Capitalism at Gunpoint

I lived in Singapore for six years, from 2009 to 2015, and I was married there. So much of what I became happened because of my time in the Lion City. I didn’t appreciate it as much then because it’s hard to love a place when it’s 90°F every day, with 90% humidity and one downpour in the afternoon thrown in for good measure. But now that I look back on it, I can’t believe how fortunate I was to live on The Rock.

One of the first books I read in 2009 upon my arrival was The Miracle by Michael Schumann. He details the Asian economic miracle country by country. In Singapore’s chapter, he quoted Lee Kuan Yew as saying there were two reasons for Asia’s miracle: the American navy and state-based capitalism. State-based capitalism, to me, seemed like a contradiction.

But now that I see Donald Trump corralling the Tech Bros to build Stargate AI, I wonder if I missed a trick. If state-based capitalism does exist, is that just a euphemism for corporatism or fascism? And if not, how does it differ?

How Did Singapore Rise in the First Place?

Singapore’s meteoric rise from a struggling post-colonial state to an economic powerhouse has fascinated policymakers and analysts alike. When the Malaysian Parliament voted 126-0 to expel Singapore in 1965, it was the first and only time in history that a country was given independence against its will.

Central to this transformation was Lee Kuan Yew’s unique model of “state-based capitalism,” which blended authoritarian governance with market-driven economics.

As we examine this model more closely, it’s crucial to identify the distinctions between ideologies like this different kind of capitalism and fascism… if there are any.

While both involve significant government intervention and curtailment of individual freedoms, we’ll see their foundations, goals, and methods are profoundly different.

State-Based Capitalism: LKY’s Practical Technocracy

Pragmatism drove LKY’s governance of Singapore. He and his technocrats controlled the economy, steering growth through state ownership of key industries and central planning. But unlike fascist regimes, the Lion City had a market economy that looked outward, embracing globalization.

Economic development was the north star, and LKY ruthlessly calibrated policies to ensure stability, efficiency, and growth. Meritocracy and anti-corruption measures became pillars of governance, alongside promoting “Asian values” that prioritized communal welfare over individual rights.

Yes, this approach was authoritarian; LKY was no saint. His government stifled political dissent and limited personal freedoms, but the objective was clear: create a thriving and stable society. The results speak for themselves: world-class infrastructure, high standards of living, and a business-friendly environment that continues to attract international investment.

Fascism: Totalitarianism Rooted in Ultranationalism

Fascism, on the other hand, is an entirely different beast. Extreme nationalism, racial superiority, and the idea of national rebirth make up its lifeblood. Totalitarian by nature, fascists control every aspect of society—economy, culture, education—leaving no room for independent thought or dissent.

As Il Duche, Benito Mussolini, once said, “All within the state. Nothing outside the state. Nothing against the state.”

While LKY’s Singapore had strong leadership, it did not cultivate the cult of personality typical of fascist regimes, nor did it glorify violence or militarism. Fascism’s reliance on systematic violence and terror to suppress opposition starkly contrasts with Singapore’s emphasis on technocratic governance and stability. Moreover, fascist states often isolate themselves economically, pursuing autarky. Singapore, in contrast, opened its doors to international trade and foreign capital. To this day, Singapore doesn’t charge tariffs on any nation, even if a nation charges them.

Where the Lines Diverge

There are five key areas where state-based capitalism and fascism differ.

1. Economic Priorities: While both systems involve state intervention, Lee’s model prioritized economic development and pragmatism. Fascism subordinates economic concerns to ideological and nationalistic goals.

2. Ethnic Policies: Singapore’s policies had ethnic dimensions, but they were not rooted in the kind of racial supremacy central to fascism.

3. Global Engagement: Fascist states leaned towards economic isolation. Singapore embraced globalization, becoming one of the most trade-dependent nations in the world.

4. Ideological Foundation: Fascism is driven by a totalizing ideology; Lee’s governance was pragmatic and technocratic.

5. Methods of Control: While authoritarian, Singapore’s regime relied on legal mechanisms and institutional stability rather than systematic violence and terror.

LKY’s state was outward-looking; Mussolini’s was very much inward-looking.

Charlie Munger on Lee Kuan Yew

One of my heroes, Charlie Munger, the late, great Vice Chairman of Berkshire Hathaway, once said:

There aren’t that many people like Lee Kuan Yew who ever lived. So, of course, I admire him. I have a bust of Lee Kuan Yew in my house. I admire him that much. Lee Kuan Yew had the best record as a nation-builder. He had probably the best grade record that ever existed in the history of the world. He took over a malarial swamp with no army … And pretty soon, he turned that into this gloriously prosperous place.

Munger added:

His method for doing it was so simple. He said, ‘Figure out what works and do it.’ Now, it sounds like anybody would know that made sense. … he was a very smart man, and he had a lot of good ideas. And he absolutely took over a malarial swamp and turned it into modern Singapore in his own lifetime. It was absolutely incredible.

Munger didn’t think that Singapore-style governance would work in America, and he was right, but that didn’t stop him from marveling at what LKY accomplished.

A Model for Discussion, Not Replication

Lee Kuan Yew’s Singapore offers a compelling case study for leaders grappling with development challenges, but it is not a one-size-fits-all solution. Its success was rooted in a unique historical and cultural context. Trying to draw parallels to fascism — or worse, justify fascist tendencies by referencing Singapore’s success — is intellectually lazy.

The reality is this: strong state control can take many forms, but the principles underpinning that control matter immensely. Singapore’s state-based capitalism was about building a nation; fascism was about dominating it. Lee’s model, while not perfect, was ultimately pragmatic and forward-looking. Fascism is backward-looking, driven by fantasies of a glorified past.

Understanding these distinctions is vital in a polarized world tempted by authoritarian solutions. Let’s avoid conflating pragmatism with oppression. After all, the devil is in the details.

Wrap Up

I felt the need to walk through this for my sanity. Thanks for joining me.

If The Donald can rally the Tech Bros to build something valuable and beneficial for American citizens, we should welcome it. But it’s going to have to be more than a photo op. Results have always mattered to Trump’s conservative base. He, least of all, is immune to the court of public opinion.