State Capitalism and the Future of Globalization

State Capitalism and the Future of Globalization

For nearly three decades, there were few certainties about the global order as starkly tangible as the Berlin Wall. Cutting off East from West both literally and figuratively, it was the most important stitch in the Iron Curtain, and even on the eve of its collapse in the fall of 1989, few could imagine a world without it or the potentially apocalyptic divisions it represented.

Yet when the Wall finally fell, eventually taking all of Soviet communism with it, a new set of certainties about the global political and economic order was born. And none has been more pervasive or enduring than the belief that the spread of markets and the advance of globalization are irreversible, even inevitable. Countries imprisoned for half a century or more behind the Iron Curtain needed only to stagger out into the light of a changed world, in which capitalism had triumphed, history had ended, and the road towards a market-driven utopia was an open, if occasionally bumpy one.

Or so the thinking went. But 20 years later, there is reason to question our assumptions, not least because a new specter has crept into view in recent years: the rise of state capitalism, an economic approach in which governing elites recognize the power of markets, but seek to manage and control that power for the direct benefit of the state itself. And in the lengthening wake of the global financial crisis, there is perhaps more skepticism about free markets now than at any point since 1989.

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