The Road from Serfdom

Cuba is a puzzle. How has Fidel Castro's regime survived, while other Communist governments have crumbled? Situated less than a hundred miles south of florida, it would appear to be uniquely vulnerable to American influence yet his hold on power is solid. By contrast communist rule has collapsed in the Soviet Union and has been shaken in China. The answer appears to be that Castro with the enthusiastic support of the US government has been able to keep Cuba in a state of economic isolation. This has insulated the Cuban people from outside influence which might encourage them to seek freedom.

In his best known work, the Road to Serfdom, the economist Frederich Hayek argued that the march of socialism posed a danger to the future of liberal democracy. Cuba demonstrates, how the opposite is also true: economic freedom is a danger to the rule of despots. If people win back the right to buy and sell as they wish then they are regaining control over an important part of their lives. If on the other hand the state retains control of the economy then that gives it enormous power over its people.

The most powerful tool available to a dictator is, as we've already seen, the ability to prevent your followers from trading with foreigners. This keeps outside influence to a minimum and limits reduces the flow of information from abroad that may challenge the regimes version of events. Trade with foreigners also helps to introduce technologies that can be exploited by opposition movements. For example, the Orange revolution in Ukraine was largely organised via mobile phones, which made it easier for the leaders of the protests to communicate and hence to co-ordinate their actions.

The free movement of people can also undermine one-party rule. The emergence of democracy in Taiwan can in part be attributed to the decision of the governing elite to send their children to American universities. This exposed them to life in a successful democracy, which encouraged them to demand the same for their own country.

It is not only by isolating people that dictators can use state intervention in the economy against their people. Nationalised industries provide them with an opportunity to dole out patronage to supporters and deny services to opponents.

This is a side to the argument about globalisation which we don't hear very much about and that has consequences. The anti-globalisation movement have been able to claim for themselves the mantle of the defenders of democracy, while opposing precisely the kind of changes that can do the most to promote political freedom.