Tuesday, February 15, 2011


This is just an academic discussion with no intention to provoke anybody. The question discussed in comparative politics class, is democracy’s capitalism better than communism’s socialism economy or closed market? Generally, in a democratic nation like Malaysia, we will have the connotation that capitalism is a kind of economy that can boast the nation economy while a closed market system will bring the nation’s development to nowhere. The question is, is it true? Statistic has proven that those first world nations are the one who practise capitalism system while those who practise socialism economy states such as North Korea, Myanmar, Cuba, Laos etc (except for China, it is a special case that need another discussion) are less developed. Communism or military regimes in those nations are rigid and not willing to open up their market for free flow. Why? When open market happens, it definitely will bring the nations to a higher level. A simple logic without referring to complicated theories is that, when two parties cooperate, they will get benefits from each other as each of them will have their different personal strength (this premise might have lots of contention, but for the moment in a simple explanation, it works). At the same time, when each of them depends too much on the other, dependency will happen. This means that those are depended on the other will be at the losing end. The advantage party will start to exploit the weaker side. In politics, it usually will be absorbing of democracy model into a non-democratic state. The weaker nation has no choice other than to oblige. That is why a lot of autocratic nations refuse to open up their market. One of my classmates said that even though Vietnam is a non-democratic nation, but their development level is very high. The growth might even far better than Malaysia. However, when we look at the nation democracy level in terms of freedom, human rights etc, they are improving. Their leaders are not that rigid anymore compared to decades back. Ignore the discussion whether it is good or not. The point is their leaders have to liberalise their ruling styles as well. Isn’t it means that open up market means that willingness to liberalise their political circuits as well?

Back to China’s scenario, the reason why China is able to open up their market is because of their ability to control their market. Worst case, they can practise back their closed market ideology without having to suffer much. Furthermore, they do not open up their market totally. There are still a lot of restrictions. The communism leaders will make sure that their political ideology is not badly affected (unless they want something from the West such as Olympic Games, then they will improve their human right track records slightly). Undeniably, China’s economy does improve tremendously after they started to open their market.

In a nutshell, I would say that capitalism system is a high risk high return model. Anyhow, the return chances are generally more than the lost. That is why when a nation liberalise their market, generally their economy will shoot up. However, when an economic crises happens, the one that liberalise their market the most are the one that suffered the most. South Korea, Hong Kong and Taiwan are examples of it due to high amount of foreign investment. China’s economy is not that badly affected in 97/98 crisis comparatively since the market is domestic-orientated. I am of the opinion that capitalism system will bring a nation economy to a higher ground, but at the same time the nation will have to be bonded by more capitalism conventional regulations plus a high risk of economy collapse if the world economy gets into trouble.

(Those data are from my memory without double-checking the accuracy. Do welcome to correct me if I am wrong).

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