Will the next dominant international conflict be between state capitalism and free market capitalism? Will it supplant the war on terror? What do you think?
With 9/11, terror seemed to be the theme of 21st century conflict.
However, the 2008 financial collapse revealed an underlying rhythm.
According to Ian Bremmer, the major conflict ahead is between state capitalism and free market capitalism. "State capitalism is less of a coherent political philosophy than a set of management principles…created to maximize political leverage and state profits."
China, Russia, and the Persian Gulf states direct economic might for political ends. State owned companies, privately owned national champions, sovereign wealth funds, and national oil companies are tools for privilege.
In contrast, free markets separate economic and political processes. These are not unregulated markets. "…[W]hen the state fails to properly regulate market activity, it allows for a system in which players have every incentive to value cleverness more than prudence, short-term gain over longer-term investment."
Also, state capitalism is not flawless. "In fact, the secrecy with which many state-owned companies and sovereign wealth funds operate creates many different kinds of risks and challenges."
Nevertheless, regulated free markets face severe challenges from state capitalists. Can the U.S., Europe, and others meet the challenges, or will competition resemble the early 20th century leading to WWI?
What do you think? Is this the dominant conflict ahead? Has it supplanted the war on terror? Can it move from a competition for markets and wealth to a war of weapons?
By
William Vocke
For more information see:
Ian Bremmer, The End of the Free Market: Who Wins the War between States
and Corporations? (New York: Portfolio, Penguin Group, 2010).