This week’s Economist magazine has an interesting cover title, and articles highlighting the emergence of something I’ve written about frequently here in my Global Markets blog — namely the Chinese state’s spin on capitalism. The Chinese example may be the most successful, but it is not the only — nor, necessarily the best — model of State-sponsored capitalism. Many of our European allies — Britain, Sweden and France for instance — owe a substantial portion of their post-war economic success to state-managed democratic capitalism. More, the United States has and continues to use state-sponsored enterprises with great success. Amtrak, the US Postal Service, FHLMC & FNMA (Freddie Mac & Fannie Mae, respectively) are just a few examples. And for much of the 20th century, the airline and telecommunications industries in the US were government regulated enterprises. Even now, the nation’s two primary pastime sports industries — the NFL and Major league Baseball — enjoy special government-sanctioned anti-trust protections; while most “private sector” utility corporations are still subject to state governance and regulation by so-called public service commissions (PSCs).
Though there were many critics of State-sponsored capitalism early on — and there still is in many quarters — who argued that China’s state-managed version of capitalism was unsustainable, it seems the long-term sustainability of so-called ‘State Capitalism‘ has been proven, and is even gathering steam in unlikely places — India, Cuba, Vietnam and the Middle-East to name a few — with the same great success that Western capitalist nations like ours have experienced using this economic model. Read more on this here...
It is a trend, I believe, that mainstream economists and Market strategists — even the most fiscally conservative Monetarist — needs to take seriously, and perhaps even learn from some of its better principles such as long-term economic planning, more efficiently regulating commodity & futures markets; and minimizing volatility and economic shocks like the one the West continues to schlog through in the wake of the Great Recession. Pay attention: you heard it here first!
Recommended Reading: The End of Free Markets by Ian Bremmer