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June 16, 2010Capitalism vs. the State
David Brooks, riffing off of Ian Bremmer's new book The End of the Free Market, sees the emergence of a new ideological standoff:
The rivalry between democratic capitalism and state capitalism is not like the rivalry between capitalism and communism. It is an interdependent rivalry. State capitalist enterprises invest heavily in democratic capitalist enterprises (but they tend not to invest in each other). Both sides rely on each other in interlocking trade networks.Nonetheless, there is rivalry. There is a rivalry over prestige. What system works better to produce security and growth? What system should emerging and struggling democratic nations aim for? There is also rivalry over what rules should govern the world order. Should countries like Russia be able to withhold gas from Western Europe to make a political point? Should governments be able to tilt the playing field to benefit well-connected national champions? Should authoritarian governments like Iran be allowed to nuclearize?
As I wrote in my own review of Bremmer's book, I think the answer to the first set of questions - which system works better and what system should emerging market states choose - will be answered by how well the U.S. and Europe handle their current economic challenges. If we can ensure our economic recovery chugs along, and if Europe can get its house in order (admittedly a tall order) than we will have made a plausible case for a free market system. Whether emerging countries buy-in is up to them, but all we can (and should) do is lead by example.
But I think it's mistaken to view the contest between "state capitalist" systems and free market democratic systems as a coherent rivalry. As Bremmer makes clear in the book, countries like China and Russia are out for their own, they're not interested in forming a coherent ideological challenge to democratic capitalism. We would do well not to stamp an overly ideological framework over what it is a very time-honored tradition of countries seeking to maximize their position in the global order.
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