INT 200: Global Capitalism and
its Discontents
State Capitalism
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 privatesector multinational and embracing globalization
– corporations in which the state owns controlling shares of publiclylisted 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
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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