The Rise of Corporate States
By Dan Lieberman

A new statism, in various prescriptions, exercises control over the political, moral, economic and social fabric of several nations and has the potential to control the destiny of the world.

United States President George W. Bush pledged to bring democracy and free market economics throughout the world. Many observers interpreted his statement to mean bringing U.S. dominance throughout the world and disguising the adventure with the trappings of democracy. In any event, apart from the new Central European nations established within the framework of the European Community, democracy has not flourished - just the opposite - the world has witnessed the expansion of statism; state interference in economy with trappings of free market economics. These "free" markets can better be described by a term allied with fascism, the corporate state.

The new statism has several identifying characteristics:

The government allows free enterprise, but invests in some industries (mixed economy) and controls significant industries, especially those related to national defense, resources, communications and media. In some cases it also has extensive land ownership.

The government regulates, either directly or indirectly, international money transfers, international trade, wages, prices, internal investment and, in some cases, the labor market.

The government promotes nationalism, reinforces a chauvinistic identification among its people and allies the education system with these efforts.

The government exercises powers that lessen opposition and prevent excessive dissent.

China and Russia are the most prominent nations that reflect the new statism. These former communist nations have redirected themselves and overcome significant political and economic defects associated with totally managed economies. Many developing nations incorporate several statist characteristics in their political system. Poland, South Africa, Indonesia, Singapore and India have State Organized Enterprises (SOE) and, to some degree, together with Israel, have incorporated essential features of the new statism. Resource rich states, such as Venezuela and Bolivia have embarked in a statist direction.

With China growing rapidly and privatization proceeding, it is difficult to ascertain the exact status of China's public ownership. Statistics indicate that China's fully state owned enterprises (SOE) add value to much of China's industrial production. The government has about 17,000 partially owned enterprises. . Almost 200 are major and are represented in about 45% of the nation's productive enterprises. State monopolized industries are in petroleum (PetroChina, SinoPec, CNOOC), telecommunications (China Mobile, China Telecom), steel (Baosteel,) materials (China Shenhua, China Aluminum) and electric power (State Grid). China also has a huge tobacco monopoly. The monopoly SOEs, as in all monopolies, can manipulate prices in fast growing economic systems.

Private enterprises are increasing with less barriers to foreign investment. Nevertheless, the Chinese government still controls much of the legal, political, social and economic aspects of Chinese life. Investment can be channeled to favor certain corporations, labor can be moved to favor certain industries, regulations can be arbitrarily applied without democratic approval, as long as the regulations don't violate international treaties and don't prejudice China's commitments to the World Trade Organization (WTO). Private enterprise is growing , but under the watchful presence of a domineering government. By pursuing a mixed economy of partial liberal economics and statism, China senses it has resolved the problems associated with its previous mis-managed economy and with communist systems.

Supply for consumer markets is dictated by international demand rather than by government action. China supplies labor and resources and foreign investors supply much of the capital that makes China the manufacturer for the world. Chinese workers use the income to purchase part of the consumer demand and the surplus is exported to foreign markets. By partial ownership, taxes and license fees, the Chinese government gains revenue for financing its capital intensive projects .

Allocation of resources, another difficulty in managed economies, is now more efficiently performed by market oriented managers, so that supply approximates a demand dictated by international needs. Unprofitable enterprises are quickly located and resources easily move from the slackers to the more efficient. This includes labor, which is represented by an All-China Federation of Trade Unions and is still indirectly controlled by the government.

Over-production is minimized and surplus is distributed. The Chinese masses can absorb surplus production that can't be exported. If necessary, the government can subsidize the prices.

Since the Yuan is mainly a domestic currency (Hong Kong, Taiwan, Vietnam and Singapore use the Yuan), unlike the omnipresent can Dollar and Euro, the Chinese authority can exchange the national currency for foreign currency acquired by export. The government maintains the Yuan at a value favorable to its economic growth, which is a cheaper Yuan for cheaper exports. With the huge accumulated reserves, the government SOE's wander the word and invest in other countries, unlike governments of democratic nations that can only make loans or give mutual assistance.