23
Jul

The One Capitalism That Dare Not Speak Its Name

By Pankaj Mishra

On Dec. 26, 1992, a year after the Soviet Union imploded and lurched to embrace American-style capitalism, the Economist editorialized about a “universal agreement that there was no serious alternative to free-market capitalism as the way to organize economic life.”

Since its origins in mid-19th century Britain, the Economist has been the main propaganda organ for the neoclassical ideology of the free market (minimal government, invisible hand, etc.). It is the job of all ideologues to make their own preferred political and economic system seem natural and perfect. Still, someone in that 1992 editorial meeting ought to have said, “Not so fast.”

In a special report on state capitalism last January, the Economist admitted that “the era of free-market triumphalism has come to a juddering halt.” Liberal capitalism in the U.K. and the U.S. isn’t just convulsed with internal crises caused by unregulated financiers. It now faced “a potent alternative”: state capitalism, which has on its side one of the world’s biggest economies — China — and some of its most powerful companies –Russia’s Gazprom OAO, China Mobile Ltd. (CHL), DP World Ltd., and Emirates Airline.

Stunning Reversal

“Across much of the developing world,” Bloomberg Businessweek recently reported, “state capitalism — in which the state either owns companies or plays a major role in supporting or directing them — is replacing the free market.” From 2004 through 2009, the article points out, “120 state-owned companies made their debut on the Forbes list of the world’s largest corporations, while 250 private companies fell off it.”

What explains this stunning reversal for Anglo-American neoliberalism? Or is it that we have just emerged, blinking, from a long period of ideological delusion in which we were unable to see the world as it actually is?

The last 20 years of globalization spawned no greater article of faith than that selling state-owned corporations, inviting foreign investment, and deregulating prices and markets would encourage growth, and even introduce democracy. Read more…

Pankaj Mishra is the author of “Temptations of the West: How to be Modern in India, Pakistan, Tibet and Beyond,” “The Romantics: A Novel” and “An End to Suffering: The Buddha in the World.”

As published in www.bloomberg.com on July 23, 2012.

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