STATE vs. LIBERAL CAPITALISM

Argumentative Essay: Is State capitalism a better economic model than liberal capitalism?

Argumentative Essay: Is State capitalism a better economic model than liberal capitalism?

The collapse of various economies led to the debate between liberal and state capitalistic economies in lieu of the recent economic crisis, leading the world to a debatable situation in which we are to assess which mode of capitalism is better than the other. The main argument of this paper is to support the view that liberal capitalism is definitely a much better economic model than state capitalism. This we say, due to two favorable scenarios: one is the assessment of China as a model economy of state capitalism while the other is the financial crisis that recently struck the world, making viable recommendations for state capitalism. The argumentation would be based on creating sound, evidence-based reasoning for the point of view.

In the modern era, innovation and transformation is the main concern of economies, since they develop new means to fight against economic pressures. State capitalism is not an engine for innovation. No state capitalism permits a process that gives the system its liberal, decisive force to renew itself again and again. This is a term in “creative destruction”. In liberal capitalism, workers, resources and ideas from a dying industry come together again in another form, and create entirely new products for the changing needs (Picciotto, 2011, 34-41). The masters of the state version of any construction or dismantling thought fear beyond their control. Under state capitalism, the government is much more directly responsible for jobs and wages, conversely, creating state-owned enterprises which exert political influence to resist the change.

In an autocratic system (state capitalism), controlled companies and banks often lack the transparency to remain adaptable in the long term. There are many examples in response to this factual observation. Norway's government fund, which manages the country's oil revenues, published exactly the gains, the value of the assets and the companies in which it invests. The Abu Dhabi Investment Authority (ADIA), the world's largest sovereign wealth fund, has even opened a little account that holds no particular mention of the type of expenditures inculcated by the economy. But ADIA also must focus on longer-term deal so that it can cause damage to conceal problems. While often politically-directed investments play a role in the development of new technologies, state capitalism is no longer a vehicle to stimulate innovation and inject catalysts of economic change into a society (Appleby, 2010, 32-67). However, over longer periods of time, bureaucrats' investment rate, as well as, markets and resources are not controlled as effectively in liberal capitalism as it does in state one.

In China, the politicians know that the citizens are the engine of economic development. That is why the country is trying with a plan of historic dimensions of shifting wealth from large companies to the public ones. Only through such an intervention they can protect the country from the dependence on the fluctuating purchasing power of Europeans and ...