CYIL vol. 11 (2020)

CYIL 11 (2020) SOVEREIGN WEALTH FUND political gain.” 29 In this regard, SWFs can be seen as typical instruments of state capitalism, 30 which would place them in violation of the Washington Consensus. In state capitalism, private enterprise still remains but there is also a close partnership between the state and big business – the state acts “directly” on behalf of large capitalists. 31 This partnership may be in the shape of subsidies for certain companies, guaranteed market shares or the ownership of corporations and the means of production. State capitalism is most apparent in respect of strategic resources and vital sectors deemed crucial to the survival and functioning of the state. For instance, credit is a strategic resource and a vital sector for countries worldwide and so governments worldwide intervene, either directly or indirectly, in national and international credit markets to bolster the financial positions of their corporations. If the latter run into difficulties, their governments may create credit facilities for them. That is all themore crucial as capitalismis now indifficulty. At present, capital accumulation through production has become difficult and a profit squeeze is being experienced in many sectors. At present, the most efficient way of capital accumulation is through finance and the increasing of credit. 32 The accumulation of capital therefore takes place through finance, rather than production. 33 Even many non-financial firms (firms active in the real sector- productive sector) engage in financial services to increase their profit 34 and there has been a significant growth in the financial subsidiaries of non-financial corporations. 35 We have reached a stage now in which finance is regarded as a panacea to the world economy’s stagnation. The weakness in the real economy is papered over by the increase of finance. 36 In fact, the problems of capitalism and capital accumulation lead to the politicization of the international markets, in that they invite state intervention, and one of the ways of state intervention takes place, arguably, through SWFs. The government behind the scenes that normally intervenes through indirect and invisible means now directly steps on to the world stage to increase its national economy’s capital accumulation prospects. In this respect, the “direct” presence of the state in the economy through the SWF is sufficient to politicize the world markets. 4. The Politics of the Sovereign Wealth Fund Every country supports the private investors in its jurisdiction in their trading enterprises and investments worldwide as capital accumulation by national private investors is a source of income and tax for states. In this regard, every state is, in fact, an indirect investor in another state. This represents the indirect presence of the home government of the private 31 ROTHBARD, Murray, A Future of Peace and Capitalism , in James H. WEAVER, Modern Political Economy , Allyn and Bacon, Boston, 1973. ROTHBARD, Murray, Egalitarianism as a revolt against nature and other essays in Left and Right: the prospects for liberty , Auburn, Ludwig von Mises Institute, 2000. 32 WALLERSTEIN, Immanuel, World-Systems Analysis, An Introduction , Duke University Press, Durhan and London, 2004, p. 86. 33 BELLAMY FOSTER, John, The Age of Monopoly – Finance Capital, montylyreview.org 01/02/2010, p. 4. 34 Ibid., p. 5. 35 Ibid. 36 Ibid., p. 3. 29 FERGUSON, Niall, We’re All State Capitalists Now , Foreign Policy , 9 February 2012, p. 3. 30 Ibid.

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