The so-called ‘‘technocratic insulation’’ under authoritarian rule has now become a standard argument in explaining East Asian development. It has also been extended to explain successful economic reforms in other regions.22 It is believed that development requires a concerted effort that is often undemocratic. The seminal study of Gerschenkron argues that late- comers to the world economy need a centralized approach to industrializa- tion and economic growth.23 ‘‘Catching up’’ demands a more centralized mechanism (often performed by the state) for capital mobilization, industrial adjustment and technology upgrading. The economic success of Japan, and the rapid industrialization and growth of Taiwan, South Korea and Singapore, have been attributed to the presence of an interventionist government that puts economic development as its top priority. The ability of a government to do so, according to the dominant literature, depends
upon the high degree of political autonomy of the state from sectional interests and popular pressure, and the capacity of the state to implement developmental programs effectively. This autonomy and capacity in turn derive from the authoritarian nature of East Asian states, a product of their historical processes of state building.
Authoritarianism is thus seen by many as a facilitating factor in develop- ment. Authoritarian rule is said to be characterized by an ability to maintain public order, insulate the policy process from competing social interests, and implement bold reforms regardless of political opposition. In addition, a highly insulated state, limited representation, and a concentrated decision- making apparatus are said to provide the basis for effective management of the economy. In this regard, Taiwan is commonly seen as a classic example of a development-oriented authoritarian state. An authoritarian state structure was institutionalized as soon as the Kuomintang regime took over control of the island from the Japanese in 1945. From the outset, a state of national emergency and martial law was declared, justified on the ground that China was under communist insurrection. Under martial law, major constitutional rights were denied, including the freedoms of the press and association. General elections to the National Assembly and other representative bodies were suspended. Chambers of commerce, industrial associations, labor unions and professional societies were created by Kuomintang initiatives. Other civic organizations not sanctioned by the regime were banned. This ‘‘quasi-Leninist’’ structure, as Cheng puts it, endured nearly forty years until martial law was lifted in 1987.24
The authoritarian regime is said to require little political support because it faced only weak centrifugal forces.25 Legitimacy is deemed to be based on international diplomatic recognition, military presence, and the ability to deliver economic prosperity.26 It is seen as almost congruent with the needs of economic development. In relation to economic development imperatives, the Kuomintang established a small group of elitist economic policy organizations in charge of economic planning. Economic techno- crats who served in these units, such as T. H. Shen, K. Y. Yin, S. C. Tsiang, and later K. T. Li, have been regarded as the masterminds behind Taiwan’s economic success, the bearers of economic rationality who championed the agrarian and industrial reforms.27 In the words of Evans, only a state that is capable of acting autonomously can provide this essential public good.28
The most outstanding example is land reform. A series of measures were implemented from 1949 to 1953, starting from compulsory land rent reduction and the selling of public land, to the Land-to-the-Tiller Program which involved the shift of landownership from landlords to peasants. The reform was initiated by Chen Cheng, then Governor of Taiwan, with the help of a high-powered technocracy – the Joint Commission on Rural Reconstruction.29 The program has often been hailed as a successful exemplar of land reform, thanks to the autonomy of the policy-makers.
All of them had no connection with any of the land interests in Taiwan. Furthermore, the reform was carried out high-handedly without the consent of landlords. This stood in sharp contrast to the failed land reform program of the 1920s and 1930s on mainland China when the Kuomintang was still in power. That program was repeatedly undermined by warlords and Kuomintang politicians who were closely associated with land interests.30
The same factor is said to be in place in relation to our earlier question about the successful policy transition to export-oriented industrialization. The top leadership and the economic bureaucracy were relatively uncon- strained by societal interests. In particular, the moving spirit behind the reform, K. Y. Yin, was a non-Kuomintang technocrat who successively occupied key economic planning positions including the Taiwan Produc- tion Board, Central Trust of China, Industrial Development Commission, Economic Stabilization Board, Council for US Aid, Foreign Exchange and Trade Control Commission, and the Bank of Taiwan.31 Despite being subjected to periodic attacks by his rivals, Yin was able to mobilize the resources and influence accrued to him in these key positions to initiate various reforms. More importantly, policy failure in the trial and error exercise did not result in devastating political consequences for Yin and his allies, thus allowing the technocrats to learn from past policy lessons.
Taiwan’s decades-long stable, authoritarian rule by an autonomous state stands in sharp contrast to Argentina which experienced a rapid succession of regimes and tremendous policy fluctuations. However, we should be cautious in jumping to the conclusion that an autonomous state and insulated technocracy were what had been lacking in Argentina. Quite the contrary, Argentina was not in short supply of strong authoritarian state and insulated technocracy. What is intriguing for our comparison is that, despite the presence of political autonomy and technocratic insulation, Argentina’s economic development remained adrift.
The military regime under Juan Carlos Onganı´a (1966–70) is indicative in this regard. As soon as he took power in 1966, Onganı´a established a coercive regime that later became known as the blueprint example of bureaucratic authoritarianism in Latin America. Onganı´a believed that what Argentina needed was a strong government that could provide political order and create a favorable business climate for investment and growth. Such a strong government would be vested with sufficient authority to set market rules and to compel economic players to follow those rules. In other words, it was to create the kind of ‘‘governed market’’ that Wade describes.32
Assisted by a group of internationally respected Argentine economists headed by Krieger Vasena, Onganı´a put forward a wide-ranging program in 1967 that aimed at attracting foreign investment, promoting industrial efficiency, avoiding radical income redistribution, combating inflation, preventing balance of payment problems, and controlling wage levels. Wynia describes it as Argentina’s most sophisticated and comprehensive
program that defied traditional labels.33 Besides its comprehensive nature, the program avoided giving special favor to particular economic sectors. Export taxes were introduced to prevent huge income flow to the rural producers due to devaluation; protections for domestic industry were lifted to foster industrial competitiveness; and a tough stand on wages was taken irrespective of the opposition from organized labor. In doing so, the Onganı´a government could hardly be seen as taking any partisan posi- tion that characterized the former regimes. Observers note that technocrats such as Krieger Vasena sincerely felt that they were the bearers of economic rationality.34
To govern the market without partisan considerations, Onganı´a insulated himself and his technocrats from the influence of private interests. He believed that technocratic insulation was necessary in order to make policies for the society as a whole according to rational economic principles rather than according to private demands of social groups. A series of measures were taken to achieve insulation. In the name of putting an end to partisan conflicts, all political parties were banned, although no attempt was made to control interest group activities. Economic interest groups were prevented from exerting any influence in the policy-making process; while cabinet officials and government executives were asked to confine to themselves to designing their economic reform measures. Onganı´a himself stayed aloof from social groups and sectional interests.
Despite all these efforts, Onganı´a’s project was not perceived by Argentines as being enacted according to principles of macroeconomic rationality. Rather, it was seen as an attempt by the liberal technocrats and the upper bourgeoisie to subordinate the popular sector and the urban industrialists, as well as the agrarian class.35 When Onganı´a refrained from offering selective favor to sectoral interests, he ended up antagonizing all major sectors. The Confederacio´n General Econo´mica, representing small industrialists, accused the program of denationalizing Argentine industry. The agro-elite organizations, the Rural Society and the Confederacio´n de Asociaciones Rurales de Buenos Aires y La Pampa, withdrew their political support for the government in protest against Onganı´a’s land tax. The Confederacio´n General del Trabajo opposed the antilabor policies. Eventually riots by angry workers broke out in the industrial city of Co´rdoba in 1969, bringing down the Onganı´a regime. The downfall of Onganı´a not only brought back political instability but also the old patterns of inflation, balance of payment crisis, diminishing state revenue, and intense social conflicts.