In an e-mail interview with WSJ in July last year, Milton Friedman spoke on China and India:
Any thoughts on a China versus India comparison?
Friedman: Yes. Note the contrast. China has maintained political and human collectivism while gradually freeing the economic market. This has so far been very successful but is heading for a clash, since economic freedom and political collectivism are not compatible. India maintained political democracy while running a collectivist economy. It is now unwinding the latter, which will strengthen freedom of all kinds, so in that respect it is in a better position than China.
Read the whole interview here.
Is economic freedom really incompatible with political collectivism? What about Singapore? Singapore has maintained its economic freedom and political collectivism for decades and I have said something to the effect that this two features could not stand side by side forever before. It might still happen. But I am now far less confident in this prediction's ability (or is it simply our belief?!) to foretell what is going to happen in that country than before.
Despite much advancement in our knowledge of political economy, we still know very little on how political and economic institutions co-evolve.