The End of the Free Market: Who Wins the War Between States and Corporations?

The author makes sense of much of the post Communist/ Cold War era policies of various countries and multinational corporations in the new global economy. New players and referees are identified and qualified with thorough background and policy facts that the intermediate disciple of world politics would easily grasp. Cutting edge interdependent analysis is spot on and sure to drive a new realm of perspective and information on how we generally view the global network at the intersection of politics and economics. The book identifies the muddling of world governments in capitalist and global systems by encroaching POLITICAL means as it's intended driver. The author also puts American politics into the larger global context of the ideology spectrum and offers a partial prescription, (by way of, non secrecy, consistency, and stewardship in socio-economic philosophical terms) that both major American political parties (i.e., government officials) should heavily consider when representing the American People. Simply said: well done sir. Thank you for refining the American conversation once again and offering keen world business perspective that all global readers can come to terms with for the years ahead. Excellent read (although maybe not for the light reader-- very dense material at times).

My review reprinted from Huffington Post: Political risk guru Ian Bremmer examines the growing momentum of "state capitalism" in his new book The End of the Free Market: Who Wins the War between States and Corporations? Bremmer argues that state capitalism differs from free-market capitalism in that politics rather than profit is the main driver of decision-making. For this reason, it threatens to curtail free markets and the global economy. It is the latest chapter in the "rise of the rest," or the expansion of non-Western states in the international system. Capitalism takes many forms but all of them can be distinguished by their "use of wealth to create more wealth, a broad enough definition to capture both free-market and state capitalism," Bremmer notes. In the free-market form of capitalism, the job of the state is to "enable" wealth generation by enforcing contracts and limiting the influence of moral bads such as greed--the latter can lead to market failures, which have occurred periodically since the Dutch tulip craze of 1637. Free-market governments attempt to ensure that the economic game is played fairly. In contrast to free-market capitalism, the economy in state-capitalist regimes is dominated by the state agenda. "Forced to choose between the protection of the rights of the individual, economic productivity, and the principle of consumer choice, on the one hand, and the achievement of political goals, on the other, state capitalists will choose the latter every time," Bremmer explains. Continuing the sports game analogy, state capitalists control the referees as well as the main players. Bremmer admits that state capitalism isn't new. He traces the first reference to an 1896 speech by Wilhelm Liebknecht, a founder of the Social Democratic Party of Germany. But due to recent questions regarding the merits of free markets after the 2008-2009 financial crisis, the need for job growth and economic stability in less-than-democratic regimes, and the growth of the economies and influence of state-capitalist countries, this form of capitalism is catching on worldwide. While there is "no single model of state capitalism," its leading practitioners, China and Russia, "share a well-developed sense of risk aversion," having recently abandoned communism as their guiding philosophies. Other notable users of this model include energy-rich states, such as Angola, Iran, Kuwait, Malaysia, Nigeria, Saudi Arabia, the United Arab Emirates, and Venezuela. Another cluster of countries in this group, some of which have benefited from rising commodity prices, include emerging markets that have only tentatively committed to free-market principles, such as Brazil, Egypt, India, Indonesia, Mexico, South Africa, and Turkey. Another way to identify a state-capitalist country is by looking at the use of four specific policy tools. One policy tool favored by state capitalists is the national oil (and gas) corporation (NOC), such as Gazprom of Russia, China

The recent tumult in financial markets has politicians, business executives, economists, and scholars alike reconsidering the future of the free market system, and it's an appropriate time for a well reasoned book such as this one from political scientist Ian Bremmer. Bremmer first came to notice with his thought provoking The J Curve: A New Way to Understand Why Nations Rise and Fall (2006) and The Fat Tail: The Power of Political Knowledge in an Uncertain World (with a New Preface) (2009). As the markets have been roiled by a series of problems there have not only been calls to re-regulate them but to fundamentally rethink free market capitalism in general. The rise of so many sovereign wealth funds from wealthier oil-rich nations and autocratic state-run economies such as China has caused many to question and rethink the existing global political economic structure. In an age where the G-20 makes more sense than the old G-7 it fairly begs for a general rethink. The diffusion and dispersal of economic power is changing the global dynamic not just for political leaders but for corporations in general. Old concepts of open markets, the rule of law, an independent judiciary, fiscal transparency, and a free press are increasingly starting to look quaint in a decentralized post-American World, to borrow a phrase from Fareed Zakariah. These changes are more than a mere swing of the pendulum from de-regulated markets back to regulated markets, but a fundamental rethinking of markets entirely. The emergence of State Capitalism is creating a new friction between existing free market capitalist societies and the newer tightly regulated and controlled economic powers. In a very real sense we're seeing the old model of capitalism being passed over in favor of a Capitalism Version 2.0 if you will. Reading "The End of the Free Market" often reminded me of Deng Xiaoping's old comment about "I don't care if a cat is black or white, so long as it catches mice." State capitalists don't care for the niceties of democracy so long as they net economic results. And in an era where the U.S. government has become the majority shareholder in a number of public corporations the question becomes whether we're far off from that same model should these companies fail to free themselves from being wards of the state. To a degree I felt echoes of "The Commanding Heights" where those counties advocating State Capitalism aren't really all removed from those states who promoted state champions, corporations essentially backed by the state to compete against foreign competition. In the end those state champions largely failed for a multitude of reasons, yet that happened in democratic societies, not the new wave of autocratic State Capitalism. And Bremmer isn't entirely certain that free market capitalism will win out over these new State Capitalist systems. These two competing systems could present a new bi-polar world just as happened with politics in the Cold

This is an excellent briefing book. It doesn't drive a single idea, offer a polemic position or try to be controversial. It is thus a hype-free reliable guide to a complex subject. The sequence of logic is centrist and carefully couched. It shows how state capitalism, rather than socialism, is the growing counter to liberal capitalism, in Russia, China, Saudi Arabia and many smaller economies. This is not driven by ideology and Bremmer convincingly argues against any coming Armageddon or WWF wrestling contest of King Kong Commies take on Freedom Fighting Finance Whizzes. He shows that the drivers of state capitalism are very much centered on political control of resources and power and of job creation. It adopts a very domestic focus and is as short-term in its focus as the earnings-driven Wall Street community. He points not so much to the distortions of markets and the misallocation of national resource this leads to as the absence of countervailing forces that are intrinsic to liberal democracies. He emphasizes the commonality of axiomatic belief in market forces that underlies countries like Norway, France and Germany that are too often classified as anti-markets. Under all the rhetoric is an often tense balancing of economics and business versus the intersection of politics and social priorities. Bremmer is pretty convincing in showing that state capitalism does not overall provide the better blueprint for growth but also that it will continue to grow because of its political rather than economic focus. My test in rating the book was to consider three questions: 1. Would I recommend it to someone largely unfamiliar with the issues to get a sound grounding. A definite 'yes' here. I know the fields fairly well and I felt that the coverage was simple without being simplistic, lucid, fair in judgment and broad enough to provide a sound briefing. It's very much is the style of Atlantic magazine pieces, the Economist and Foreign Affairs journal. It's well-presented, though not exciting or jazzy. It emphasizes judgment over flashiness. 2. Would I recommend it to an expert? Here, the answer is more or a 'probably' than 'yes.' There's little that's new or striking in analysis or the sensible centrist recommendations for policy at the end of the book. The "probably" is because it brings material together in a shrewd exegesis, so that I found conformation of what I already know, and extra insights too. His analysis of the dominance of state capitalism in the oil sector was a grabber, for instance. I hadn't realized that ExxonMobil is just 15th in revenues, behind state-owned firms and that the eight top multinationals account for just 10% of global revenues and 3% of reserves. It's not overheavy on such statistics but usefully selective in the ones it does present. 3. Is it useful for a wide range of readers? The specialist economics and policy literature circles round and round all the topics Bremmer covers and provides far more depth. But World