The Rise of State Capitalism

Eurasia Group's Kevin Kajiwara spoke today at the Second Annual CFA Institute Middle East Investment Conference in Abu Dhabi.
What he sees developing is state capitalism replacing globalization.Through state capitalism, states are increasingly becoming the dominant economic actors that "use markets primarily for political gain." Globally, state capitalism is practiced through four key channels, according to Kajiwara: national oil companies, state-owned enterprises, privately owned national champions, and sovereign wealth funds along with other key state-controlled investment vehicles.With regard to the Middle East, Kajiwara breaks the recent unrest into three key phases. The first phase was the secularist, nationalist rise of people power across the region, reinforced by social and global media coverage. The second phase was the state response, which has ranged from promises of reform to direct subsidies to crackdowns, and which has swung the tide from the protesters to state consolidation. The third and final phase is the reassertion of state power and the internationalization of conflicts.Kajiwara's analysis dovetails with my warnings that all though revolution of one sort or another is in the air and across the globe, this does not mean we will necessarily see an advancement toward liberty in the United States or elsewhere. The large majority of people don't understand what liberty is, how it works, or the gifts it brings. With this failure to understand, revolution will, in most cases, simply lead to a new forms of government abuse of the people.