Aikins: Is the rise of state capitalism a threat to economies like Canada’s?

By: /
February 13, 2012

One reason that the rise of so-called ‘state capitalism’ does pose a unique set of challenges to economies like Canada’s is because state-directed economies are able to pursue strategies that fall outside of the typical range of market-based outcomes. For example, China has been able to engineer what is in effect a massive transfer of intellectual property from the West. They’ve done this by cutting deals with individual Western companies that—while they offer short and medium-term profits to those companies—force them to partner with Chinese companies. That in turn gives those Chinese companies a short cut to technologies that then allows them to compete directly with their erstwhile Western partners. That’s a smart play, but not one that a free market will typically organize or counter, since its logic takes place on higher level than the interactions between individual buyers and sellers.