issues is increasingly apparent, challenging the narrative of endless growth under such systems.
In the throes of political darkness and economic turmoil, some attribute China’s predicament to a betrayal by Xi Jinping rather than acknowledging the inherent flaws in the CCP’s authoritarian structure.
The convergence of Xi Jinping’s leadership and the CCP system has exacerbated damages to China’s economic prospects, emphasizing the detrimental impacts of their policies on the nation’s growth trajectory.
In facing economic distress, some argue that CCP’s regime is on the verge of collapse while others suggest a more nuanced view of its potential to withstand external pressures and internal challenges.
While examples like North Korea’s sustained existence on external aid showcase the robustness of authoritarian regimes under specific conditions, experts emphasize that without structural transformations and reforms, such regimes are inherently vulnerable to economic and societal crises.
The resilience of extractive systems relies on strict control mechanisms, isolation, and propaganda, which can sustain them for a time, but interactions with the outside world can expose their vulnerabilities and accelerate their downfall.
As economic dynamics evolve, cracks in authoritarian structures become more apparent, signaling an inevitable collapse if they fail to adapt to changing circumstances and persist in isolating from the global community.