from Asia Unbound

State Capitalism and its Threats

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March 22, 2016

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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State capitalism poses five types of threats to democracy, global security, and the global economy.

One of the fears about state capitalism is that the state’s control of the economy, in democratic nations, will inexorably lead to state control of politics and a reduction in democratic freedoms. These fears are not totally misplaced. But when Western writers, politicians and other opinion leaders examine state capitalism, they tend to take an undifferentiated approach, treating all state capitalists alike, rather than examining each country in some more detail.

In Ian Bremmer’s work on state capitalism, such as his book The End of the Free Market and his subsequent articles on state capitalism, he, like most Western analysts, tends to fall into this undifferentiated approach. He and others often suggest that state capitalism will inevitably erode a country’s democratic freedoms or prevent a country from becoming democratic.

It is true that in state capitalist nations, leaders often have greater access to state funds, more potential largesse to hand out to supporters, and wider leverage over some of the most important companies in their countries. In part, maintaining democracy as state capitalism becomes entrenched depends, in some countries, on the commitment of individual political leaders to democratic norms even as they gain control of more economic tools—potentially too thin a reed upon which to base democracy.

For more on state capitalism’s challenges to the international system, read my piece for the Asia Sentinel.

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