By Joshua Kurlantzick
State Capitalism; How the Return of Statism is Transforming the World
- Posits the controversial thesis that state capitalism has the potential to be a real competitor to free market capitalism, showing that countries with greater intervention in their economies are not necessarily slower-growing than those with a free market approach
- Offers analyses of the economies of major countries that have been and will be in the news, including China, Brazil, and Indonesia
- Argues that state capitalism will alter all aspects of modern international politics and economics, including the prospects for democracy
The end of the Cold War ushered in an age of American triumphalism best characterized by the 'Washington Consensus': the idea that free markets, democratic institutions, limitations on government involvement in the economy, and the rule of law were the foundations of prosperity and stability. The last fifteen years, starting with the Asian financial crisis, have seen the gradual erosion of that consensus. Many commentators have pointed to the emergence of a powerful new rival model: state capitalism. In state capitalist regimes, the government typically owns firms in strategic industries. Not beholden to private-sector shareholders, such firms are allowed to operate with razor-thin margins if the state deems them strategically important. China, soon to be the world's largest economy, is the best known state capitalist regime, but it is hardly the only one.
In State Capitalism, Joshua Kurlantzick ranges across the world-China, Thailand, Brazil, Russia, South Africa, Turkey, and more-and argues that the increase in state capitalism across the globe has, on balance, contributed to a decline in democracy. He isolates some of the reasons for state capitalism's resurgence: the fact that globalization favors economies of scale in the most critical industries, and the widespread rejection of the Washington Consensus in the face of the problems that have plagued the world economy in recent years. That said, a number of democratic nations have embraced state capitalism, and in those regimes, state-backed firms like Brazil's Embraer have enjoyed considerable success. Kurlantzick highlights the mixed record and the evolving nature of the model, yet he is more concerned about the negative effects of state capitalism. When states control firms, whether in democratic or authoritarian regimes, the government increases its advantage over the rest of society.
The combination of new technologies, the perceived failures of liberal economics and democracy in many developing nations, the rise of modern kinds of authoritarians, and the success of some of the best-known state capitalists have created an era ripe for state intervention. State Capitalism offers the sharpest analysis yet of what state capitalism's emergence means for democratic politics around the world.
"Two distinctions are crucial according to the author: First, state capitalism differs in terms of the political system. Some such as Saudi Arabia, Iran, China, and Russia are autocratic, some are democratic (Brazil or India) and some lie in between (Singapore or Malaysia). Kurlantzick thereby de-links the two notions of autocratic rule and state capitalism and uses examples from Brazil and Indonesia to debunk the myth that state capitalism is naturally linked to autocracy. Second, state capitalism differs in terms of economic performance, with very effective economies such as Singapore leading, followed by less effective (China or Indonesia) and least effective economies such as Egypt, Kazakhstan and Iran. This implies that the skepticism in the West about the long-term success potential of state capitalism is misplaced. [...] Kurlantzick gives the reader a superb analysis of recent changes in the developing world. With the help of a differentiated analysis, he thereby debunks myths about state capitalism – the key merit of this study in my view. At the same time, his nuanced analysis does not prevent him at times from drawing a too stark contrast between state capitalism and (what in fact are rather Western ideals of) free-market capitalism and democracy."
Book Launch of State Capitalism
- Teaching notes for if you would like to use State Capitalism in a course
- Interview with Joshua Kurtlanzick on the book, Aspen Review, issue 1 of 2017
- State Capitalism and the Return of Economic Interventionism - essay by the author at World Politics Review, 12 July 2016
Table of Contents of State Capitalism
- Leviathan Re-Emerges
- A Brief History of (State Intervention) Time
- The Shift is On: Why State Capitalism Has Flourished Over the Past Decade
- A Taxonomic Guide to the State Capitalists
- China's State Capitalism - A Closer Look
- The Democratic State Capitalists: A Closer Look
- Can State Capitalism Be Successful?
- The Implications
- Prescriptions for the Future
About Joshua Kurlantzick
Joshua Kurlantzick is Senior Fellow for Southeast Asia at the Council on Foreign Relations and author of both Democracy in Retreat: The Revolt of the Middle Class and the Worldwide Decline in Representative Government and Charm Offensive: How China's Soft Power is Transforming the World. Previously, he was a scholar at the Carnegie Endowment for International Peace.