Why State Capitalism? State Capitalism verses Liberal Capitalism

I am are not talking about two systems with the same objectives. Almost perfect examples are State capitalism in China & Liberal capitalism in the U.S.A. The fundamental disconnect between governments and the free markets is that free markets are driven by what people are willing to pay for; governments have an agenda. State capitalism is simply a mechanism to realize the government’s agenda. In China, that agenda leaves out around 900 million people, but let’s not worry about a few outliers.

The problem with free markets is that they really don’t concern themselves with social needs unless people are willing to pay. Since the neediest people are also the one’s least able to pay, there is bound to be resentment of the market. You are criticizing a zebra for having stripes.

The model says, let the markets run because they are (more) efficient (than government), but tax them to meet national needs. Don’t ask the markets to meet the needs directly. That is not what they are designed to do. You should also not tax them so severely that they become uncompetitive. Taxes shouldn’t be based just on how much income you have, but how much competition. A profitable business with no competition should be taxed highly, but in certain dynamic fields, high taxes that would take the capital for research and development can kill the company.

Perhaps most damaging, state sponsored companies have little incentive for innovation or efficiency. This is what competition brings to the table, and it is fed best by the existence of personal opportunity. People who go to work for state controlled companies are looking for security – not challenges.If state capitalism is such a good deal, why did Communist Russia collapse? Why is India struggling to loose the bonds imposed from the time of Nehru? Singapore is about as democratic as the Vatican. Liberal capitalism is also imperfect. It is simply superior in providing the greatest good to the greatest number of any economic system invented up to now. Income equality is a chimera which has never existed in any society. Certainly Communist Russia had a wealthy four or five percent while the remainder suffered in equal poverty.The axiom that "Power corrupts and absolute power corrupts absolutely" applies to government trying to run economies as well as to the individual but alas!!In the last 30 years china has distributed more wealth to more people in the history of mankind. In the last 30 years the west has concentrated more wealth in fewer hands in the history of mankind. Tell me who corrupts absolutely...

Free trade always was a greenhouse garden established by state in its frontiers.In domestic commerce free trade is common, but international commerce always depends on politics, in colonies and intimidated countries. Capitalist system was developed in England with world trade at service of local England commerce, industry and finance. After all this was moved to United States where American State obtains overseas big gains for his business. American capitalism is intermixed with old England financial oligarchy.
Free trade also is an argument to oblige poor countries to open their frontiers to an unequal commerce with commercial and industrial dominant powers.
US are very interested in free trade when this is good for big gains. China socialism offers very cheap labour and don't enforce regulations at all what results in a paradise for industrial profit.
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About Rowland Mtetezi

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