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What makes a capitalist system authoritarian?

25 November 2021

3 mins

Dr. Gerhard Schnyder & Dr. Dorotta Sarai recently published an academic paper that challenges the view that state-owned enterprises have a passive stance towards institutions, drawing on historical institutionalist and institutional work frameworks. Following this, Business & Society published a blog covering the topic of this paper. Check it out below.


Authoritarian trends are on the rise in many liberal democracies and threaten, according to some observers, fundamental values – such as the rule of law and judiciary independence – and, in Europe, even the integrity of the European Union. Some governments have used the COVID-19 pandemic to further restrict individual rights as well as increase their intervention in the economy. But how can we tell when increasing state intervention is a healthy correction of markets and when we should talk about a more problematic phenomenon: ‘authoritarian capitalism’?

Photo: Koshu Kunii

Management scholars tend to use ‘authoritarian capitalism’ to designate any capitalist system where the state plays a more prominent role than has been considered ‘optimal’ since the 1980s or so (e.g., Situ et al. 2018). We challenged this view in our recent paper, arguing that the simplistic application of the political theory concept of authoritarianism to the economic realm is problematic. We do not reject the concept of authoritarian capitalism per se. Rather, we argued that it needs to be used with caution and requires a clear definition instead of using it as a facile label to describe any business systems where the state plays a more prominent role than we consider optimal. Crucially, such a definition also requires a narrower and more rigorous conceptualisation of how political authoritarianism translates into economic authoritarianism.

Authoritarianism designates a political system, which diverges from liberal democracy in two ways:  Firstly, it restricts citizens’ right to participate in politics and to publicly contest power. Secondly, it aims to replace pluralism and diversity with obedience and conformity. Belarus, for example, can be considered authoritarian according to these criteria. For instance, electoral alternation in power is all but impossible, as was illustrated by last year’s presidential elections when Alexander Lukashenko, the incumbent, was declared the winner– a highly unlikely result that let to mass protests, which were violently repressed. Similarly, the recent forced landing of the Ryanair flight 4978 by the government to arrest a vocal journalist on his way from Athens to Vilnius, illustrates the force with which the Lukashenko regime suppresses any dissent.

To read the full article, please visit the Business & Society website here.


We would like to thank Dr. Gerhard Schnyder for sharing this blog with us. You can read the original research paper here and check out more of her work here.

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