Perhaps the most enduring consequence of the recent financial crisis will be to slow the worldwide trend toward market capitalism. The alternative is not Soviet-style central planning, which is incapable of allocating resources in a modern economy, but state capitalism. Under this model, semiautonomous enterprises, often owned by governments, are guided in their strategic and sometimes even their operational decisions by their political masters. Although the usual goal for these enterprises is to create jobs, when profitable, they can finance the state. As this interesting book demonstrates, state capitalism is nothing new, but it has been given new longevity. Bremmer explains how the model has taken hold in China, Russia, Saudi Arabia, and other Arab Gulf states, which he contrasts with developing countries, such as Egypt and India, that have begun to rely more on markets. (Europe, surprisingly, is not covered.) The title aside, Bremmer believes that market capitalism has compelling advantages over state capitalism, especially its flexibility and capacity for innovation. Provided it is well managed, market capitalism will predominate in the long run, especially in functioning democracies, where state capitalism is hard to sustain against private enterprise. But state capitalism will not give way easily or quickly where it serves the interests of those in power.
Get the best of Foreign Affairs' book reviews delivered to you.
More Reviews on Economic, Social, and Environmental From This Issue