Global capitalism is undergoing turbulent mutations, including the seemingly unstoppable rise of Big Tech and the aggressive reengineering of globalization to intensifying geopolitical rivalries. The supercharged business and political news cycle is moving at an ever more dizzying pace. In this context, many of us are seeking intellectual resources to help us understand the specificity and significance of the present moment, particularly in light of the long historical development of global capitalism.
The role of the state appears to be changing in its relation to capital and society at large. The state is now remarkably assertive in the world economy, as shown by the recent proliferation of foreign investment screening mechanisms, export bans, capital and border controls, tariffs, and other restrictions on the cross-border flow of commodities, finance, technology, and labor. This assertion of state power over economic flows is, however, not incompatible with a deep commitment to generously supporting select firms, sectors, and fractions of capital, as evidenced by historically unprecedented levels of corporate welfare, in the form of public subsidies, tax cuts, grants, subsidized loans, blended finance, and other exotic ‘de-risking’ instruments. Further, the state is increasingly directly assuming the role of investor, shareholder, and capitalist. In sum, we witness, on the one hand, the increasing expansion of state ownership over resources and markets, and on the other, the concomitant development of more assertive and muscular forms of statism. These shifts have been observed across all continents, political systems, and levels of economic development.
To some, and perhaps especially to those well-versed in materialist state theory and the history of capitalism, these trends may appear banal. Indeed, economic globalization has always featured a strong state footprint, including during peak neoliberalism spanning the 1980s to the mid-2000s. The history of capitalism (and empire) is also one of intense state activism through diverse forms, including state ownership, protectionism, complex state-private hybrids, and extensive financial support to capitalist industry. No rule of law and private property, stable money, disciplined workforce, or bourgeois social order can exist without the iron fist of the capitalist state. There are both compelling historical and theoretical reasons to think that there is nothing new today under the sun (of the capitalist state).
This, however, would be the wrong lesson to draw from the theory and history of the capitalist state. The pervasive and enduring role of the state in capitalism must be the starting point of any analysis, not its conclusion. Materialist state theory must be brought to bear on the present conjuncture, in its concrete historical and geographical specificity. Instead of trivializing the moment (“this is just what the state always does under capitalism”), the work of theorizing and analysis also requires openness to the idea that there might be something new going on, and that existing theories may need to be revised, or in the words of economic geographer Jamie Peck, “challenged, stretched, stress-tested, and perhaps troubled.” It is in this spirit that, in a recently co-authored book with Adam Dixon titled The Spectre of State Capitalism, we revisit the concept of state capitalism.
The “new” state capitalism
State capitalism is an ambiguous and contested notion with a long history. Even though the concept is difficult to manipulate–or perhaps because of it–multiple generations of thinkers have creatively mobilized it to interrogate diverse articulations between the state and the economy. In The Spectre of State Capitalism, we offer a conceptual reconstruction of the notion of state capitalism, grounded in materialist state theory and critical political economy. We do so to analyze how and why governments across the world economy have dramatically expanded their role as promoters of capital accumulation, industrial policy actors, investor-shareholders, venture capitalists, and direct owners of capital. In short, the book is an attempt to understand the causes, significance, and implications of this world-historic arc in the trajectories of state intervention.
What sparked the “new” state capitalism? A core argument of the book is that this phenomenon is rooted in the historical development and geographical remaking of global capitalism over the past two decades. More precisely, we identify four political economic transformations: (1) industrial restructuring and the formation of increasingly complex global value chains, leading to a drastic geographic rebalancing of the world economy; (2) deep-seated tendencies towards economic stagnation and industrial overcapacity, increasingly visible post-2010; (3) intensified competition over trade, investment, and technological supremacy; and (4) a reshuffling of geoeconomic force fields leading to new forms of multipolarity.
On one end, governments have been central protagonists in these transformations. They have (more or less willingly) aided, accompanied, and occasionally expedited them by reinventing their economic roles. Specifically, governments North, East, and South have been compelled to reembrace commercially oriented state ownership and develop new modes of state interventionism. But, each of these transformations produced a new set of constraints, dilemmas, and opportunities for governments to navigate, including how to capture and retain value within their domestic economies, how to effectively support firms and business strategies in new competitive environments, how to reposition national territories within shifting economic relations, and how to contain crises and manage escalating geoeconomic conflicts. This, too, has forced muscular policy experimentation and assertion of state power across the board. In addition, crises, like the 2008 global financial crash, the COVID-19 pandemic, or Russia’s war of aggression in Ukraine, have accelerated (rather than initiated) this historic arc in the trajectories of state intervention.
What’s more, mechanisms of competitive emulation and mimetic behavior have acted as an additional impetus for state transformations: under conditions of intensifying geoeconomic rivalry and geopolitical crispation, states monitor and scrutinize each other’s policies and strategically adapt their own. These interactive and antagonistic relations between rivals and would-be challengers have been a major catalyst contributing to state capitalism’s tendency to develop in a spiral-like movement, with self-reinforcing state transformations expanding geographically and across policy domains. Take, for example, tit-for-tat retaliation in the realm of trade policy (whereby the deployment of tariffs or trade restrictions to penalize a competitor sparks retaliation and countermeasures). Or think about the ongoing global green subsidies race, which is characterized by competitive outbidding and attempts to undercut rivals by offering generous grants, tax credits, loans, guarantees, and other forms of government aid. These mechanisms of competitive emulation and combined development bestow the “new” state capitalism with a remarkably dynamic character.
What characterizes our present historical juncture, then, is not so much the rise of a new national model of state-led capitalism coming from the East and South, but rather, a planetary process of state restructuring, involving profound transformations in relations between states and firms, shifting boundaries between the economic and political spheres, and the development of flexible forms of property that collapse the distinction between state and private ownership, control and management. We speculate in the conclusion of The Spectre of State Capitalism that this may imprint the future of capitalism with a distinctly new flavor–one that is defined by the proliferation of muscular modalities of statist interventionism and the increasing concentration of capital in the hands of states, and perhaps even transforms the social property relations of capitalist society.
Trump 2.0 as a new state capitalist impetus?
Enter Trump. Again. This time, a lot more disruptive than during his first administration. The Trump 2.0 presidency started with an unhinged attempt at reasserting imperial power in the world economy, at the risk of bringing down the international trade and financial system. As impetuous and erratic as it is, this attempt must be situated within the global political economic transformations earlier mentioned. Indeed, the tensions, conflicts, and contradictions they unleashed are accelerating the decay of neoliberalism, the liberal international order, and American global hegemony.
It remains to be seen if Trump’s reckless attempt will be successful (or not) in resetting global economic and security relations in favor of the United States. And time will tell if friends and foes will react with deference, defiance, or a combination of both. What is sure, however, is that Trump 2.0 will force a strong response on the part of governments worldwide in the form of enhanced state economic interventionism. Whether this is to politically contain the fallout of destabilized financial markets, reconfigure supply chains, reorient trade relations, support domestic firms, or navigate rapid realignments in the imperialist hierarchy of the world economy, states are likely to increasingly mobilize state power and ownership.
Amongst other things, this will involve state-coordinated investment to rebuild strategic supply chains and to build connective and green energy infrastructure; subsidies packages to support national champions and sectors deemed strategic; foreign investment screening mechanisms to protect critical tech and core intellectual property; techno-industrial policies to compete at the leading edge of the productivity frontier (in sectors such as next-gen semiconductors, AI, quantum computing, cloud computing, advanced material, biotech, intelligent robotics, etc.) or to reshore manufacturing activities; the use of sovereign funds and state enterprises to redeploy capital from stagnant sectors to more economically dynamic ones, or to strengthen state control over strategic assets and critical supply chain nodes; and policy measures such as tariffs, bans on foreign technologies, and “green” protectionism to directly penalize foreign competitors or shift the burden of economic adjustment to other states.
All of this, of course, will be simultaneously turbocharged by accelerating environmental breakdown, enduring secular stagnation, and set against a backdrop of a general turn towards aggressive forms of economic nationalism, which is further collapsing the distinction between economic interest and national security. Economic historians may thus remember Trump 2.0 as the great accelerator of 21st-century state capitalism, a historically specific form of capitalism whereby the fusion of private and state capital reaches new heights.
A call to critical scholars of law and political economy
The law is evidently a fundamental dimension of these ongoing state capitalist transformations. This is because attempts to reconfigure state power and to redefine the rules of economic globalisation often take place on the negotiated terrain of the law. This is particularly obvious in the case of areas of international economic law, such as trade, competition and investment law, which are clearly currently crystallizing conflicts and contradictions associated with some of the above transformations. For instance, the deployment of increasingly sophisticated and encompassing foreign investment screening mechanisms in technologically advanced and in large emerging economies creates cracks in the global investment regulatory regime and its legal architecture of rights and obligations. Likewise, the increasing presence of state-owned corporate entities in the global economy increasingly introduces tensions in the global trading regime, which was not conceived to accommodate vast state ownership.
More generally, the law plays an active role in structuring state activities and patterns of production and economic exchange, and in mediating the spheres of politics and the economy. It is therefore a constitutive element of the concomitant expansion of state ownership and muscular forms of statism. Rendering the present state capitalist conjuncture amenable to analysis and critique, then, will require the crucial input of scholars of law and political economy, in dialogue with state-theoretical reconstructions. How the law helps to constitute present-day state capitalism and is being reshaped in the process, and how the law mediates its crises, conflicts, and contradictions, are urgent questions to reckon with.
