I promised to respond to Sperry’s longread On the Utility of Dictators, and I have finally gotten around to it.
Sperry’s objective was to show, using the example of Asian tigers such as Japan and Korea, that the reason for the rise of their capital-intensive industries was direct, prolonged, and brazen state intervention in the economy, rather than the free market. Compared to monstrous corporations merged with states, the free market is a poor market, and it is left with industries that are not as capital-demanding. I believe he fully achieved his goal.
Indeed, the state is an institution that is very good at concentrating effort, and as for which specific sphere the state will concentrate those efforts in—that is a matter of politics. Thanks to this concentration of effort, a mega-army, a mega-fleet, or a mega-corporation can be created; pyramids in the desert and in the jungle; mega-statues of gods and leaders; bridges with mega-traffic and bridges to nowhere; people can fly into space or burn in gas chambers—there is no end to the applications of state effort.
And yet, Sperry’s article is titled “On the Utility of Dictators,” not, for example, on their greatness. So who do they benefit—those dictators he examined in his review of the Asian electronics market? The answer is obvious: they benefit the consumer. The Korean, Japanese, Taiwanese, or American state takes money from its citizens, borrows from gullible investors, simply prints money—and pours it into building an industry that will provide the average consumer from god-forsaken Montenegro or Costa Rica (where dictators are too pathetic and unable to concentrate such frantic resources) with cheap and high-quality gadgets.
Thus, dictators can be considered conditionally useful if they spend looted funds on the production of consumer goods, conditionally useless if they spend looted funds on the production of cultural mega-monuments, and conditionally harmful if they spend looted funds on the extermination of neighbors. How did it happen that “useful dictators” appeared as a class at all? What forced the proud descendants of plunderers and religious fanatics to switch to trade wars in the spirit of “open your market to our goods, or we will close our market to yours”? There is a simple and boring answer to this: the Industrial Revolution. The previous revolution, the agricultural one, allowed for the concentration of resources to create giant armies, using those armies to seize new lands and concentrate even more resources. The Industrial Revolution, however, ensured global dominance for a country with a very modest army through manufacturing and a merchant fleet. It was the Industrial Revolution that led to the emergence of a new type of war: for the opening of markets. Not for the right to plunder a particular colony, but for the right to trade and invest. The Opium Wars, Commodore Perry, all of that.
It remains to understand: are these useful dictators, who lead national markets toward prosperity with an iron fist, necessary or optional? Fortunately, we have an example of an Asian tiger that managed without useful dictators—Hong Kong. The number one country in economic freedom achieved significant prosperity. This means that even in Asia, one can get by without developmental dictatorships. On the other hand, Hong Kong is not particularly famous for microelectronics. It turns out that the free market in Asia somehow bypassed this sphere, preferring the organic growth of many small companies over the super-concentration of resources in a few chaebols. Had there been no dictators, the global economy today would be different. We can only guess which industries would have flourished if they hadn’t been crushed in the pursuit of primacy in the chip race. But it seems that without dictators, there would be no AI bubble, thanks to which I easily draw beautiful pictures for my posts and do other cool things that I hope to tell you about soon.
