By Chrystia Freeland

NEW YORK Feb 23 (Reuters) - Are we outsourcing repression to China? That is the fear driving stepped-up scrutiny of labor conditions at Foxconn, the consumer electronics maker that assembles products for a number of Western technology companies, most prominently Apple.

As one blogger put it, before watching the latest high-profile investigation, aired this week on the ABC television news program "Nightline": "I had been worried that after I watched the report, I'd feel angst-ridden and guilty about using my iPad, iPhone, or MacBook Pro."

An independent assessor working with the Fair Labor Association, a nonprofit group that Apple has hired to audit conditions at the plants, said the California company was facing its "Nike moment," a reference to the 1990s,when the sporting goods maker was accused of using Asian sweatshops to manufacture its iconic sneakers.

The conditions at Foxconn are indeed grim: 12-hour shifts doing boring, repetitive work; dorms that pack seven workers into each room; commands issued by a disembodied fembot. And the ABC cameras and Fair Labor Association auditors surely didn't see the worst of it: Foxconn first came to international attention in the spring of 2010 when 18 workers killed themselves, or tried to.

But the "Nightline" report included an implicit justification: The 3,000 workers lined up at Foxconn's gates before dawn in hope of a job. Work at Foxconn may be hard and boring, but for many Chinese people it is better than the alternative.

This is the historic price and promise of industrialization: It is no fun, but it is better than subsistence living back on the farm. And, modernization theorists like Seymour Martin Lipset have argued, as people get richer thanks to dismal jobs like those at Foxconn, they are able to demand more rights.

That is a powerful argument, and it has been true not only in the Western developed world, which industrialized first, but also in 20th-century stars like Japan and South Korea. But Daron Acemoglu, an economist at the Massachusetts Institute of Technology, warns that we should not assume that the happy connection between prosperity and democracy will automatically hold true for China. That is because China is industrializing in the age of Apple - in an era of globalization and the technology revolution.

The result, Acemoglu argues, is that China is able to deliver strong economic growth without transforming its domestic political and social institutions. To illustrate the point, in an essay written for a forthcoming book, Acemoglu contrasts China's "catch-up" economic development with the way the process unfolded in Germany and Russia in the 19th century and Japan and South Korea in the 20th.

In these places, catch-up growth for Germany and Russia at the end of the 19th century or for Japan and South Korea in the second half of the 20th century "involved developing industries, building a domestic market and undergoing a process of structural, social and institutional changes," Acemoglu writes. In order to grow their economies, those countries had to reform their politics and their society.

But globalization and the technology revolution mean that China's authoritarian rulers have been able to deliver strong economic growth without surrendering political and social control: "Instead of having to develop an entire industry, an emerging-market economy can house just some of the tasks such as assembly and operation. This not only enabled China to grow very rapidly by relying on world technology and leveraging its cheap and abundant labor force, but has also mollified demands for structural, social and institutional changes that previous societies undergoing catch-up growth had experienced," he writes.

Acemoglu sees a powerful, and worrying, paradox at work. It is the triumph of the open society in the West, with its focus on individual rights, independence and iconoclasm that created the technology revolution. But the impact of those discoveries on the world's mightiest dictatorship may be to prolong its reign. The connection between the free-thinking of Cupertino and the communism of Shenzhen may not be an accident or a temporary phase - the first may be strengthening the second.

Acemoglu's vision of how the simultaneous economic transformations of the West and of the emerging markets - a double act I have described as the Twin Gilded Ages - are interacting is a powerful alternative to the two more common narratives about communist China's remarkable economic rise. One story is that the eventual shift to democracy, as we saw in previous catch-up countries, is inevitable. The other is that China shows that state capitalism is actually a more effective form of governance in this volatile age than chaotic democracy.

Acemoglu offers a third possibility: Chinese authoritarianism is working so well because of the success of other democracies. But - and this is the paradox at the heart of Acemoglu's analysis - that relationship may retard the growth of democracy in China.

This debate isn't just for political scientists or Sinophiles. One of the biggest questions in the world today is what impact a rising China will have on the rest of us. One of the big books of the season is foreign policy thinker Robert Kagan's "The World America Made." It has mostly been read as an assertion that the United States is not in decline.

That is part of Kagan's argument. But he also warns that if the United States commits "pre-emptive superpower suicide," global politics and economics could change profoundly. "China may have benefited from our economic order," Kagan told me. "But its capacity or desire to sustain that order is very much in question."

Kagan makes a point of limiting his focus to foreign policy and explicitly excluding economics. But from his very different vantage point, he arrives at a version of Acemoglu's paradox: China owes its rise to Western democratic capitalism, but that very success may put it at odds with the social order that created it. Call it Apple authoritarianism - what happens when the ideas from the freest valley in the world end up underwriting the planet's most powerful dictatorship.

• A Permanent Economic Emergency