ABSTRACT
Free markets and democracy are related. Open markets and open minds mutually reinforce one another. It is natural then on theoretical grounds to conclude that the shortest paths to democracy and free markets for countries with distorted economies and authoritarian politics should be economic and political reform programs that are parallel, complementary and contemporaneous. Yet empirical observation does not offer much support for this conclusion. Some countries succeed in economic reform, but not in political reform. Some succeed in political change, but fail to make progress in economic development. The countries of Latin America in recent years have enjoyed comparatively good success with democratization, yet they have been less successful with economic liberalization. During the same time period many Asian states have had relatively good success with economic reform but have been less successful in democratization. In some African states political reform has not been accompanied by economic progress while in others political reform is championed as the cause for economic progress. In Russia political reform preceded market reform, but at least in the early stages of Russia’s reform heavy doses of “shock therapy” produced ample shock and only modest therapy. At the same time, China made great progress in economic reform; but China’s reform was adopted, at least in part, as a deliberate strategy to forestall political change. If democracy and market freedom are so closely related theoretically, why is the empirical relationship between political and economic liberalization so complex and varied?
