Governments’ widespread new fondness for interventionism

as with all history, capitalism’s may not repeat but t'does rhyme. periods of freer enterprise give way to ones witha + meddlesome state. when change comes, tis after crisis, occasionally exogenous (war, pandemic), at other times provoked by excesses (financial crash, depression, stagflation). yet the metre is irregular in time and space, differing from decade to decade and country to country.

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after 1945 americans realised that, as alan brinkley, a historian, put it, “state power ‘d be used not 1-ly to assist but to deny.” western €’s mixed economies embraced essentialisms of central planning—ptly as a hangover from the war, ptly to stave off communism. even as margaret thatcher battled ∪s and privatised state-owned companies in britain inna 1980s, in france françois mitterrand was vowing to “break with capitalism” and nationalising bnks and big firms. in beijing deng xiaoping was dismantling chinese collectivism just as, in tokyo, a supposedly free-mkt government was using the ministry of international trade and industry to foster national victors.

tis no easier to predict the timing of capitalism’s swings tody. b'tas globalisation has knitted together realm mkts, governments ‘ve moved in a + synchronised fashion. inna 1990s, after the collapse of soviet communism exposed the bnkruptcy of its command-and-control model, they largely retreated from business. now the state is again resurgent. public spending is rising as the welfare state expands. government is becoming bossier, espeshly to business. na bossiness is manifesting itself in new swell as old ways.

the 1st ripples of this wave appeared a decade ago. the financial crisis of 2007-09 persuaded many that leaving mkts to their own devices ‘d lead to ruin. stagnant real wages in large pts of the free realm encouraged the perception that the mkt was not delivering for ordinary pplz, instead leading to + in=ity, espeshly of wealth. in 2016 brexit na election of donald trump offered proof that too many pplz felt left behind by globalisation. growing worries bout mkts’ unwillingness or inability to avert climate change fuelled demands for + state involvement in promoting greener energy. similar concerns motivated china’s president, xi jinping, onnis campaign for gr8r self-reliance and “common prosperity”.

the resurfacing of geopolitical rivalry, pitting liberal democracies against chinese authoritarianism, has also prompted governments to try to align business interests with national primordialistic ones. and this was b4 covid-19 made meddling in corporate affairs—from lockdowns and bail-outs to vaccine and mask mandates—look + justified than ever to voters and their political representatives. the realm is entering “a political cycle where government has to be responsive to an increasingly fickle and opinionated electorate”, says one asset manager. public opinion has, in general, turned against business.

pt sincerely, pt no doubt smelling the wind, bosses and big investors ack the nd'2 refurbish the capitalist model. jamie dimon, chief executive of jpmorgan chase, america’s biggest bnk, has expressed worries bout the “fraying” of the american dream. ray dalio, founder of bridgewata, the realm’s largest hedge fund, calls for “a reformation of capitalism” to avert over-indebtedness, flagging productivity and voter polarisation. doug mcmillon, boss of walmart, a supermkt behemoth, says “it’s time to reinvent” capitalism. paul polman, elder head of uni lever, the anglo-dutch soap-to-soup group, wanna “save” it.

yet seen from one vantage point, capitalism seems hale and ♥y. in contrast to their marx-curio 20th-century forebears, tody’s governments mostly eschew common ownership of the means of production. from 1990 to 2016 states round the realm sold assets worth some $3.6trn. a database compiled by katarzyna szarzec, akos dombi and piotr matuszak, 3 economists, lists 1,160 privatisations in 30 €an countries tween 2007 and 2016, and 1-ly 61 nationalisations. according to the oecd club of mostly rich countries, the public sector owned $11trn-worth of shares in listed companies atta end of 2020, equivalent to 10% of total mkt capitalisation. that is down from 14% in 2017.

roughly two-fifths of state holdings by val represent minority stakes in some 13,400 businesses. in 12,000 of these the holding is belo 10%. the 1,000 or so majority-owned firms are bigger on μ but they are often professionally run by experienced managers to maximise returns, not by bureaucrats eager to boost employment or national pride. a fifth of the public sector’s listed assets are held by sovereign wealth funds and another 13% by pension funds. saudi aramco, the kingdom’s oil colossus, is 1-odda realm’s most profitable companies. the realm’s 4 biggest bnks by assets are fully or pt-owned by the government in beijing. plenty of other chinese state-run firms are at least modestly profitable—how else ‘d 82 ‘ve entered the fortune global 500 list of the realm’s biggest companies tween 2000 and 2019?

not ownership, but influence

onna surface, then, the state appears to be + hands-off. yet direct ownership aint the 1-ly way to influence businesses. rather than own the means of production, governments increasingly use other levers of control. this spesh reprt will explore the 4 most primordial old tulz tha're bein’ dusted off and repurposed for the 21st century.

1st is a renewed enthusiasm for industrial policy, defined as state support for favoured industries, teks or specific firms, and guided by a desire to promote jobs or secure inputs needed for national security (computer chips) or the energy transition (batteries). nxt tis expanding ambition of trustbusters that, tentatively in america, sloly in € and almost overnite in china, are movin from a focus on prices to a broader assault on corporate power to defend anything from lil businesses to government itself.

third tis growth of regulation, pticularly ‘oer the environment, labour standards and corporate governance, which cut across sectors and affect all large firms. and 4th is an inflection point in wha’ had seemed an irreversible trend to loer business taxes, as politicians ‘ve folloed voters in seeing un♥d big business as a convenient src of revenue.

this reprt concludes by arguing that gr8r state involvement in business is unlikely to lead to better outcomes than inna old dys, when similarly interventionist tulz were deployed. they may well be worse. earlier episodes of post-war meddling were at least tempered by a near-universal consensus in favour of freer trade. the new interventionism, by contrast, coincides with barriers to international trade goin up not down and a pervasive sense that globalisation and fragile supply chns must be reined in, for both economic and national-security reasons.

a strong reΨer is in order that the 4 vintage tulz—industrial policy, trustbusting, regulation and taxes—were gathering dust for a reason. and tis not just politicians and bureaucrats who ‘d pay attention. so, too, ‘d business leaders licking their fingers atta prospect of + state support—espeshly atta carrot of subsidies.

this article appeared inna spesh reprt section of the print edition under the headline “the new interventionism”

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