State Capitalism: What is it?
Above is my previous article on State Capitalism. I have been reading "The End of the Free Market" By Ian Bremmer and studying this book as it shares some of the world economic changes that anyone who wants to survive in the new world economy should know about.
For any of you who don't click on the word button "What is it?" above, State capitalism is a system in which the state dominates markets, primarily for political gain. But the division between state-capitalist and free-market coutries isn't always clear.
Begin Quote from a section in the book called, "The Free Market Camp"
page 43 middle:
The governments of China, Russia, Saudi Arabia, and other countries had begun building their own versions of state capitalism long before the Western Financial crisis sparked a global recession. But the market meltdown of 2008 proved a turning point, because it reversed a move toward less government intervention in the United States and Europe--- and discredited free market capitalism for many in the developing world. end quote.
begin quote from
http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act
When the United States abolished the Glass-Steagle Act of 1933 Some provisions of the Act, such as Regulation Q, which allowed the Federal Reserve to regulate interest rates in savings accounts, were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm–Leach–Bliley Act. [2][3]
end quote:
However, when the government repealed this and other sections of the Glass Steagle act many investment institutions like banks increased their level of risk which culminated in the Global 2008 recession and pushed dozens of governments back towards the left side of the spectrum to avoid panic and mayhem and outright revolution in the streets worldwide as a result.
begine quote on page 47 of "The End of the Free Market":
Before leaving office, President George W. Bush fought to create a program that allowed the U.S. Treasury Department to spend up to $700 billion to purchase or insure so-called troubled assets, a move supported by boh Barack Obama and his Republican presidential rival, John McCain.
The following is a list of the most "Free Market" type of economies The United States, Europe, Japan, Canada, Australia and many other like minded countries. And all these countries intervened during the 2008 recession to try to maintain their "Free Market" whether this was Intelligent or not.(only history can judge at this point).
begin quote page 48.
The United States is not the only free-market coutnry in which government has moved to bolster the free market throgh state intervention." end quote.
In fact, if you do the research you will see that all or almost all free market economies have had to intervene in some way, shape or form since about 2007 or 2008 to keep the country's economic system afloat.
The term 'Command' economy is usually reserved for only state capitalism countries. In other words (if I understand this correctly) a "Command" comes from the countries leadership for something to be done in the state owned company and then it happens. Whereas in a free market economy a company is relatively autonomous from the government and makes most of its own decisions itself through it's governing board, which many times is a corporation.
Begin qutoe Bottom of page 49:
"No wealthy Western countries appear more skeptical of free markets than those of Scandinavia--- Sweden, Norway, Finland, Denmark and Iceland. Among larger countries, they have both high standards of living and narrow gaps between rich and poor. Few countries have come closer to eliminating poverty and illiteracy. According to the 2008 Human Development Index from the United Nations, which ranks 179 countries according to a composite sore that includes life expectancy, educational achievement, and wealth, all five of these countries appeared among the top 13 in the world." end quote.
So from the point of view of "How do we lift the highest percentage of people into affluence, education and health within a country, these countries have set an example for the whole world to potentially follow. I think other countries will follow their lead as soon as overpopulation ceases to be a problem over the rest of the world. When birth rates decline to people basically only replacing themselves all countries could theoretically follow their lead successfully. But until that time it is extremely problematic on all levels to replicate what these Scandinavian countries have all done.
Next we will address the State Capitalist Camp.
Begin quote on page 51:
"--policy makers don't embrace state capitalism as a temporary series of steps to rebuild a shattered economy or to jump start an economy out of recession. It's a strategic long-term policy choice. Second, state capitalists see markets primarily as a tool that serves the national interests , or at least those of the ruling elites, rather than as an engine of opportunity for the individual.
State capitalists use markets to extend their own political and economic leverage--- both within society and on the international stage." end quote.
So, State capitalism is a way to "make war" not only upon one's own people by "keeping them down" and removing opportunity from them but also state capitalism is a de facto "Economic War" against Free Market Economies. Whether this economic war is intentional or not, still the effect is the same. The effect is an economic war against the free markets of the world by the state capitalists even if it might only be a war for the elite to stay in power within their own nation the effect internationally is in the end an economic war against free market economies.
A perfect example of this is 75 dollar a barrel oil instead of it costing only about 25 dollars a barrel which would be it's normal actual value if oil values weren't being manipulated in part by State Capitalism. If oil was actually at 25 dollars a barrel Free market economies likely could all recover within a couple years of 25 dollars a barrel. However, if it stays artificially pumped up like this free market economies might stay in recessions for 5 or 10 years around the world. This is not to say that this is the only problem causing continued recession. However, it is one of many. And whether you call it a recession or a downturn or whatever you call it, we aren't coming out of this very fast at all.
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