Cracks in Burma’s Political Permafrost

A few days ago, the New York Times ran a story describing a hesitant liberalization underway in Burma (a.k.a. Myanmar) and the U.S. government’s equally cautious response to it. Nearly a year ago, Burma held national elections that were neither free nor competitive but did restore at least the veneer of civilian government after a long spell of rule by military junta. Despite its illiberal origins, that civilian government seems to be finding its legs and taking small steps toward political and economic liberalization. According to the Times,

The new president, U Thein Sein, a former general who was part of the military junta that ruled the country for two decades, has in six months in office signaled a sharp break from the highly centralized and erratic policies of the past. Mr. Thein Sein’s government is now rewriting laws on taxes and property ownership, loosening restrictions on the media and even discussing the release of political prisoners.

Conventional explanations for political liberalization have a hard time explaining cases like this one. According to the usual thinking, authoritarian rulers only loosen the reins as a defensive concession to political challengers who might otherwise destroy their regimes. Absent a clear and present danger, an autocrat has no incentive to expand his subjects’ freedoms, because in so doing he only stands to empower an organized opposition, the single-greatest threat to his grip on power.

This can’t explain Burma, where only a few years ago the regime violently and thoroughly quashed a popular uprising. To understand why autocrats might liberalize in the absence of an immediate threat, we have to widen our view to include the economic costs as well as the political benefits of closed dictatorship. In a conference paper I wrote a few years ago, I used game theory to explore the idea that authoritarian rulers will sometimes choose to expand civil liberties as a way to increase revenues by reducing their own transaction costs and the transaction costs of their constituents. By reducing the costs to the ruler of acquiring information and monitoring compliance, political liberalization can directly increase the state’s net income. By expanding opportunities for private exchange and facilitating coordination among constituents who control productive resources, this kind of liberalization can also indirectly increase state revenues by expanding the economy’s productive potential, and thus the regime’s tax base.

The core idea in this take on the political economy of authoritarian rule is that political and economic transactions are not neatly separable, so state-imposed constraints on political behavior are likely to interfere with economic exchange as well. The resulting friction, and the costs of maintaining the machinery that creates it, represent opportunity costs that authoritarian rulers would like to avoid, or at least to minimize. A game-theoretic representation of these trade-offs suggests that dictators are most likely to undertake political liberalization either when citizens already pose a credible and formidable threat (liberalization by concession), or when citizens appear to pose only a weak threat (liberalization by imposition).

Viewed through this wider lens, recent events in Burma make a little more sense. Like Gorbachev’s initially timid steps toward openness (glasnost) in support of economic restructuring (perestroika), the Burmese government’s recent reforms seem to identify that country as a budding case of liberalization by imposition. After the collapse of the USSR, dictators may have become more inclined to err on the side of caution and forego the potential gains from reduced economic friction. More recently, though, the Chinese government’s success (so far) in managing these trade-offs in its favor seems to have re-opened the door to liberalization from above.

Whether this process will create an opening for democratization or will reinvigorate dictatorship in Burma is impossible to know right now. Either way, though, I think it is crucial that we avoid confusing this timid expansion of civil liberties with a genuine commitment to expanded political rights. As Serge Schemmann wrote about the greatest of the twentieth century’s accidental democrats, “Though the West lionized Mikhail Gorbachev as a reformer, it is important to remember that his goal was not to destroy or even humanize Communism, but to perpetuate it.”