June 2, 05:31 (UTC+3)

The visible hand: the growing impetus of state-directed capitalism

KEY CONCLUSIONS:

  • The model of capitalism as an effective economic system is evolving to include state-paternalistic and/or socially-oriented regulation methods

“There is confidence that there is a crisis in neoliberal economics right now. <…> Most countries do not have business tradition. Business organisations <…> derived from military organisations,” said Andy Xie, Independent Economist.

“To me, this Xi Jinping’s new normal, Brexit, the election of Mr Trump as president are the beginning of the end of new liberalism,” said Xiang Bing, Founding Dean and Professor of China Business and Globalization, Cheung Kong Graduate School of Business (CKGSB).

“There is a global problem of redistribution of income. And rather than on capitalism, it depends on whether there is fairness and equality in this or that society,” said Rodrigo Malmierca Diaz, Minister of Foreign Trade and Foreign Investment of the Republic of Cuba.

  • Capitalism as a system adapts to the global demand for a fair, but not equal access to the income from entrepreneurial and economic activities

“The key element of the new model will be coming from Europe, the social democracy side. <…> In the future, I think, we need a new model,” said Xiang Bing.

“In our government’s view, the fundamental element is a person. A person is more valuable than the capital,” said Silvana Vallejo Paez, General Director, ProEcuador.

  • The model may not be necessarily introduced by the state. The business increasingly performs functions far beyond those related to mere economic viability and profitability

“Eight individuals have as many assets as half the world’s population. <…> I think we really need to look at what the real basis, the goal of capitalism is. <…> It has reached the point of disequilibrium when it is falling apart. <…> We need to create a new type of economy, whether we do it as state-owned capitalism or privatised capitalism, I think we can debate those points, but the essential issue is that we need to create an economic system that is itself a renewable resource,” said John Perkins, Founder, Dream Change Inc.

  • In its turn, the state acts as a guiding force creating conditions for business development in a strategic long-term perspective

“We need to find a balance and opportunities for the state to participate in the regulation and provide reasonable support for industries that are, either in the long-term perspective or locally, the most promising for the country’s economy,” said Dmitry Kurdyukov, First Deputy Chairman, Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank).

  • However, it is extremely important not to overestimate the role and effectiveness of state interventions in market economic processes

“I think, China succeeded despite the state capitalism, not because of it,” said Xiang Bing.

"I am not sure that state capitalism is coming globally. Moreover, I think that there is no serious need to have state capitalism across the world,” said Oleg Vyugin, Member of the Board of Directors, Rosneft; Professor, National Research University Higher School of Economics.