CYIL vol. 11 (2020)

HALIL RAHMAN BASARAN CYIL 11 (2020) Global capitalism in its present guise and manifestation pressurizes governments around the world to accumulate. Every government is in competition not just with other governments but with multinational corporations too. The SWF is a response by national governments to these competitive pressures. The national bureaucratic state is the pillar of state capitalism and the SWF is a part of this national bureaucratic state. Governments support their private investors. The United States (U.S.) government, for instance, subsidizes U.S. corporations; American capitalism is “shot through with subsidies for some of the most powerful private actors.” 22 It is not the pure impersonal economic laws of the market that govern the American capitalism; there has always been considerable intervention by the U.S. government into the free market. However, this intervention does not take place through the direct U.S. government ownership of corporations. Rather, the U.S. presence in this respect is “indirect” and secondary. For example, if huge corporations run into difficulty, the U.S. government bails them out, if and when these corporations are deemed “too big to fail.” By contrast, the SWF is a “direct” ownership of the means of production – i.e., the corporation. Since the 1980s, the Washington-based international financial institutions – the IMF and the World Bank – urge governments the world over to liberalize trade and capital flows and to allow the market to set interest and exchange rates. 23 That policy was defined as the Washington Consensus . 24 It was argued that it encouraged and promoted economic freedom, private investment and the liberalization of world trade – 25 the cornerstones of market capitalism. The Washington Consensus led to the liberation of the powers of finance both in the U.S. and in the wider world. 26 The Washington Consensus aims at bolstering private property rights, free markets and free trade and advances the idea that state interventions in markets must be limited. 27 The free market and free trade are to reign, and public property, public enterprises and public assets should be privatized. Moreover, as a matter of principle, the government should be only indirectly involved in market transactions as the famous “invisible hand” regulates the market. The government should operate behind the scenes as a guarantor of security and defender of rights and the law. State capitalism, however, challenges the fundamental principles of the Washington Consensus . State capitalism is an economic system that, although still primarily capitalistic, maintains a high degree of direct government ownership of the means of production. 28 In state capitalism, “the state acts as the dominant economic player and uses markets primarily for 22 CHOMSKY, Noam, History doesn’t go in a straight line, Jacobin, An interview with Noam Chomsky, 09. 22. 2015, p. 3. 23 FERGUSON, Niall, We’re All State Capitalists Now , Foreign Policy , 9 February 2012, p. 2. 24 Accessible at https://web.archive.org/web/20170715151421/http://www.cid.harvard.edu/cidtrade/issues/washington. html. (accessed on 01.05.2020). 25 MAZOWER, Mark, Governing the World, The History of an Idea, Allen Lane, Penguin Books, Great Britain, 2012, p. 360. 26 HARVEY, David, A Brief History of Neoliberalism, Oxford University Press, New York, 2005, p. 1. 27 Ibid., p. 2. 28 The Free Dictionary, Accessible at https://www.thefreedictionary.com/state+capitalism (accessed on 20 February 2020).

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