Tell me and I forget. Teach me and I remember. Involve me and I learn. Benjamin Franklin

Thursday, June 19, 2014

Leviathan as capitalist State capitalism continues to defy expectations of its demise

The Economist - Jun 21st 2014

IT IS now 25 years since Francis Fukuyama published “The End of History?” and ignited a firestorm of debate. Today there are many reasons for thinking that he was wrong about the universal triumph of liberalism and markets, from democracy’s failure in the Middle East to the revival of religious fundamentalism. But one of the most surprising reasons is the continuing power of the state as an economic actor: far from retiring from the business battlefield in 1989, the state merely regrouped for another advance.
Survey the battlefield today and you can see state capitalism almost everywhere. In China companies in which the state is a majority shareholder account for 60% of stockmarket capitalisation. In Russia and Brazil companies in which the state has either a majority or a significant minority stake account for 30-40% of capitalisation. Even in such bastions of economic orthodoxy as Sweden and the Netherlands state-owned enterprises (SOEs) account for 5% of market capitalisation. The Chinese and Russian governments show little sign of wanting to surrender control of the commanding heights of the economy. Privatisation seems to have ground to a halt in Brazil and in India (though its new government may revive it). There has been talk of the French government taking a stake in Alstom or part of its business—adding to the stakes it and Germany hold in Airbus and the one France recently took in Peugeot.

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