Old Socialist.
Feb 09, 2026
The visible hand
The crisis of Western liberal capitalism has coincided with the rise of a powerful new form of state capitalism in emerging markets, says Adrian Wooldridge
Jan 21st 2012
https://www.economist.com/special-report/2012/01/21/the-visible-hand
…
State capitalism increasingly looks like the coming trend. The Brazilian government has forced the departure of the boss of Vale, a mining giant, for being too independent-minded. The French government has set up a sovereign-wealth fund. The South African government is talking openly about nationalising companies and creating national champions. And young economists in the World Bank and other multilateral institutions have begun to discuss embracing a new industrial policy.
That raises some tricky questions about the global economic system. How can you ensure a fair trading system if some companies enjoy the support, overt or covert, of a national government? How can you prevent governments from using companies as instruments of military power? And how can you prevent legitimate worries about fairness from shading into xenophobia and protectionism? Some of the biggest trade rows in recent years—for example, over the China National Offshore Oil Corporation’s attempt to buy America’s Unocal in 2005, and over Dubai Ports’ purchase of several American ports—have involved state-owned enterprises. There are likely to be many more in the future.
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 world’s 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.
Ian Bremmer, the president of Eurasia Group, a political-risk consultancy, claims that this is “the end of the free market” in his excellent book of that title. He exaggerates. But he is right that a striking number of governments, particularly in the emerging world, are learning how to use the market to promote political ends. The invisible hand of the market is giving way to the visible, and often authoritarian, hand of state capitalism.
Editor: Reader look to Wooldridge’s Cast Of Characters and the redoubtable Ian Bremmer, given to exaggeration!
Old Socialist.
StephenKMackSD's Blog 