The idea was that once it started opening its economy to capitalism, China would inevitably become more democratic politically. A liberalized economy equals a liberalized state, or a free market leads to a free people, is how cheerleaders in the West sold it. Some of the most vocal of those voices ended up supporting the Chinese Communist Party’s murderous suppression of dissent in Tienanmen Square in June 1989. In an appropriately capitalist twist, some of those regime-boosters, like Henry Kissinger, were employed as consultants by that regime.

Thirty-six years later, the avowedly autocratic Chinese Communist Party remains firmly in control of China, and the country’s economy has risen to the second highest GDP in the world. Capitalism, it seems, doesn’t necessarily need democracy to thrive.

Taiwan, Hong Kong, South Korea, and Singapore are other examples of autocratic capitalist states that powered up to high-income status in the latter part of the last century. This isn’t an “Asian” characteristic: Iran, Turkey, Venezuela, Russia, and Hungary are current examples of authoritarian capitalist states.

More to Explore

How to be a Modern Autocrat

Livia Gershon

April 2, 2025

In the twenty-first century, dictators are less likely than their predecessors to use violence to suppress dissent, cultivating instead “informational autocracies.”

Yet we’re taught that capitalism and liberal democracy go together like motherhood and apple pie. But scholar Michael A. Peters wonders if they’re really “natural allies.” He suggests that it’s more of “historically contingent” and “strategic” relationship, pointing out that it arose in very specific historical circumstance. The liberalism that neoliberalism harkens back to, laissez-faire and free trade capitalism, was predicated on a political economy of imperial nation-states wielding military force to establish race-slavery and colonial labor exploitation and resource extraction—and to contain or co-opt labor power within imperial metropoles.

“Liberal democracies espoused a free trade ideology that greatly advantaged them,” Peters writes, “creating a symbiotic relationship between the expansion of capitalist enterprise and the democratic institutions that supported and legitimized it.”

The breakdown of the post-Cold War order has resulted in a rise of authoritarianism and democratic backsliding in liberal democracies, but this seems to been no hindrance to capitalism. Autocratic capitalism is thriving around the world—again.

“The rise of authoritarian regimes,” Peters writes,

the persistence of non-democratic governments in economically successful countries like China, the resurgence of nationalist and populist movements within democracies, and the erosion of democratic norms in established democracies have all raised questions about the inevitability of democrat progress.

Capitalism tends towards wealth concentration. Wealth concentration without checks and balances leads to outsized political power for the wealthy. This is well-illustrated by recent US experience. Decades of bipartisan neoliberalism have created a disproportionately powerful elite. The mid-twentieth-century’s regulative and redistributive checks on capitalist tendencies have been undermined. The resulting extreme wealth/political inequalities—akin to that of the Robber Baron era of the late nineteenth century—have destabilized democratic institutions and seeded the ground for a reactionary populist revival of the old American demons of racism, nativism, and fundamentalism. In the “complex and evolving relationship between democracy and capitalism,” capitalism seems to be winning.

“Capitalism operates within a framework of state control” he writes about China. This is a statement that works across the globe: the question is how much state control, for there’s a broad spectrum of state interaction with capitalism. (Peters notes the US, for all its touting of a free market, has a history of massive public investment, maintains a permanent war economy, and enforces sanction regimes on dozens of countries.) In this sense all capitalism is state capitalism in one form or another, except when it isn’t: trillion-dollar corporations are richer than some nation-states and can wield more power than many other nation-states.

What’s the political economy of the future? asks Peters for all of us. Will capitalism be “a force for democratic empowerment, or will it entrench new forms of authoritarianism?”

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