Review of Ian Bremmer's New Book

Below is a review that I wrote of Ian Bremmer's new book, The End of the Free Market.
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Although there was certainly no dearth of commentary about the rise of China and the appeal of "The Beijing Consensus" prior to the global financial crisis, such discussion has exploded in its aftermath. While the United States coped with the most serious challenge to its economy -- and the intellectual underpinnings thereof -- since the 1930s, China lamented that its economy "only" grew by 8.7% in 2009. The marked performance gap between the world's lone superpower and its putative successor has, understandably, generated an intense debate about the performance and sustainability of democratic capitalism.

Prolific political-risk expert Ian Bremmer joins this discussion with an important contribution.

In an interview with Nouriel Roubini, he defines state capitalism as "a system in which the state uses the power of markets primarily for political gain." Although it is neither new nor a uniquely Chinese phenomenon, it is also true, as Bremmer notes, that "we wouldn't be talking about state capitalism as [a] game-changer for international politics and the global economy if it weren't for China."

The state-capitalist challenge appears to loom especially large when juxtaposed with the developed world's anemic recovery from the crisis. Indeed, one could argue that it is precisely those three places that were considered the anchors of the global economy at the turn of the century -- the US, Western Europe, and Japan -- that have struggled most in the past year. Although sobering, that reality also suggests grounds for optimism: state capitalism poses a challenge because the underlying ideology of market-based capitalism has sustained such a serious blow, not because it is intrinsically more appealing.

Indeed, it would be mistaken to view state capitalism as an ideology for at least two reasons:

(1) Although there are increasingly robust commercial and strategic ties between its principal practitioners -- China, Russia, and Arab countries in the Persian Gulf -- those countries have yet to coalesce into an ideological front of the kind that the West encountered in the Soviet Union and its satellite network.

(2) Its exponents are far more concerned with advancing their interests than with exporting what amounts to a management system.

Consider China, state capitalism's de facto, if reluctant, spokesperson. The impressiveness with which its global imprint is growing belies the reality that its overarching goal is to maintain internal stability. Achieving that objective requires robust economic growth, which, given the size of its population, requires it to undertake extraordinarily ambitious campaigns abroad to secure vital commodities. Most commentary adduces the scale and shrewdness of those campaigns as evidence of an exportable model, even though they are better interpreted as demonstrating how daunting it is to maintain authoritarian rule over such a vast, increasingly empowered citizenry.

Indeed, it is somewhat ironic to speak of a China "model" since China could well be the world's most inimitable country. In a recent essay, "The Geography of Chinese Power," Robert Kaplan observes that it "combines an extreme, Western-style modernity with a 'hydraulic civilization'," making it "relentlessly dynamic in ways that democracies, with all of their temporizing, cannot be."

Although his title might suggest a different conclusion, Bremmer predicts that market-driven capitalism will outlast its state-capitalist counterpart.

Whether or not that conclusion proves correct, it is clear that the struggle to identify the "correct" model of economic governance -- once believed to have been settled with the Cold War's conclusion -- is anything but. The US is wondering how to tame a hyperfinancialized variant of capitalism whose inner workings appear to elude even many of its chief beneficiaries. The European Union is struggling to achieve economic integration, let alone the coherent vision for foreign policy towards which it doubtless continues to aspire. And the China model, notwithstanding its seeming vitality, faces important constraints. No less than Yang Yao, a prominent Chinese intellectual, has concluded that "Popular resistance and economic imbalances are now moving China toward another major crisis. Strong and privileged interest groups and commercialized local governments are blocking equal distribution of the benefits of economic growth throughout society, thereby rendering futile the [Chinese Communist Party's] strategy of trading economic growth for people's consent to its absolute rule."

Bremmer's account offers a sobering corrective to those who have grown complacent about capitalism's staying power, but also a welcome antidote to those who regard its demise as a fait accompli. And yet, despite striking a sensible middle ground, it leaves one feeling far more uncertain about the future of the global economy and the paradigms that will steer it.