The End of the Free Market

The End of the Free Market: Who Wins the War Between States and Corporations? (Portfolio, 2010) is a book by Ian Bremmer that details the growth of state capitalism, a system in which governments dominate local economies through ownership of market-dominant companies and large pools of excess capital, using them for political gain. This trend, Bremmer argues, threatens America’s economic strength and the conduct of free markets everywhere.
The president of Eurasia Group, a leading global political research and consulting firm, Bremmer is an expert on the intersection of economics and politics. He has followed the rise of state-owned firms in China, Russia, the Arab states of the Persian Gulf, Iran, Venezuela, and elsewhere. In The End of the Free Market, he outlines the challenge that state capitalism will pose for the future of the global economy.
State capitalism
State capitalism is a system in which governments dominate local economies through ownership of market-driving companies and large pools of excess capital, using them for political gain.
State capitalist governments use state-owned companies to manipulate entire economic sectors and industries. For instance, state-owned oil companies now control three quarters of the world’s crude oil reserves. State capitalist governments also own enormous investment funds (known popularly as sovereign wealth funds) that have become vitally important sources of capital for Western governments and financial institutions.
Free market capitalism and state capitalism are in conflict, because the political motivations behind state capitalism distort the performance of markets. For example, when state-owned Chinese companies operating abroad pay above-market prices to lock up long-term access to the commodities that China needs to ensure growth, create jobs, and protect the Communist Party’s hold on domestic political power, they raise the price that everyone must pay for those resources.
The future of free market capitalism depends on the willingness of those who believe in free markets to learn from the failures that triggered the Western financial crisis, to practice the kind of capitalism they preach, and to renew their commitment to the principles that have helped them prosper.
Selected quotes
"During the financial crisis and global recession, an enormous market meltdown that provided globalization with its first true stress test, political officials in both the developed and the developing worlds seized responsibility for decisions that are usually left to market forces -- and on a scale not seen in decades."
"In the first decade of this new century, public wealth, public investment and public ownership have made a stunning comeback."
"Authoritarian governments everywhere have learned to compete internationally by embracing market-driven capitalism. But if they leave it entirely to market forces to decide winners and losers from economic growth, they risk enabling those who might use that wealth to challenge their political power."
"State capitalism is not the reemergence of socialist central planning in a twenty-first century package. It is a form of bureaucratically engineered capitalism particular to each government that practices it."
"Many of the governments that practice state capitalism have profited from it—both economically and politically. This might encourage some of them to rely less for future growth on commercial ties with the United States and more on one another."
"There are no ties more important for the future of the free market than those that bind America and China—the world’s most powerful advocate of free trade and open markets and the largest and most influential practitioner of state capitalism. US policymakers can’t afford to simply ignore the many disputes that burden commercial relations between the two states. But nor can they ignore the mutually assured economic destruction that now exists between them."
"The strength and durability of recovery will depend on the willingness of those who believe in free markets to learn from the failures that triggered a crisis, to practice the kind of capitalism they preach, and to renew their commitment to the principles that have helped them prosper."
Chapter overview
Introduction
Chapter One: The Rise of a New System
In The End of the Free Market: Who Wins the War Between States and Corporations, chapter one tells the story of how all this happened.
Chapter Two: A Brief History of Capitalism
Chapter two offers a brief history of capitalism to uncover the roots of the current emerging conflict.
Chapter Three: State Capitalism—What It Is and How It Happened
Chapter three illustrates how state capitalism works.
Chapter Four: State Capitalism Around the World
Chapter four reveals how and why governments in a dozen different countries use it, with special attention on China, Russia, Saudi Arabia, and the United Arab Emirates.
Chapter Five: The Challenge
Chapter five outlines why state capitalism threatens free markets and the future of the global economy.
Chapter Six: Meeting the Challenge
Chapter six details what those who believe in free market capitalism can do about it.

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