Overview

Developing Asia has been the site of some of the last century's fastest growing economies as well as some of the world's most durable authoritarian regimes. Many accounts of rapid growth alongside monopolies on political power have focused on crony relationships between the state and business. But these relationships have not always been smooth, as anti-corruption campaigns, financial and banking crises, and dramatic bouts of liberalization and crackdown demonstrate. Why do partnerships between political and business elites fall apart over time? And why do some partnerships produce stable growth and others produce crisis or stagnation?In Precarious Ties, Meg Rithmire offers a novel account of the relationships between business and political elites in three authoritarian regimes in developing Asia: Indonesia under Suharto's New Order, Malaysia under the Barisan Nasional, and China under the Chinese Communist Party. All three regimes enjoyed periods of high growth and supposed alliances between autocrats and capitalists. Over time, however, the relationships between capitalists and political elites changed, and economic outcomes diverged. While state-business ties in Indonesia and China created dangerous dynamics like capital flight, fraud, and financial crisis, Malaysia's state-business ties contributed to economic stagnation.To understand these developments, Rithmire presents two conceptual models of state-business relations that explain their genesis and why variation occurs over time. She shows that mutual alignment occurs when an authoritarian regime organizes its institutions, or even its informal practices, to induce capitalists to invest in growth and development. Mutual endangerment, on the other hand, obtains when economic and political elites are entangled in corrupt dealings and invested in perpetuating each other's dominance. The loss of power on one side would bring about the demise of the other. Rithmire contends that the main factors explaining why one pattern dominates over the other are trust between business and political elites, determined during regime formation, and the dynamics of financial liberalization. Empirically rich and sweeping in scope, Precarious Ties offers lessons for all nations in which the state and the private sector are deeply entwined.

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9780197697535

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Reviews

In Precarious Ties, Rithmire delves into one of the most puzzling aspects of China's economic development: the unusually dangerous relationship between business and political elites in an authoritarian country. * David Barboza, Co-Founder of The Wire China * Meg Rithmire has brought finance into the study of Asian political economy with a vengeance. Her comparative analysis of three diverse authoritarian systems masterfully details how trust and alignment between business and the state tend to disintegrate over time, with politically explosive implications. Interested in what China's growing financial woes might mean for its politics? Read this book. * Dan Slater, James Orin Murfin Professor of Political Science, University of Michigan *

Author Information

Meg Rithmire is the F. Warren McFarlan Associate Professor in Business, Government, and International Economy at Harvard Business School. She is the author of Land Bargains and Chinese Capitalism: The Politics of Property Rights under Reform. Her work on state-business relations, finance in Asia, and China's internationalization has been published in World Politics, Comparative Politics, and International Security, among other journals.

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