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State Capitalism THE FRENCH STATE CAPITALISM IN COMPARATIVE AND HISTORICAL PERSPECTIVE Robert Boyer Institute of the Americas, Paris EACES Workshop "The Rise of State Capitalism: consequences for economic and political development”, HSE bulding in Armyanskiy Pereulok 4, bldg. 2, Room 418, Moscow, April 10 and 11, 2019 INTRODUCTION 1. Back to Berlin Wall collapse: the idea of an irreversible victory of the synergy between markets and democracy 2. Post the Great 2008 crisis : the structural instability of finance led capitalism, the State as a rescuer of last resort 3. Against the unequal distribution of the benefits from internationalisation: National sovereignty is defended by new movements and parties. Has the time of State capitalism come back? SYNOPSIS I. The concept of state capitalism in long run historical perspective. II. The contemporary debate: is state capitalism the successor of liberal capitalism? III. A taxonomy of various brands of state capitalisms. IV. How specific is the French state capitalism of the Golden Age? V. Was the demise of state French capitalism ineluctable? VI. Is China a new form of state capitalism and can it be exported? VII. Are multinationals and states trading place? I - THE CONCEPT OF STATE CAPITALISM IN LONG RUN HISTORICAL PERSPECTIVE. 1. The same word but quite different meanings and configurations 2. The State is born before the rise of capitalism 3. Its nature evolves at each step of capitalist development 4. The rise of China redefines the debate around State Capitalism. Figure 1 – A brief survey of the long run transformation of the State Capitalism nexus II - THE CONTEMPORARY DEBATE: IS STATE CAPITALISM THE SUCCESSOR OF LIBERAL CAPITALISM? 1. A convergence of structural transformations in contemporary societies 2. The consequence of the excesses of liberal capitalism? 3. A black and white debate or the impossibility of a third way? Table 1 – The State capitalism versus liberal capitalism INSTITUTIONAL FORMS LIBERAL CAPITALISM STATE CAPITALISM Collective labor rights A pure private Wage labor nexus and state intervention via commercial contract minimum wage policy Wave of regulation / Still regulation and Forms of competition deregulation Nationalized sector Banking / Financial Intermediation via capital Bank intermediated System markets Finance, Highly regulated Property rights Architect of institutional State / Economy Nexus enforcement and pro- forms market incentives Administered exchange Integration into the Via product and financial regime and capital world economy markets control III - A TAXONOMY OF VARIOUS BRANDS OF STATE CAPITALISMS 1. A variable mix of objective and instruments : protectionism, full subordination of the economy to polity … 2. .. Strategic State with indicative planning 3. ....or a development State in charge of fighting against dependency and/or for late development ? Table 2 – The various brands of State capitalism in historical perspective IV - HOW SPECIFIC IS THE FRENCH STATE CAPITALISM OF THE GOLDEN AGE? 1. Creating a virtuous circle among large and numerous public entities Figure 2 – A large part of economic coordination operates within the public sector Firms (including nationalized) Public Public research procurement (transport, health, defense) State Multiplier revenue effect 2. Indicative planning: pooling expectations and reacting to uncertainty. Figure 3 – Planning as an ex-ante exploration of economic coordination Short-Medium Term Strategy Actual Economic + Trajectory Reaction to uncertainty adjustments Real economy Real economy ECONOMIC INTEREST Diverse / Conflicting Shared diagnosis Macroeconomic Business interests And performances / Representatives expectation Viability planning Heterogeneity of Workers Unions expectations XPERTISE OF E national national of of ECONOMIC ADMINISTRATION sphere POLITICAL The LEGITIMACY A collective Vote National Economic anticipation of by Plan proposed by economic trajectory National Assembly government 3.The complementarity of various economic policy instruments Figure 4 – State capitalism: a full range of tools in order to deliver satisfactory outcomes Industrial / Technological policy Growth Price controls Budgetary Income policy Low inflation Full employment policy and / or monetary policy Monetary policy External equilibrium A fix exchange rate regime IV - WAS THE DEMISE OF STATE FRENCH CAPITALISM INELUCTABLE? 1. The structural transformations that have eroded the efficiency of State capitalism Figure 5 – The three structural transformations that explain the crisis of French State capitalism - Privatization - Enforcement of competition at the European levels - Structural public The circularity of deficit economic circuit organized by the States FRENCH STATE CAPITALISM Indicative National An extended tool Planning box of instruments - Diverging interests between of globalized capital and workers - Price liberalization - Diffusion of free - Financial market ideologies deregulation - Loss of expertise of - Market led flexible economic exchange rate administration 2. A new epoch for the French capitalism Figure 6 – The present configuration of French capitalism is no more a typical State capitalism Market enhancing State but still mutualisation of risk Still a different form of capitalism ECONOMIC POLICY DIVIDED COMPETENCES Global exchange rate Reactive to exogenous European: Monetary shocks and large firms policy global strategies National: fiscal and budgetary policy under EU supervision 3. No convergence towards a typical market led SOCIAL- MARKET INSTITUTIONAL LIBERAL capitalism DEMOCRATIC ENHANCING FORMS CAPITALISM CAPITALISM STATE Wage labor nexus Individualization / More competitive Individualization but Decentralization / wage formation but multiple public Acute competition still collective interventions about Table 3 – The French bargaining and/or labor laws redistribution capitalism is still different Form of Constitution of Via foreign Polarization between from others competition monopolies / competition multinationals and oligopolies smaller firms Financial system Domination and Corrections of past Still the role of banks resilience of capital sources of crises under control by markets, partially transnational entities monitored State-economy Still belief in the State, the insurer of Still recurrent and nexus efficiency of markets last resort multiple public interventions Integration into the Ongoing shift out of Still the acceptance Strong French world economy the free trade of world multinationals but doctrine competition shrinking share of export Iconic Case United States Denmark France 2019 2019 2019 VI - IS CHINA A NEW STATE CAPITALISM? 1. The competition among a multiplicity of local State corporatism under the difficult monitoring by Central government A myriad of local corporatism controlled by Beijing: an original form of state capitalism 2. A genuine architecture for institutional forms IMPACT UPON INSTITUTIONAL FORMS MAIN FEATURES REGULATION MODE ACCUMULATION REGIME 1. FORMS OF COMPETITION Acute competition among A tendency toward The driving force of numerous and various entities constantly declining accumulation (firms, provinces, localities) production costs and prices 2. WAGE-LABOR NEXUS Dual status (rural/urban) Strong influence of the large Unbalanced income Balkanized and serialized pool of rural workers on distribution: low and works competitive wage formation declining wage share Absence of own collective organization 3. MONETARY/CREDIT Dialectic between large-scale A fine-tuning in reaction to A tool to sustain and manage REGIME decentralization and need for quickly evolving a high growth regime control at the domestic/international macroeconomic level economy 4. THE STATE/ECONOMY A pragmatic and High reactivity to emerging Periodic reconfiguration of NEXUS anticipatory central state disequilibria institutional forms A multilevel/complex governance 5. INSERTION INTO THE A selective insertion The exchange rate is a key The trade surplus is the INTERNATIONAL - Constraints upon FDI political variable, along with consequence of domestic ECONOMY - Control of external current domestic credit, in smoothing imbalances between account external shocks production/demand - Specific domestic norms 3. An unbalanced accumulation regime : balkanized workers and trade surplus Figure 2 – Competition: the hierarchical institutional form in China WAGE-LABOR NEXUS Protectionist FORMS OF COMPETITION segmented (rural/urban) backlash and serialized workers threat Cutthroat competition: over Declining wage share investment Permanent Unbalanced trade surplus accumulation regime Asymmetric Active monitoring Periodic insertion into the by money reconfiguration of world economy and credit institutional forms 4. Beijing to monitor such a dynamic process via three instruments Figure 3 – From the local to the national: the three major tools of the Central State Central State Exchange rate policy Control of credit Redistribution by public budget Local Local Local Poor Laxist Overcapacity meso- meso- meso- welfare credit corporatism corporatism corporatism 1 2 3 Competition-led growth 5. A overview of Chinese State capitalism Figure 2 – China: A unique mix of institutional arrangements A SOCIETY WIDE COMPROMISE Party-State versus population Promise of better standards Political of living support Legitimacy Growth via growth Protection of Investment, fuzzy property growth Local growth Promotion rights attraction of FDI Local authorities versus firms A tax sharing system, land based local finance A SERIES OF LOCAL STATE
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