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Sunday, February 19, 2012

"State capitalism" (7 of 8): In which we learn of the inevitable defeat of the Axis of State Capitalism

The war between the United Nations of Neoliberalism and the Axis of State Capitalism wouldn't be the replay of the Cold War melodrama that the authors of The Economist's series of articles on state capitalism want it to be if we weren't promised the inevitable victory of Our Side. After a long, difficult struggle, of course.

I have to say that "Axis of State Capitalism" strikes me as one of the dumbest slogans I've ever seen. But I suppose dumber ones have caught on. Like "death tax".

And that's what we get in The long view: And the winner is...

Of course, the labor movement is on the side of the New Axis. Along with the occasional Silicon Valley hippie:

Is state capitalism the wave of the future, or is it simply one in a long line of state-sponsored failures? Some commentators have seized on the riots in Russia in December as evidence that it is already on its way out. Others point to the continuing problems with global capitalism, arguing that the state variety is winning the war of ideas. Andy Stern, a former boss [sic] of the powerful Service Employees International Union, argues that China's economic model is superior to America's and quotes Andy Grove, the founder of Intel: "Our fundamental economic belief is that the free market is the best of all economic systems - the freer the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modi fication that is even better."

And we have a Defining Battle of the Century! (I think these writers must be watching too many sword-and-sorcerer movies or something.)

The defi ning battle of the 21st century will be not between capitalism and socialism but between diff erent versions of capitalism. And since state capitalism is likely to be around for some time yet, Western investors, managers and policymakers need to start thinking more seriously about how to deal with it.

Yes, supposedly serious business magazines spend time concocted third-rate historical melodramas like this. Of course, in Cold War 2.0 there are potential Fifth Columnists, too. Like - try to guess - the French!

Western policymakers face even more diffi cult decisions than businesspeople. They will fi nd their voices diluted as China and other state-capitalist countries play a more active role in multilateral institutions. And the rise of state capitalism in the East may encourage imitation in the West. The European Commission's directorate for enterprise and industry has mused on the need to create European champions to fight "unfair competition" from overseas. Nicolas Sarkozy, the French president, has created a French sovereign-wealth fund. Alexandre de Juniac, as chief of state to Christine Lagarde, then France’s finance minister, ascribed his country’s renewed enthusiasm for dirigisme to China's infl uence. Japan’s Ministry of Economy, Trade and Industry in 2010 named the rise of state capitalism as one of the drivers of a newly interventionist industrial strategy. Worse, the rise of state capitalism in the East may encourage a trade war as liberal countries attack subsidies and state-capitalist countries retaliate.

Yes, those pinko Europeans, who are currently jamming austerity economics that Herbert Hoover would have found too draconian down the throats of the entire EU during a serious depression - they're ready to copy the Chinese model. Or the Russian's, or Brazil's, or somebody's in the Axis of SC. Menaces to the true faith of neoliberalism lurk all across the landscape.

But our 21st century Churchills know that the neoliberal faith can never fail, it can only be failed:

But state capitalism's biggest failure is to do with liberty. By turning companies into organs of the government, state capitalism simultaneously concentrates power and corrupts it. It introduces commercial criteria into political decisions and political decisions into commercial ones. And it removes an essential layer of scrutiny from central government. Robert Lowe, one of the great Victorian architects of the modern business corporation, described businesses as little republics that operate as checks and balances on the power of the big republic of government. When the little republics and the big republic are one and the same, liberty is fatally weakened.

Montesquieu's separation of powers in the age of Citizen's United: corporations protect Liberty through the checks and balances of corporate personhood. Awesome. I can see Willard Romney out there on the barricades, leading the charge.

Tags: state capitalism

posted at 10:59:00 AM by Bruce Miller

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