State capitalism

The Economist is hosting (2012-01-29) an excellent, robust online debate “state capitalism is a viable alternative to liberal capitalism.” The moderator Adrian Wooldridge is reporting from Davos.

Ian Bremmer, Founder and president, Eurasia Group argues against the motion,
“State capitalism is not simply an economic system. It is a political invention designed to ensure that market activity and wealth serve the interests of the state and those who run it. This is the primary reason that it will not become a viable alternative to liberal capitalism.” He defined “state capitalism” as a “political construct in which the state is used to promote the interests of the political elite.” Extend the definition of the term to include any country that has a large state-backed country, he argues, and you end up lumping Norway along with China.”

Nation states operate most efficiently and effectively as a mutually agreed upon buffer between the market and civil society protecting the most vulnerable resources (human, natural, etc) from the excesses of either the market or civil society. In late capitalism, even without state-capitalism, public policies are already tightly aligned with market concerns thereby dissolving this protective buffer zone with unintended consequences on vulnerable resources for which the market is not answerable. Who will be answerable when state-capitalists do what the most efficient capitalists do, make more profits by taking risks, and ultimately err and plunder to the advantage of a few and the loss of the majority? What entity of governance can ensure equilibrium in trade relationships between capitalist-state-owned oil industries and democratic market liberal nation states?