The End of the Free Market: Who Wins the War Between States and Corporations? Paperback – 27 September 2011

Excellent Book

There is an analysis of almost every nation practicing state capitalism. A great book to get a big picture of what state capitalism is and why it matters.

Tout etait corret

Starting with a personal anecdote about a meeting with Vice Foreign Minister, He Yafei, he asked the author, "Now that the free market has failed, what do you think is the proper role of the state in the economy?" Ian Bremmer's book The End of the Free Market and the Rise of State Capitalism charts the rising trend of state capitalism in the developing world as an alternative and potential rival to the established free market system. In particular, he analyzes how the recent global recession has weakened the free market system by demonstrating its volatility and hardening attitudes around the world about market liberalization. Published in 2010, Bremmer's analysis comes after the initial chaos of the global recession in 08-09 and so is able to contrast before and after policies of the leading nations. He analyzes changes in geopolitics since the fall of communism and recounts the history of state capitalism amid the roots of mercantilism. For each of the prominent adherents to state capitalism, he explores a minor history of their degree of state capitalism and discusses the general principles they use to make decisions. He also goes into great detail about the flaws of state capitalism, its inefficiency, and potentially disastrous effects should more countries adopt it. The predictions are not all stark. By the end of the book he is advocating strategies for accommodating these emerging powers, but emphasizes that the United States has a key role in defusing tensions, integrating their economies, and encouraging eventual reform. Bremmer grounds his opening argument in the debate about Fukuyama's End of History ideas. Contrary to popular opinion at the time, he claims that only one of the three predictions made by proponents of globalism like Fukuyama came true; communism would die, dictatorships would be replaced by democracies, and nation-states would become obsolete. Only communism died. He counters that although principles of liberal democracy such as elections have been adopted around the world, they are hardly fair or even democratic. New means of communication through the internet, instead of being subversive have been co-opted by the state propaganda network to strengthen authoritarian regimes. Massive companies with GDPs bigger than most countries were seen as another indicator of obsolete nation-states in the face of globalism, but have been hard-pressed to compete with state-run or state-favored companies. The failure of communism convinced many people that state-directed economies could not produce prosperity. Indeed, the massive trade growth, tariff reductions, and business expansion after the fall of the Soviet Union seemed to prove this. However, the recent arrival of multiple large companies from BRIC countries, usually state-controlled oil and gas like Gazprom and Petro China have contradicted this popular idea. Bremmer even points to the massive bailouts from both the United States and European countries for their own economies as proof that worldwide governments are controlling more of their economies. Exploring the roots of state capitalism, Bremmer identifies a historical connection to mercantilism. He defines the United States and Western Europe as "mixed" capitalist economies, they manage common goods like education, welfare, and national defense, but are reliant on the market to generate both prosperity and ideas. In state capitalism, the idea of common goods extends to state-sanctioned companies and resources, but Bremmer insists that state capitalism is not simply "repackaged communism." Instead, he defines it as "a form of bureaucratically engineered capitalism particular to each government that practices it. It's a system in which the state dominates markets primarily for political gain." With a few reservations, Bremmer prefers to compare state capitalism to mercantilism which he calls "economic nationalism for the purpose of building a wealthy and powerful state." Like mercantilist states, they actively sought access or markets to resources and were obsessed with a positive trade surplus. Using China as an example, during the recession it curbed imports by subsidizing the manufacturing industry and hoarding foreign currencies to regulate the yuan. He is careful to clarify the many differences between the two systems, namely the false assumptions of finite wealth and fixed economies, though an argument could be made about the growing scarcity of natural resources. Because government behavior often uses a combination of free market and state capitalism to achieve their ends, Bremer insists that labeling countries state capitalist or free-market is problematic. He uses a scale to determine that countries like the United States and Japan are mostly free-market, but have recently been pushed left by the recession. Overall, he concludes that most countries have shifted towards free market capitalism in the last 20 years. In identifying state capitalists, he points to China and Russia as the most important examples or the reason "why we talk about state capitalism" but also goes into great detail discussing many countries who have adopted degrees of state capitalism. He identifies four distinctive elements in the state capitalist model; national oil companies, state-owned enterprises, privately-owned national companies, and sovereign wealth funds. For each of the countries listed in his book, he explores to what degree these countries use "oil, gas, and other commodities as political tools and strategic assets," or resource nationalism. Overall, Bremmer sees the threat of state capitalism being overcome by the forces of free market capitalism. Unlike other pundits who worry that foreign countries like China and Russia can threaten the United States by calling in all their debts, Bremmer insists that a more likely scenario would be a refusal to extend further credit to the U.S. government. The recession also hurt the cause of free markets by convincing many state capitalist leaders that connections to the free market were hazardous. Furthermore, the recession showed that the G8 was not representational and that the G20 was too big to build consensus. Nevertheless, Bremmer insists that creative destruction can fuel future growth and that governments do occasionally relinquish control. He claims that state capitalist governments are fundamentally unstable and inefficient because they lack popular appeal and allocate resources based on what pleases the public rather than helps the economy. He dismisses any substantial military threat to U.S. power, but focuses on global shortages of key resources due to inefficient administration and an emphasis on growth. These governments also offer no-strings attached aid to repressive governments in order to secure resource concessions, but have difficulty aligning other interests because they lack a unifying ideology. He encourages the United States to continue investing in a strong military because as a public good it reduces arms races and escalating conflicts. He also advocates Americans to resist the urge to ban foreign investment or immigration and instead "Buy Chinese." He insists that China has explosive economic potential and by deepening ties with China, the United State not only benefits financially but could also apply gradual pressure to reform their markets and ensure that any politically motivated Chinese maneuver would be insured by a policy of "mutually assured economic destruction." The End of the Free Market offers a coherent and succinct analysis of the current political dynamic. Bremmer is one of the first scholars to adequately treat the effects of the recession on geopolitics. He also offers compelling criticism of the state capitalist model and its profoundly short-sighted political potential versus the productive potential of a free market system. However, in retrospect some of his criticisms of state capitalism do not sound so critical. With good reason, he repeatedly claims that state capitalism is inherently inefficient, yet the Chinese economy continues to grow at 10% a year. Additionally, his discussion on sovereign wealth funds does a better job of selling the policy than repudiating it. His characterization of new means of communication being used by the government to control populations does not also consider the revolutionary impact that these new forms of communication have on government resistance. The recent events of the Arab Spring demonstrate just how powerful social media, smart phones, and the internet have been to protesters. If anything, several governments in the Middle East tried limiting internet access to prevent further protests.

Ich musste das Buch für die Uni lesen, bin aber am Ende davon überzeugt, dass ich es mir nicht freiwillig kaufen würde.Bremmers Argumente sind weithin bekannt (und können woanders nachgelesen werden). Er entwirft eine eigene Art von Staatskapitalismus. Ich finde diese aber wenig revolutionär oder neu - gerade für die "Musterregionen", die er nennt (Russland, Saudi-Arabien, China) gibt es länderspezifisch einige andere Autoren, die die jeweiligen Wirtschaftsformen mit dem Zusammenspiel von Staat und Wirtschaft anders und differenzierter beschreiben, als Bremmer es tut. Mit anderen Worten: Bremmers Argumente werden von ihm über einen Kamm geschoren und somit extrem reduziert, damit seine Grundaussage für alle von ihm identifizierten Länder zutreffend ist.Das Problem dabei ist jedoch, dass mit dem Anspruch auch Frankreich (oder auch Deutschland) ein staatskapitalistisches Land sein kann. Nur das bestreitet Bremmer. Im Endeffekt bleibt also nur die wenig neue Erkenntnis bzw. Hypothese, dass die aufstrebenden Länder weiterhin eine Gefahr für "den Westen" darstellen und dieser sich daher anpassen soll.Sein Schreibstil ist klar, aber seine Argumente wiederholen sich zu oft. Der Aufbau im Buch ist daher etwas verwirrend, die Fallbeispiele tragen zu spät zur Klarheit seiner Argumentation bei. Das ist auch in der deutschen Ausgabe nicht anders (z. B. über die bpb zu erhalten).

I did not expect the insight into future decision making which was new to me. An excellent and easy to read book which should be read by all American politicians.