Political economy and globalization - Varieties of capitalism - State capitalism

8 important questions on Political economy and globalization - Varieties of capitalism - State capitalism

What does state capitalism (authoritarian capitalism) refer to?

Capitalist economies in which the state plays a crucial directive role.
Often non-liberal capitalist societies.

What is the difference between 'liberal market economies' and 'coordinated market economies'?

-Liberal market economies: firms coordinate their activities on the basis of competitive market arrangements.

-Coordinated market economies: depend heavily on non-market arrangements. --> adopted by East and Southeast Asian 'tigers'.

What is the distinctive character of state capitalism?

Emphasis on cooperative, long-term relationships (collective capitalism).
This allows the economy to be directed not by an impersonal price mechanism, but through 'relational markets'.

-Firms provide the social core of life. Workers are 'members' of firms. In return for their loyalty and hard work , have traditionally expected lifetime employment, pensions etc.
-Stress is placed on teamwork and the building of a collective identity.      
- The state has played a vital role in 'guiding' investment, research and trading decisions.
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What are the downsides of state capitalism?

- Inflexibility and unresponsiveness to changing global market conditions, and the tendency for individualism and entrepreneurialism to be stifled by a continuing emphasis on values such as duty and hierarchy.

- Contradiction between economic liberalism and non-liberal political arrangements, as authoritarianism may either become a fetter on enterprise and innovation, or it may generate resentment and demands for political freedom that make such systems unsustainable.

What is an example which shows how state capitalism can help but also cause a slowdown of the economy?

Japan: highly succesful in the post-1945 period, helping Japan to recover from wartime devastation, making it the world's second largest economy.
But causing an economic slowdown in the 1990s and the 1997 Asian financial crisis.

What has helped China in delivering sustained economic growth?

China's mixture of burgeoning capitalism and Stalinist political control. Huge supply of cheap labour and massive investment in the economic infrastructure.

What has been the key aspect of Putin's economic strategy and what is the chief weakness of Russian state capitalism?

Key aspect: to exploit Russia's vast energy reserves, both as a motor for economic growth and to give Russia greater leverage over neighbouring states and much of Europe.

Weakness: its failure to sufficiently diversify the economy. Russia's economic aspects are closely linked to the price, in particular, of oil and natural gas as determined by global markets.

When can state capitalism constitute a viable alternative to Western-based capitalist models?

If it is possible for market economics to prosper in the long-term in the absence of political liberalism.

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