The Spectre of State Capitalism. By Ilias Alami and Adam D. Dixon. Oxford University Press. 2024.
At one time the concept of ‘state capitalism’ was used only by socialists, to describe the state acting as a capitalist by investing capital, employing wage labour, and producing for the market. As far back as April 1910 the Socialist Standard carried an article entitled ‘Evolution and State Capitalism’ which explained that nationalisation was not socialism. From the 1920s we applied the concept to the economic system in the USSR. Other articles followed in the 1930s and 40s. The concept was also applied to other countries where, in the absence of a strong enough capitalist class, the government set up state enterprises to introduce and develop capitalism.
Today China is routinely described by politicians and the media as ‘state capitalist’. There is even a branch of academia devoted to ‘state capitalist studies’ of which Alami and Dixon’s book is both a product and a description. A large part of their book is taken up with questions of methodology and definitions for specialists in the subject, which makes it rather heavy-going for the general public.
Their conclusion is that the term should be applied only to particular state bodies, such as state-owned enterprises (SOEs), sovereign welfare funds, and state-funded development banks where the state is an actual owner, and not simply to any state intervention in the capitalist economy. They distinguish between an old state capitalism of nationalised industries, often natural monopolies, and a new state capitalism of ‘state-capital hybrids’ which are consciously structured and behave exactly like private capitalist corporations or investment funds, seeking to maximise profits, paying dividends, engaging in financial wheeling and dealing, and even taking over other businesses.
The authors come up with some perhaps surprising facts:
‘Their [SOEs] share among the world’s 2,000 largest firms doubled to 20 per cent over the last two decades. Over the same period, the assets controlled by SOEs grew from about $13 trillion in 2000 to $45 trillion (equivalent to half of global GDP) (IMF). Many SOEs are in top rankings such as the Fortune Global 500. According to the OECD, half of the top ten non-financial firms as measured by revenue are SOEs. In 2021, they made up 132 of the world’s 500 largest companies—up from thirty-two just two decades ago. UNCTAD estimates that there are at least 1,500 state-owned multinational enterprises, which are SOEs that control assets or other entities in countries other than its home country. In other words, many SOEs now compete on the world market, and perform as efficiently as private capitalist firms in some sectors.’
Alami and Dixon see the ‘new state capitalism’ of ‘state-capital hybrids’ as a new stage in the evolution of capitalism, after ‘neoliberalism’. This is certainly an increasing feature of contemporary capitalism but whether it represents a new era is another matter. In any event the advocates of ‘free market’ capitalism are back on the defensive. Even those who accept capitalism as we know it in the West are alarmed at Chinese-style state capitalism. Alami and Dixon quote the President of the European Commission complaining about ‘distortions created by China’s state capitalist system’ and Blinken, the late US Secretary of State, insisting on the need for protection ‘from the aggressive state capitalism of modern autocracies’.
Apologists for the West portray the conflict with China as one between ‘liberal capitalism’ and ‘state capitalism’. A case for this can be made out but it was that even under Mao when the apologists were calling China ‘communist’. At least they are now being honest.
In the final chapter Alami and Dixon come out as some sort of leftists, citing Marx. They see a potential ‘progressive’ side to their new state capitalism as, by further blurring the distinction between the economic and the political realms, it opens up the possibility of achieving ‘non-reformist reforms’. This, despite their conceding that (by ‘valorise’ they mean create surplus value):
‘State-owned capital is still subjected to the imperatives of self-valorization. The state can partially or temporarily suspend these imperatives (for instance, by accepting a lower-than-average rate of profit, or by institutionalizing other social and political goals alongside profit maximization), but if it does so over the long term, the risk is that the capital becomes devalued. State-owned capital must therefore continue to valorize not to be destroyed, and with it, the social wealth that it represents.’
Which is precisely why supposed non-reformist reforms can no more lastingly overcome the economic laws of capitalism than can common-or-garden reforms.
Adam Buick
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