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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsChoose your poisen. Free-Market or State Capitalism The visible hand/Economist/UK
A very interesting article on the conflict of capitalisms. Read the full article for more info.
http://www.economist.com/node/21542931
The era of free-market triumphalism has come to a juddering halt, and the crisis that destroyed Lehman Brothers in 2008 is now engulfing much of the rich world. The weakest countries, such as Greece, have already been plunged into chaos. Even the mighty United States has seen the income of the average worker contract every year for the past three years. The Fraser Institute, a Canadian think-tank, which has been measuring the progress of economic freedom for the past four decades, saw its worldwide freedom index rise relentlessly from 5.5 (out of 10) in 1980 to 6.7 in 2007. But then it started to move backwards.
The crisis of liberal capitalism has been rendered more serious by the rise of a potent alternative: state capitalism, which tries to meld the powers of the state with the powers of capitalism. It depends on government to pick winners and promote economic growth. But it also uses capitalist tools such as listing state-owned companies on the stockmarket and embracing globalisation. Elements of state capitalism have been seen in the past, for example in the rise of Japan in the 1950s and even of Germany in the 1870s, but never before has it operated on such a scale and with such sophisticated tools.
State capitalism can claim the worlds most successful big economy for its camp. Over the past 30 years Chinas GDP has grown at an average rate of 9.5% a year and its international trade by 18% in volume terms. Over the past ten years its GDP has more than trebled to $11 trillion. China has taken over from Japan as the worlds second-biggest economy, and from America as the worlds biggest market for many consumer goods. The Chinese state is the biggest shareholder in the countrys 150 biggest companies and guides and goads thousands more. It shapes the overall market by managing its currency, directing money to favoured industries and working closely with Chinese companies abroad.
The rise of state capitalism is also undoing many of the assumptions about the effects of globalisation. Kenichi Ohmae said the nation state was finished. Thomas Friedman argued that governments had to don the golden straitjacket of market discipline. Naomi Klein pointed out that the worlds biggest companies were bigger than many countries. And Francis Fukuyama asserted that history had ended with the triumph of democratic capitalism. Now across much of the world the state is trumping the market and autocracy is triumphing over democracy.
nxylas
(6,440 posts)As a choice between free-market (yay!) or state (boo!) capitalism, in an attempt to paint Chinese-style totalitarian capitalism as a deviation from the Chicago School economics they espouse, rather than an inevitable consequence of them.
Tierra_y_Libertad
(50,414 posts)MFrohike
(1,980 posts)I could buy this argument if I hadn't seen the federal government step in to backstop the financial industry every time they fail to do even basic risk assessment. Latin American debt, S&Ls, LTCM, and the 2008 crisis in just 30 years. Not a damn crisis from 1929 to the oil shock and 4 in just 30 years. I'm not even counting stock crashes. "Free market" capitalism needs to be called bipolar capitalism because that's all it seems to be.
dixiegrrrrl
(60,010 posts)and asking poster if he would terribly cross posting this in the Economy forum, where I KNOW it will be very much appreciated.