In Western Countries
An alternate definition is that state capitalism is a close relationship between the government and private capitalism, such as one in which the private capitalists produce for a guaranteed market. An example of this would be the military-industrial complex in which autonomous entrepreneurial firms produce for lucrative government contracts and are not subject to the discipline of competitive markets. Many consider this as part of a continuum characterizing the modern world economy with "normal" capitalism at one extreme and complete state capitalism like that of the former USSR at the other.
Both the Trotskyist definition and this one derive from discussion among Marxists at the beginning of the 20th century, most notably Nikolai Bukharin who, in his book Imperialism and the world economy thought that advanced, 'imperialist' countries exhibited the latter definition and considered (and rejected) the possibility that they could arrive at the former.
State capitalism is practised by a variety of Western countries with respect to certain strategic resources important for national security. These may involve private investment as well. For example, a government may own or even monopolize oil production or transport infrastructure to ensure availability in the case of war. Examples include Neste, Statoil and OMV.
There are some limits that state capitalism face as well. There are arguments that state capitalism only exists to ensure that wealth creation does not threaten the ruling elite’s political power. As the government is tightly connected to the industries, they are able to control the economy in the sense that it does not threaten their ruling power. The tight relationship between the state and the company can cause negative aspects in this matter. Also, state capitalism has a fear towards “creative destruction.” They have fear towards the revolutions and it wants develop without significant changes being made. Therefore, industries tend to remain longer than its usefulness. This in the end creates an environment that is not well equipped to inspire innovation as well. For this reason it can cause inefficiency in the economy.
Read more about this topic: State Capitalism
Famous quotes containing the words western and/or countries:
“Ex oriente lux may still be the motto of scholars, for the Western world has not yet derived from the East all the light which it is destined to receive thence.”
—Henry David Thoreau (1817–1862)
“General education is the best preventive of the evils now most dreaded. In the civilized countries of the world, the question is how to distribute most generally and equally the property of the world. As a rule, where education is most general the distribution of property is most general.... As knowledge spreads, wealth spreads. To diffuse knowledge is to diffuse wealth. To give all an equal chance to acquire knowledge is the best and surest way to give all an equal chance to acquire property.”
—Rutherford Birchard Hayes (1822–1893)