Democracy around the world is under strain. According to recent measurements of global political freedom, roughly 41 percent of the world’s population now live in countries that are autocratizing — becoming more authoritarian. A new wave of democratic backsliding has pushed levels of freedom down to those not seen since the late 1970s, and many of the 92 autocracies that remain are growing more repressive.
That trend is puzzling given a longstanding belief among many political economists: economic liberalization — privatization, deregulation, and opening markets to trade and investment — would curtail state power and create conditions for democracy. The logic is simple. When citizens no longer depend on the state for jobs, credit, or economic opportunity, they gain autonomy to organize, challenge rulers, and demand political rights. This argument, associated with thinkers like Milton Friedman and Friedrich Hayek and enshrined in the policies of the Washington Consensus, guided reformers around the world.
But the evidence is mixed. In country after country, opening the economy has sometimes coincided with rising human rights abuses and sharper repression. In his book The Road to Repression, Arizona State University political scientist Jose Kaire explains why economic opening can produce the opposite of the expected political liberalization.
The core argument centers on regime insiders: party officials, military officers, state managers, and other elites who control the levers of power. For those insiders, liberalization is not just an economic shift. It is a political threat. Opening markets can create new centers of wealth and influence — independent business actors, civic groups, or opposition figures — that could erode the patronage, privileges, and authority elites rely on.
Leaders who push liberalization therefore face a dilemma. They need to satisfy international lenders, investors, and powerful foreign governments that expect market reforms. At the same time they must keep their ruling coalition intact. If elites are strong relative to the leader, losing their backing risks a coup or political collapse. To secure elite support for reforms that weaken their own direct control, leaders often compensate insiders by stepping up repression of outsiders.
Repression serves a dual purpose in this dynamic. It signals to elites that the leader remains committed to protecting their interests, and it suppresses potential challengers who might benefit from market openings. In other words, crackdowns are not only about silencing dissent; they are instruments of elite management.
Kaire documents this pattern in countries such as Mexico, Malaysia, and Senegal, where liberalization coincided with increases in human rights abuses. His statistical analysis suggests that roughly half of autocracies that opened their economies followed this trajectory. Mexico, for example, shows how presidents used repression against previously tolerated opponents to compensate party insiders for reforms that threatened their political influence.
The effects of opening depend on one key variable: the relative strength of regime elites. When elites are weak, leaders can liberalize without making major concessions, and political repression may not escalate. When elites are powerful, leaders often need to placate them by demonstrating that their grip on power — and on protections for elite interests — remains firm.
Recent developments in Cuba and Venezuela illustrate how these dynamics can play out. Both countries have faced U.S. pressure to loosen state controls and have taken steps toward economic opening. In Cuba, institutional changes under Raul Castro shifted power into party structures and expanded military economic privileges, strengthening insiders and creating incentives for a harder political line to protect their stakes. In Venezuela, the removal of Nicolás Maduro in a U.S. operation in January 2026 has the potential to create space for regime insiders to carve out more autonomy; if that happens, future deregulation could similarly provoke greater repression as elites guard their position.
International factors also matter. Leaders who fear external prosecution or sanctions have additional reasons to remain in power at all costs. Threats from institutions like the International Criminal Court or punitive foreign policies can make rulers more willing to use repression to secure elite loyalty and avoid displacement.
Looking forward, Kaire sees the logic of his argument applying beyond classic market reform to any economic shift that reshuffles the distribution of wealth and influence. One area to watch is artificial intelligence. In China, for example, the party under Xi Jinping has centralized oversight of the AI sector and aligned new tech elites with the leadership, reducing the chance that an independent tech class will challenge established power holders. But if AI or other emerging sectors produce new elites whose success depends on the ruler, those dynamics could either dilute old elites or, if insiders remain strong, trigger more coercive politics.
The broader lesson is that economic opening is not a mechanical path to democracy. It changes who has money and influence, and those changes interact with existing power structures. Where elites feel threatened, opening can provoke a political reaction: more repression, not less. Policymakers and analysts who assume that markets will automatically produce political liberalization should therefore take account of elite politics and the incentives that drive authoritarian survival.
