In September 1789 George Washington appointed Alexander Hamilton as America’s first ever treasury secretary. Two years later Hamilton presented Congress with a "Report on Manufactures", his plan to get the young country's economy going and provide the underpinnings for its hard-fought independence. Hamilton had no time for Adam Smith's ideas about the hidden hand. America needed to protect its infant industries with tariffs if it wanted to see them grow up.So what they call "state capitalism" includes standard protectionist measures the United States applied in the early decades of the Republic? This is like a joke. But they're serious.
They then jump to the 20th century and list three different brands of capitalism: Singapore, China and post-Communist Russia. Their description of the latter is particularly striking:
The final event [after Singapore's and China's adoption of "state capitalism"] was the collapse of Soviet communism. This was initially seen as one of the great triumphs of liberalism, but it soon unleashed dark forces. Communist apparatchiks-turned-oligarchs grabbed chunks of the economy. Between 1990 and 1995 the country's GDP dropped by a third. Male life expectancy shrank from 64 to 58. Once-captive nations broke away. In 1998 the country defaulted on its debts.They present "state capitalism" as a negative thing. But this explanation is practically a confession of the all-too-obvious failure of neoliberal prescriptions in Russia makes it clear why Russians would have wanted to seek an alternative. It also explains in part why polls show so many Russians looking back at the fall of the Soviet Union as a very bad thing.
The post-Soviet disaster created a craving for order. Vladimir Putin, then Russia's president, reasserted direct state control over "strategic" industries and brought the remaining private-sector oligarchs to heel. But just as important as the backlash in Russia was the one in China. The collapse of the Soviet Union confirmed the Chinese Communist Party's deepest fear: that the end of party rule would mean the breakdown of order. The only safe way forward was a judicious mixture of private enterprise and state capitalism. [my emphasis]
But the main thing this article shows about their notion of "state capitalism" is that it's more a general criticism of everything that doesn't fit into the current ideal framework of neoliberalism. Even Alexander Hamilton.
Tags: state capitalism