INT 200: Global Capitalism and its Discontents State Capitalism

The state / government engages in profit seeking economic activity with the management of the productive forces in a capitalist manner – Or, an environment wherein the capitalist enterprise is a component part of the state bureaucracy and the receivers of capitalist surplus value are state appointed bureaucrats – even government agencies that are organized like corporations and use business management practices Rising powers often use the state to kick-start growth – USA, Japan, Korea

State Capitalism Centrally Planned Economies – state effectively controls both production and allocation of resources Social Liberalism – role of the government includes addressing economic and social issues such as poverty, health care and education Ordoliberalism – variant of social liberalism; need for the state to ensure that the free market produces results close to its theoretical potential the state must create a proper legal environment for the economy and maintain a healthy level of competition state must have a strict monetary policy in order to create monetary stability and low inflation Haftung: responsibility Dirigisme – an economy in which the government exerts strong direct influence – “Indicative planning

State Capitalism State Own Enterprises (SOEs) – hybrid corporations, backed by the state but behaving like a private- sector multinational and embracing globalization – corporations in which the state owns controlling shares of publicly- listed corporations, effectively acting as a large capitalist shareholder – Initially, SOEs were little more than government departments in emerging markets, with no independence – Now, they operate by recognizable capitalist management principles – Now, powerful Significant advance on Predecessors – Wider scale, faster, & more sophisticated – Seen as a sustainable model  state capitalism is the most formidable foe that liberal capitalism has faced so far

State Capitalism Various Models – Chinese, Russian, Petrostates, and Brazil Best of both worlds? – Pros Stability as well as growth Clout that private-sector companies would take years to build Success – Cons Favoring one group of companies / industries means others suffer Good at copying, not as good at innovation Does not guarantee stability: concentrates power and corrupts it State-capitalist governments can be capricious Unfair trading