Liberal Capitalism vs State Capitalism

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For years, the long debated issue of which capitalist philosophy was the more fruitful and beneficial one amongst liberal and state seemed to be settled, with liberal seemingly the victor. However, China’s success over the past 30+ years, and in recent times, of other emerging nations that have adopted state capitalism, has caused many question marks. Where the liberal capitalist Western society failed to stay relevant, many state capitalist nations came out impressively resilient and in excellent financial state after the 2008 global financial crisis. This has led to the reprise of the controversial debate aforementioned, thus, leaving several experts around the world to, once again, distinguish between the two philosophies. At the heart of this essay, we will not only look at both sides of the debate, but also ultimately look to prove that both philosophies are quite practical, depending on the position of the nation in question, from a global financial standpoint. On one hand, we have Aldo Musacchio, who defines state capitalism as a system in which both democratic and autocratic governments apply extensive influence on their own economies, “through direct ownership or various subsidies”. He claims not to be an advocate of state capitalism; however, he advises liberalists to adopt some sort of a state capitalist system. He claims, “a hybrid form of capitalism – state support disciplined by the market” – provides state capitalism with new features and advantages. Firstly, it creates ‘National Champions’ that have fast risen up in the corporate world. These champions are private companies that are subject to privileges from the government such as subsided loans. Next, it offers companies the choice to invest for long-term, emphasizing its preference for stability over risk. And, thirdly, “it smooths the economic cycle”, as in it allows state capitalists to better

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