A week before Prime Minister Stephen Harper left to China to sign $3 billion worth of deals and collect two pandas, The Economist published a special report on state capitalism. Inspired by Ian Bremmer’s provocatively titled The End of the Free Market, the report proclaimed that “The era of free-market triumphalism has come to a jarring halt,” and cited state capitalism’s claim to the “most successful big economy” – China’s – as proof.
In a system of state capitalism, Bremmer writes, “the state [uses] markets to create wealth that can be directed as political officials see fit … the ultimate motive is not economic (maximizing growth) but political (maximizing the state’s power and the leadership’s chance of survival).”
What, then, are we to make of Canada’s $3-billion trade deal with Beijing? What of Petro-China’s $1.9-billion investment in Alberta’s oil sands? While economic freedom in the rest of the world is in decline, Canada’s economic freedom remains among the highest in the world (higher, even, than our southern neighbour’s). If eastern state capitalism is the new western liberal capitalism, has Canada missed the boat?
Over the course of the week, OpenCanada interviews the top minds on economic freedom and Canada-China relations. We ask them to consider what this new capitalism means for Canada, how the prime minister is approaching it, and whether Bremmer and The Economist simply got it wrong.
Don’t blame the BRICs. Roundtable blogger Gregory Chin argues that the trend toward state capitalism is not confined to emerging economies. >>
Willis Sparks, of Ian Bremmer’s Eurasia Group, defends the state capitalism thesis against Chin’s charges. >>
The pandas might have been cute, but… The Fraser Institute’s Fred McMahon thinks Chinese state capitalism is a threat to Canada. >>
It’s all in the details. UBC’s Pitman Potter discusses how Canada’s new agreement with China should be crafted to avoid the pitfalls of state capitalism. >>
Photos courtesy of Reuters