Let's hear it for the state (sort of)

The visible hand | The Economist

This will go over well at Catallaxy. The Economist has a quasi sympathetic look at the success of "state capitalism," as demonstrated by China, Brazil and elsewhere:

This special report will cast a sceptical eye on state capitalism. It will raise doubts about the system’s ability to capitalise on its successes when it wants to innovate rather than just catch up, and to correct itself if it takes a wrong turn. Managing the system’s contradictions when the economy is growing rapidly is one thing; doing so when it hits a rough patch quite another. And state capitalism is plagued by cronyism and corruption.

But the report will also argue that state capitalism is the most formidable foe that liberal capitalism has faced so far. State capitalists are wrong to claim that they combine the best of both worlds, but they have learned how to avoid some of the pitfalls of earlier state-sponsored growth. And they are flourishing in the dynamic markets of the emerging world, which have been growing at an average of 5.5% a year against the rich world’s 1.6% over the past few years and are likely to account for half the world’s GDP by 2020.

State capitalism increasingly looks like the coming trend. The Brazilian government has forced the departure of the boss of Vale, a mining giant, for being too independent-minded. The French government has set up a sovereign-wealth fund. The South African government is talking openly about nationalising companies and creating national champions. And young economists in the World Bank and other multilateral institutions have begun to discuss embracing a new industrial policy.

The Economist comments are often worth reading too, and this one caught my eye:

The problem is that the Western liberal capitalism, that developed our society, has transformed paradoxically into communism. The welfare state is really a form of communism that prune and obstruct the tradicional liberalism that became western contries leaders of the world.

If you create a huge free public health system, a three years unemployment coverage, a free educational system, a grants culture or compel successful workers to pay 56% income tax, you really has establish a communism regime where talented people have to support others without any merit more than to be human beings.

Yes, what a tragedy that is!