Late last year I happened to catch an interview with Ian Bremmer on the Charlie Rose Show. Bremmer, president of the global risk research and consulting firm Eurasia Group spoke with the show’s host in considerable detail regarding the state of the global economy and where it is heading, with special attention paid to the rising economic and political power of China. After enjoying the interview and being intrigued by Bremmer’s opinions on global economics I made a mental note to someday read his latest book The End of the Free Market: Who Wins the War Between States and Corporations ? I guess you can only imagine the smile which quickly erupted on my face a few weeks ago when I spotted his book sitting on the “hot titles” shelf at my local public library. After finishing it the other day I’ve concluded that Bremmer has written a fairly impressive assessment of what appears to be the dominant trend in international trade. This can be seen as is a shift away from the traditional or what some call “neo-liberal” approach favoring multinational corporate entities enjoying little if any government support, towards large state-owned or state-championed firms enjoying the protection and patronage of their (usually) authoritarian host nations. While maybe not the most sexy and exciting thing I’ve read lately, I’d say Bremmer’s book did a pretty credible job showing the reader where the world could be heading.
According to Bremmer, one merely has to look at China to see how this new paradigm of “state capitalism” is being played out. Ruled by an authoritarian government and thus not accountable to any electorate or independent judiciary, the Chinese government can shape their nation’s economy in any way they see fit, whether it’s creating state-owned enterprises to directly serve the needs of the nation or enacting policies and decisions which favor locally owned firms. This allows China to pursue markets and raw materials in countries long associated with gross human rights violations and/or unsavory governments. Naturally, this puts China at a distinct advantage over Western multinationals who do not enjoy such sovereign patronage and are banned by democratically elected governments and international agreements from doing business with the world’s pariahs.
The growing power of state capitalism is also evident in the global oil and natural gas industries. Today the world’s largest oil and gas companies are not Western multinationals but state-owned entities representing Russia, Saudi Arabia, Venezuela, Kuwait, Mexico and China. Being state-owned they are isolated from market forces and thus, in essence policy tools of their host nations. While some regimes use the massive profits derived from this lucrative trade to build state coffers known as sovereign wealth funds, some prefer to dole out foreign aid to allies and future allies or even bankroll domestic populist social programs; nations like Russia use their national resource management as a foreign policy weapon, much like Moscow did when it cut off natural gas exports in the dead of winter in order to punish Ukraine. International trade, just like war becomes politics by other means.
While maybe not the most exciting reading, I’d still recommend Bremmer’s book to any readers who might have an interest in global affairs or international economics. If this is the way the world is heading, it would be best get a leg up on things and read Bremmer’s book.