Will Capitalism Turn China Into a Democracy?

Democracy first, market economy later. At least that is the conclusion of this paper, Democracy, Market Liberalization and Political Preferences.

The main result of this paper is that in transition countries democracy increases popular support for the market, while economic liberalization does not influence support for democracy. Our data do not support the widespread view that democracy needs naturally emerge as a by-product of capitalism. Instead, our results indicate that building democratic institutions can act as an ingredient in favor of market liberalization, whereas early market development is no guarantee of subsequent popular support for democracy, particularly in less developed countries of our sample in Central Asia and the former Soviet Union. These observations are consistent with the empirical fact that market economies can live without democracy, whereas there is no historical evidence of a democratic society without a market economy (Dahl, 1982b). One explanation for this is certainly that preferences of citizens do not, by definition, matter in autocracies.28 Our results illustrate an alternative explanation, which is that the determinants of the support for democracy have to be found elsewhere: market liberalization, in itself, is not sufficient to trigger the demand for democracy. One tentative explanation for the positive relationship between democracy and support for a market economy, which is explored in more details in a related paper (Grosjean and Senik, 2008), can be found in the impact of democracy on income distribution. We find support for the hypothesis that although rising income inequality in itself triggers backlash against reforms, extending democratic rights appears as a credible promise of future income redistribution (Acemoglu and Robinson, 2000, 2002, Acemoglu et al., 2007b) and acts as a positive ingredient in reinforcing adhesion to the economic reform process.

Me: I am fairly certain is that the failure of capitalism will surely make China less democratic. The current economic slowdown is causing increasing social unrest and more opression in response.