The Leviathan’s Growth: Arguing the Case for Illiberal Prosperity

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The Counter-Argument: Why Economies Can Prosper Without Liberal Pillars

Historians and economists often point to "Late-comer Advantage" and "State-Led Mobilization" to explain how prosperity can emerge in restrictive environments.

1. The Efficiency of Centralized Resource Mobilization

In the early stages of industrialization, fragmented markets can be inefficient. A centralized government can bypass the "market hinterland" by forcibly directing capital, labor, and raw materials toward strategic sectors (like steel or semiconductors).

• Example: The Soviet Union from the 1930s–50s transformed from an agrarian society into an industrial superpower capable of defeating Nazi Germany and launching satellites, despite having zero private property protection or information freedom.

2. "Order" as a Substitute for Independent Judiciary

While an independent judiciary is ideal for resolving disputes, a strong, predictable Autocratic Stability can serve as a temporary substitute. If a regime guarantees that it will protect certain favored investors or state-owned enterprises, capital will flow in because the "political promise" provides enough certainty for a 20-year ROI, even without a formal legal shield.

3. Directed Innovation via "State Capitalism"

Information freedom is vital for the creation of new ideas, but imitative growth (the catch-up phase) does not require it. A state can prosper by acquiring foreign technology and scaling it through a captive market.

• Example: South Korea and Taiwan during the 1960s and 70s. Both achieved "miracles" under martial law or authoritarian regimes with restricted information, controlled labor movement, and limited judicial independence. The state forced the market to form.

4. The "Security of Results" Over the "Security of Rights"

In a "Policy Testing Ground," the lack of private property protection is often offset by massive state subsidies. Investors tolerate the risk of seizure if the immediate profit margins—driven by cheap labor and state-backed monopolies—are high enough to compensate for the lack of long-term legal safety.

Conclusion 

The opposite argument suggests that Economic Growth is a function of Resource Alignment, not just Liberty. While the liberal model creates the most resilient economy, the authoritarian model can create the most explosive early-stage growth by crushing internal friction and forcing a country into the industrial age. The tragedy, as history also proves, is that these "miracles" often struggle to transition into sustainable innovation once the "catch-up" phase ends.

 

The Three Pillars of Commitment: “Bao 報”, “Bao 保”, and “Bao 包” in Chinese Culture and Their Link to Deng Xiaoping’s Contracting System

Chinese society has long been shaped by a set of implicit cultural logics that define relationships, duties, and social expectations. Among these, the trio of “報” (repayment), “保” (preservation), and “包” (total responsibility) forms a subtle but powerful framework. Although these three characters share phonetic similarity, their meanings extend in different directions—together forming a uniquely Chinese way of understanding obligation and trust.

1. 報: The Logic of Reciprocity, Gratitude, and Vengeance

In Chinese thought, 報 carries three major strands:

1. 報償 — to repay what one has received.

2. 報答 — to return kindness, often with loyalty.

3. 報仇 — to repay harm, often through vengeance.

This dual nature—gratitude and vengeance—reflects the Confucian belief that relationships are moral transactions. Good deeds must not go unanswered; nor should injustice remain unresolved. To Chinese society, one who cannot “報” is unreliable, unrooted, and unbound by duty.

2. 保: The Responsibility to Uphold, Maintain, and Defend

保, by contrast, emphasizes continuity. It implies:

• to preserve what has been entrusted,

• to maintain stability, and

• to protect people or resources under one’s care.

“保” expresses a commitment not to innovate radically but to safeguard what must not be lost—family, property, agreements, loyalty. It is the cultural basis for why Chinese clans emphasized guardianship and why imperial administrators were judged by their steadiness, not flamboyance.

3. 包: Total Responsibility, Full Commitment

包 suggests wholeness, completeness, and full accountability.
To “包” something is to take full charge of it, without excuses or partial responsibility.

In traditional society, someone who “包” a task is not only performing it—they are guaranteeing its outcome. This became the root concept behind many contractual, guild, and village arrangements.

Connecting These Concepts to Deng Xiaoping’s Contracting System (承包制度)

During the reform era of the late 1970s and 1980s, Deng Xiaoping introduced the system of 承包—contract responsibility, applying market principles to agriculture, state-owned enterprises, and local governance.

This policy resonated strongly with traditional cultural principles:

• 承包 = 包 (full responsibility)
  Contractors guaranteed output, profit, or quotas, taking total responsibility for results.

• 成功要報 (reward)
  Those who met quotas were rewarded—fitting the moral logic of “報償”.

• 地方需保 (preserve stability)
  Local officials had to “保” order and continuity, upholding production and social stability.

But the Pitfalls: When Cultural Concepts Become Economic Distortions

The cultural resonance of 報、保、包 made the contracting system feel natural—but also created long-term weaknesses:

1. 包 leads to over-responsibilization
   Local cadres “包” everything—taxes, growth, stability—leading to abuse, corner-cutting, and falsification.

2. 報 encourages transactional loyalty
   Rewards created networks of personal repayment (報償), sometimes drifting into corruption or patron-client ties.

3. 保 reinforces risk-aversion
   Officials avoided bold reform to “保” their positions, leading to stagnation or bureaucratic conservatism.

Thus, the contracting system succeeded in unleashing productivity but also carried deep cultural risks.
The trio of 報、保、包—core to Chinese ethics—became tools for both rapid development and systemic imbalance.

The State's Hidden Tax: Analyzing William Rees-Mogg's Case Against Fiat Currencies in The Crisis of World Inflation

 

The State's Hidden Tax: Analyzing William Rees-Mogg's Case Against Fiat Currencies in The Crisis of World Inflation

Published in 1974, William Rees-Mogg’s The Crisis of World Inflation offers a stark and uncompromising critique of modern monetary systems. The book’s central argument revolves around the historical inevitability of failure for fiat currencies—money declared legal tender by a government but not backed by a physical commodity like gold.

The Inherent Flaw of Fiat Money

Rees-Mogg contends that history offers a clear lesson: all fiat currencies, regardless of the political system that issues them, eventually fail due to inflation. The root cause is the irresistible temptation for governments to print money as a short-term solution to fiscal problems. This process, evident in crises like the post-2008 financial bailout and the mass money creation during the COVID-19 pandemic, inevitably leads to the erosion of currency value.

Inflation as Hidden Taxation

The author defines inflation not merely as rising prices, but fundamentally as a form of hidden taxation—the state taking money from its citizens by stealth. Taxation is politically difficult, but printing money provides governments (whether democratic or autocratic) with an easier, less obvious mechanism to seize purchasing power.

The mechanism is explained using Irving Fisher’s Quantity Theory of Money, summarized by the equation MV = PT:

• M (Money Supply): The amount of money in the economy.

• V (Velocity): The rate at which money is spent.

• P (Prices): The general price level.

• T (Transactions): The number of transactions.

Rees-Mogg argues that when governments significantly increase the money supply (M), the easiest way for the equation to balance is for prices (P) to rise, absorbing the extra currency in the system. The book serves as a foundational warning against government debasement of the currency and implicitly encourages readers to consider real investments that hold value against monetary instability.

Rerunning the 1970s: Why Britain's Economic and Political Crisis Signals Doom

 

🕰️ Rerunning the 1970s: Why Britain's Economic and Political Crisis Signals Doom

As a historian, the parallels between Britain's current predicament and the catastrophic breakdown of the 1970s are not merely suggestive—they are strikingly structural. The argument, powerfully articulated in David Starkey’s analysis, suggests the nation is "rerunning the 1970s at high speed," heading toward an inevitable financial and political collapse driven by systemic irresponsibility. The key reasons for this pessimism lie in both dire economic metrics and a profound political and social decay.

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The Looming Financial Crash: 1976 on Steroids

The current economic situation is dangerously mirroring the lead-up to the 1976 IMF crisis, but magnified to an almost unmanageable degree. The central issue is debt and the cost of servicing it:

• Unsustainable Debt Burden: In 1976, when the UK had to seek a bailout from the International Monetary Fund (IMF), the national debt stood at roughly 30% to 40% of GDP. Today, the national debt is nearing 100% of GDP, demonstrating a far greater and riskier level of indebtedness.

• The Debt Spiral: Interest payments alone are consuming approximately £100 billion a year. The most alarming statistic is the reported recent instance of borrowing: for every £20 billion borrowed in a single month, £16 billion (80%) was spent merely on servicing the interest. This mirrors the behavior of a company or individual using new debt to pay off old debt—a classic sign of financial insolvency.

• Inconceivable Bailout: A rescue package equivalent to the one required in 1976 would now demand an unprecedented 50% of the IMF's total credit reserves. The sheer scale of the required aid makes an external rescue effectively impossible, leaving the UK to manage the crisis alone.

This economic recklessness finds a historical echo in the Anthony Barber Boom (1972-1973).¹ As Chancellor of the Exchequer, Barber’s expansionary policies led to catastrophic inflation, exemplified by urban property prices tripling in value in a single year. Such mismanagement under a Conservative government created the instability that ultimately led to the 1970s crises.

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Political and Social Decay: The Return of the Winter of Discontent

Economic failure rarely occurs in isolation; it is invariably accompanied by political and social fragmentation. The current environment is replicating the instability that led to the Winter of Discontent (1978–79):

• Labour Unrest and Public Service Collapse: The 1970s were characterized by widespread strikes and failing public services.² Today, the crisis is evident in the National Health Service (NHS), with doctors already on strike and nurses announcing similar action.³ This labor unrest signals a breakdown in the government's ability to maintain essential public infrastructure and manage industrial relations.

• Ideological Drift and Failure to Govern: The core political failure is identified as a lack of ideological coherence and a failure to implement promised policy. The historian Sir Keith Joseph famously critiqued the post-war Conservative establishment in the 1970s, stating he had been "a cabinet member of a conservative government that's done nothing conservative." The current crisis is viewed as a continuation of this malaise, where decades of governments have failed to uphold their stated principles, leading to the current crisis and the perceived loss of control.

The convergence of uncontrollable debt, inflation, and public sector paralysis presents a picture of a nation re-enacting its most turbulent post-war decade, only with the economic stakes significantly higher.

How Malaysia's Bumiputra Policy Led to the Rise of a Wealthy Chinese Elite

 

How Malaysia's Bumiputra Policy Led to the Rise of a Wealthy Chinese Elite

The Bumiputra policy, enacted in 1971 as part of the New Economic Policy (NEP), was a landmark affirmative action program in Malaysia. Its primary goal was to address the economic disparities that existed between the Bumiputra (literally "sons of the soil," a term for ethnic Malays and other indigenous peoples) and non-Bumiputra, particularly the Chinese, who dominated the commercial sector. The policy was a response to the 1969 race riots and aimed to create a more equitable distribution of wealth and opportunities. Over four decades, however, this policy, despite its intentions, inadvertently fostered the growth of a wealthy Chinese elite.

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Unintended Consequences of Affirmative Action

The Bumiputra policy aimed to increase Bumiputra ownership of the corporate sector, enhance their participation in higher education, and elevate their representation in the professions. It included measures such as quotas for university admissions, reserved business licenses, and government contracts. While these policies did, to a degree, create a nascent Bumiputra middle and upper class, they also had a significant and unanticipated effect on the Chinese business community.

The policy's structure often created a need for Chinese-owned firms to partner with Bumiputra individuals or entities to secure lucrative government contracts or business licenses. These partnerships, known as "Ali-Baba" arrangements (referencing a Chinese entrepreneur 'Ali' and a Bumiputra front 'Baba'), were common.In these arrangements, the Bumiputra partner would act as a nominal owner, leveraging their privileged status to gain access to opportunities, while the Chinese partner would provide the capital, expertise, and management. This system allowed many Chinese businesses to circumvent the restrictions of the policy, enabling them to expand and thrive. The Bumiputra partner, in many cases, would receive a fee or a share of the profits without being actively involved in the business operations. This practice, while subverting the policy's intent, solidified the position of existing Chinese conglomerates and provided a new avenue for growth.

Furthermore, the policy's emphasis on state-led economic development and the allocation of licenses and contracts often created an environment ripe for corruption and rent-seeking. This environment disproportionately benefited politically connected individuals from all ethnic groups, including the Chinese. Those Chinese businesspeople who had ties to the ruling political parties or key government officials were able to navigate the policy's complexities and secure a competitive advantage. This further concentrated wealth and power within a select group of Chinese entrepreneurs, a class of "crony capitalists."

The policy also encouraged a form of economic leakage. Many wealthy Chinese families, feeling that their long-term economic prospects were precarious under the Bumiputra policy, began to invest their capital overseas. This phenomenon, often referred to as a brain drain and capital flight, meant that while the policy was intended to redistribute wealth domestically, it instead pushed some of the most dynamic and wealthy non-Bumiputra individuals and firms to seek opportunities abroad, further entrenching the wealth of those who stayed and adapted to the policy's framework. This flight of talent and capital had long-term implications for the Malaysian economy.

Ultimately, while the Bumiputra policy aimed to empower the Malay majority, its complex implementation and unintended consequences allowed a select group of Chinese entrepreneurs to adapt and prosper, sometimes through partnerships that exploited the policy itself. Thus, the very policy designed to reduce ethnic wealth disparities paradoxically contributed to the rise of a new, well-connected, and affluent Chinese elite in Malaysia.

When Constraint Thinking Becomes Control: TOC, the USSR, and the Limits of Systemic Focus

When Constraint Thinking Becomes Control: TOC, the USSR, and the Limits of Systemic Focus

Introduction

The Theory of Constraints (TOC) is a powerful method for identifying and managing the limiting factor in a system to achieve a goal. Its Five Focusing Steps offer a logical path for driving progress, especially in business and operational contexts. But what happens when TOC-style thinking is applied not to a company — but to an entire country?

The Soviet Union's obsessive focus on heavy industry in the 20th century presents a compelling case study. At first glance, it seems like a national-level application of TOC: a clear constraint, a national goal, and complete subordination of all resources to elevate the system. However, this raises critical questions about the ethical, adaptive, and human limitations of applying TOC principles without balance.

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1. Identifying the Constraint

For the USSR, the constraint was clear: industrial and economic underdevelopment relative to Western powers. Stalin and other Soviet leaders believed survival and relevance on the world stage required overcoming this gap — fast. Industrial production, especially in heavy sectors like steel, coal, and defense, became the nation’s bottleneck to global power.

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2. Exploiting the Constraint

To exploit this constraint, the Soviet state directed massive human and material resources toward heavy industry. The Five-Year Plans were TOC in action: eliminate waste, reduce variation, increase output at the constraint. The USSR bypassed market signals and consumer demand, focusing on capital goods to maximize throughput in strategic sectors.

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3. Subordinating Everything Else

Subordination in TOC is usually about aligning decisions to support the constraint. In the USSR, this meant subordinating everything — from education and science to agriculture and consumer welfare — to the goals of industrialization. Individual rights and desires were often cast aside in service of "the plan."

This step, while mechanically consistent with TOC, lacked the voluntary alignment and respect for individual needs that make TOC effective in organizations. It became coercive, not collaborative.

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4. Elevating the Constraint

Once the system had done all it could with existing resources, the USSR sought to elevate the constraint by:

• Creating new industrial cities from scratch

• Importing foreign machinery and expertise

• Driving massive projects in defense and space

These efforts expanded capacity but also exposed a deeper flaw: the elevation was focused only on quantitative throughput, not qualitative growth, innovation, or adaptability.

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5. Reassessing — or Failing to

TOC emphasizes revisiting the constraint: once it's no longer the bottleneck, identify the next one. But the USSR failed to shift focus when heavy industry was no longer the limiting factor. By the 1970s, the new constraints were innovation, efficiency, and responsiveness — but the system kept acting as if steel and tanks were still the bottlenecks.

This fixation led to stagnation, inefficiency, and eventual collapse.

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The Unintended Consequences of Systemic Focus

Applying TOC without balance can yield dangerous side effects, especially at the scale of a nation:

• Suppressed human needs: The needs of individuals — for freedom, self-expression, and consumption — were systematically ignored.

• Rigidity and misalignment: The system failed to adjust when the real constraint moved. This made the USSR increasingly disconnected from the modern world.

• Local optima, system failure: Optimizing for industrial output created impressive outputs — tanks, rockets, steel — while people lacked basic goods and quality of life.

• Coerced subordination: Alignment wasn’t achieved through shared understanding, but through fear, ideology, and repression.

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Was It Really TOC?

What the USSR practiced had superficial resemblance to TOC — identifying constraints, subordinating, elevating — but missed the heart of it: ongoing learning, voluntary alignment, and respect for system dynamics.

TOC, properly applied, is not a blunt tool of control. It's a method for clarity, focus, and flow, grounded in logic and feedback. In the hands of a closed, authoritarian system, it became rigid and harmful — a machine built for output but blind to its consequences.

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Conclusion

The Soviet Union’s industrial strategy illustrates both the power and the peril of constraint-focused thinking. When used wisely, TOC is a liberating framework that reveals leverage and drives systemic improvement. When used dogmatically — without feedback, ethics, or adaptability — it can turn into a form of control that undermines the very system it seeks to improve.

TOC is a tool. How it's used determines whether it builds thriving systems — or brittle empires.

From Hawkers' Alleys to Mega-Malls: Skinner's Theory and Singapore's Evolving Markets

 

From Hawkers' Alleys to Mega-Malls: Skinner's Theory and Singapore's Evolving Markets

G. William Skinner's market theory, rooted in the study of traditional rural Chinese markets, provides a powerful lens to understand how communities organize around economic nodes. While Singapore's vibrant, modern shopping malls stand in stark contrast to Skinner's periodic peasant markets, his theoretical insights, when adapted, can illuminate their proliferation and function within the city-state's unique historical evolution.

The Historical Evolution of Singapore's Markets

Singapore's journey from a humble trading post to a global metropolis is mirrored in the evolution of its market structures:

• Early Trading Hubs (19th Century): From its founding by Stamford Raffles in 1819, Singapore thrived as a free port. Early "markets" were bustling riverside trading posts, shophouse clusters, and street vendors catering to a diverse population of merchants, laborers, and immigrants. These were largely organic, driven by the immediate needs of a burgeoning port city.
• The Rise of Wet Markets and Hawkers (Early 20th Century onwards): As the population grew, formal "wet markets" (巴剎, from Malay "pasar") emerged, providing fresh produce, meat, and seafood. Alongside these, highly localized hawker centers (小販中心) proliferated, offering affordable prepared food. These were deeply woven into the fabric of daily life, serving as primary food sources and important community gathering points in specific neighborhoods. They functioned as vital, albeit fixed-location, lower-tier economic nodes, providing essential goods and services to a defined catchment area.
• Department Stores and Early Shopping Centres (Post-WWII to 1970s): With increasing affluence and Western influence post-WWII, department stores like Robinsons and John Little became symbols of modern retail. The 1970s saw the emergence of Singapore's first purpose-built, air-conditioned shopping centers (e.g., Tanglin Shopping Centre, Peninsula Plaza), catering to a more affluent clientele and offering a broader range of manufactured goods beyond daily necessities.
• The Proliferation of Modern Malls (1980s onwards): Driven by rapid urbanization, rising disposable incomes, and active government planning (especially the development of HDB new towns with integrated commercial complexes), shopping malls began to proliferate across the island. This marked a deliberate shift from organic market growth to centrally planned, comprehensive retail and lifestyle hubs.

Compatibility: Skinner's Framework in Modern Singapore

Despite the vast differences in context, Skinner's core tenets still offer explanatory power for Singapore's mall phenomenon:

1. Hierarchical Retail System:

   • Lowest Tier (Heartland/Neighbourhood Malls): Akin to Skinner's "standard markets," malls integrated into HDB towns (e.g., Junction 8, Tampines Mall, even smaller community centers with retail components) serve the daily and frequent needs of residents in their immediate vicinity. These are the primary shopping destinations for routine purchases and casual dining, connecting clusters of housing estates.
   • Middle Tier (Regional Malls/Specialized Districts): Larger malls like VivoCity (HarbourFront), Nex (Serangoon), or malls within specialized districts like Bugis Junction/Bugis+, serve broader regions of Singapore, offering a wider range of fashion, electronics, and entertainment options. They act as "intermediate market towns," drawing people from several HDB towns or districts for more specific shopping trips.
   • Highest Tier (Luxury/Tourist/CBD Hubs): At the pinnacle are iconic luxury malls and integrated resorts in the Central Business District or prime tourist zones (e.g., ION Orchard, Ngee Ann City, Marina Bay Sands, Jewel Changi Airport). These are Singapore's "county seats" or even "macroregional cores," showcasing global brands, high-end dining, and major attractions, drawing visitors from across Singapore, Southeast Asia, and globally.

2. Spatial Organization and Socio-Cultural Functions:

   Singapore's malls are not merely retail spaces; they are deeply ingrained in its social fabric. In a dense, hot urban environment, they serve as vital "third places" – air-conditioned sanctuaries for socializing, family outings, and community gatherings. They are popular meeting points, venues for casual meals, and escape from the heat and humidity. This replicates the social nexus function of Skinner's traditional markets. Furthermore, malls are crucial sites for cultural transmission, displaying global trends and influencing consumer behavior, and providing spaces for Singapore's multi-racial society to interact and share experiences.

3. Modern "Periodicity" and Consumer Rhythms:

   While malls are open daily, their activity cycles exhibit a modern "periodicity." Weekends and public holidays witness massive surges in foot traffic, becoming concentrated "market days" for leisure and larger purchases. Major national sales (like the Great Singapore Sale), festive seasons (e.g., Chinese New Year, Hari Raya, Deepavali), and specific mall-hosted events (performances, exhibitions) create intense, time-limited shopping "periods" that drive significant economic and social activity, mirroring the concentrated energy of traditional market fairs.

4. Singapore as a Macroregional Core:

   Singapore, as a highly urbanized city-state, can be seen as its own "macroregion." Within this compact space, the hierarchy of malls organizes internal consumption patterns. Externally, Singapore functions as a dominant "macroregional core" for luxury retail, healthcare, and tourism in Southeast Asia, attracting shoppers and capital from neighboring countries, reflecting a core-periphery dynamic in a globalized context.

Limitations: The Urban Paradox

Despite the explanatory power, significant divergences exist:

• Planned vs. Organic Evolution: Unlike Skinner's largely organic, bottom-up market systems, Singapore's mall landscape is predominantly a product of deliberate, top-down government planning and large-scale corporate development, often integrated into public housing estates. This is a fundamental difference in origin.
• Compactness and Hyper-Connectivity: Singapore's small geographical size and world-class public transport network (MRT, buses) mean nearly all malls are highly accessible to most residents. This high connectivity somewhat blurs the rigid boundaries of Skinner's market catchment areas, as consumers can easily travel between tiers for different needs.
• From Commodities to Experiences: While early Singaporean markets provided basic necessities, modern malls, especially higher-tier ones, are less about mere commodity exchange and more about offering integrated lifestyle experiences, entertainment, and luxury goods – a fundamental shift in value proposition.
• Globalized vs. Localized Focus: Singapore's malls are deeply integrated into global supply chains, featuring international brands and catering to a highly diverse and transient population of expatriates and tourists, a scale of globalization far beyond Skinner's localized rural markets.

Conclusion

Skinner's market theory, originally conceived for a vastly different context, provides a valuable framework for dissecting the organizational patterns and social functions of Singapore's shopping malls. It highlights how hierarchical structures persist even in hyper-modern retail, and how these nodes continue to serve as crucial social and cultural centers. However, the unique historical trajectory of Singapore's urban development, its compactness, advanced infrastructure, and globalized nature, necessitate a nuanced application of the theory, acknowledging a transformation from traditional economic hubs to sophisticated, integrated lifestyle destinations.