State Capitalism

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The economist summary

Articles mainly talk about rise of state capitalism, its growth and actions of the government, the variations of state capitalism, benefits and flaws and its future.

Rise of state capitalism
In the recent years, following the biggest financial/economic crisis in 2007-2008 that destroyed Lehman Brothers, state capitalism grew to be more popular.

State capitalism is basically profit making and seeking, with the government trying to match the powers of the state with the powers of capitalism. They use capitalist tools like listing the State-owned enterprises on stock market and also embracing globalization. They attempt to control the economy using the business in this way.

Some examples are China, Russia and Brazil, where the political system is still very much communist even though the economy is opening up and being more capitalistic.

Another example will be Singapore, though not communist, but have successfully attempted to attract world’s most powerful companies, MNCs, to invest in the economy, at the same time, controlling the country’s economic growth in a way.

Actions of Govt
Government uses State-owned entreprises and National champions (privately owned companies which receive huge support from government. Eg. China’s Geely cars, Singapore’s Singtel) to achieve their control.

1.exercise their control using ownership of shares and productive use of assets in these companies 2.form alliances with MNCs and international companies and model after them (capitalist) 3.invest and provide support to the national champions

Variations of state capitalism
1.State controls economy at the back, using SOEs and National champions (as mentioned above) . eg China 2.Create “vertical business groups” – business in the same industry coming together like an oligopoly, and control that through shares 3.Acquire shares in many companies but retain minority ownership, rather than majority. Give private shareholders more...
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