Power Elite Versus State Capitalism – A New Meme!
By Staff News & Analysis - July 03, 2010

The latest threat to the global recovery – state capitalism … A fascinating new book is about to hit the shelves. Called The End of the Free Market it argues that all-powerful governments from around the world will be the new driving force in the global economy, skewing the decision making process away from individuals, companies and the market towards states, political interests and authoritarianism. Stated in one bald paragraph it sounds a little apocalyptic. But Ian Bremmer (left), the highly respected author who is president of the Eurasia Group in the United States, makes a compelling case. – UK Telegraph

Dominant Social Theme: State capitalism is a threat and true believers in Western free-markets must settle in for a long fight.

Free-Market Analysis: This is a rare event. It is like watching a dormant volcano come to life. Or an island being raised in the ocean from resultant lava flows. It is a one-of-a-kind opportunity. We are bearing witness to the creation of a brand new dominant social theme. It is a most important occasion in the life of our modest electronic paper. The meme we are referring to is the one that is currently being propounded by Ian Bremmer of the Carnegie Foundation and Foreign Policy magazine.

And what a meme it is! And how timely as well! In the nick of time, actually. Things are not going especially well for the power elite and its grab for global governance. The combination of the Internet and a fiat-money implosion has made populations restive. There is too much pressure, too much anger, to easily proceed to further internationalism. Allies are nervous. Political systems are not yielding the required results, or not easily anyway. The whole program has become overly transparent. The pattern is obvious even to bloggers. (The Bell comes to mind?) And that's bad news.

More dominant social themes are needed. More "wars" against something, somebody – anything really – that will rally people together against a "great Satan" and cause them to value and accept the culture they have. It is necessary to do this quickly. The population rages against the West's unrolling, totalitarian, regulatory democracy, the ruinous, inflationary price-fixing of central banks, ever-higher and arbitrary taxes and general militarization of every aspect of society in the name of "security." Let the anger spiral out of control and power is dissipated as well. Global governance goes a-glimmering. Decades, at least, of hard work frittered away.

Enter Bremmer. Here is a young man (a sociopolitical/media star actually) who is a walking compendium of elite relationships. Bremmer's books include "The J Curve: A New Way to Understand Why Nations Rise and Fall (Simon & Schuster, 2006), named a Book of the Year by The Economist magazine … and the national bestseller The End of the Free Market: Who Wins the War Between States and Corporations. Is it a coincidence that he has received so much attention?

We have not read the book, by the way, but we are not trying to do a book review. We are trying to analyze yet another dominant social theme and this is a big one. It's like going fishing for trout and hooking a killer whale. We didn't expect what we found. Anyway, we're skilled meme watchers at the Bell (you may not wish to try this at home!) and as soon as we read the Telegraph article, excerpted above, our collective antennae went up as if were participating in a dozen reruns of My Favorite Martian simultaneously.

OK, enough with the preliminaries. Now it's time for the nitty gritty. What is Bremmer pushing, exactly? Drum roll, please … Bremmer's latest compelling idea is that most of the major powers of the world today are practicing something called state capitalism. Bremmer contrasts state capitalism to the West's "free-market" model.

Bremmer's thesis and book present this paradigm as a kind of "war." A war, actually, between statist leaders of China, India, Brazil, et. al and the more visionary, multinational, corporatist leadership of the Anglo-America/European axis. Here's an excerpt from a reader-review from on the book that we thought must encapsulate some of Bremmer's ideas rather well:

The challenge to the capitalist system comes from the ability of state capitalism to achieve stability and growth while avoiding massive downturns that would otherwise threaten the stability of authoritarian regimes. The theory is that free market capitalism will not be as stable as state capitalism because free market capitalism has to weather the storms of periodic downturns that cannot be wrung out of the free market system. Mr. Bremmer tells us that state capitalism has problems, but with its leading proponent, China, doing so well vs. the free market system the battle will be a long one. … The author makes certain assumptions about the most recent free market downturn in 2008 that are, in my opinion, wrong. He states that it was a lack of regulatory oversight that caused the free market meltdown. He forgets the role of Freddy Mac and Fanny May in the debacle. (- Amazon reader-review)

Actually, Bremmer is pro-regulation. In various interviews he speaks approvingly of Barack Obama and the need for sensible regulation that will ensure the continued health of Western free-market capitalism. He explains, for instance, that the meltdown of the past two years was not caused by capitalism itself but a LACK of effective regulation. In fact, from what we could tell, Bremmer is apparently "pro" the entire authoritarian Western regulatory apparatus that has sprung up in the past 100 years, or so it would seem from the interviews we have read.

For Bremmer, free-market capitalism is not "free-market" in the libertarian sense. However, it is certainly free-market ENOUGH, especially when one contrasts it to the statist variety that is now occurring all over the globe. (Exactly how he comes up with such arguments when the EU is busy trying to make it illegal to sell a dozen eggs is a little difficult for us to understand, but he seemingly manages the trick.)

Bremmer makes other provocative arguments. He comes up with novel twists, such as the idea that the American Tea Party freedom-movement is an outgrowth of economic frustration with the success of overseas state capitalism. You see, if China and other countries had not succeeded in creating a better mousetrap, the economic frustration would be diminished and peopled would not be protesting the failure of WESTERN capitalism.

The logic that flows from this is inexorable! Rather than fighting among ourselves, Bremmer suggest, Western nations have simply got to generate better outreach. It is necessary to find commonality. And lacking commonality, the Anglo-American axis must find other sorts of common ground or state capitalism will sweep the field, which would be a Bad Thing.

Bremmer has been around for a while. His previous big book, so far as we can tell, was the The J Curve: A New Way to Understand Why Nations Rise and Fall. Here's an excerpt from an "reader review" that seems to describe his thesis fairly concisely:

The central argument of The J Curve is quite persuasive: the path from authoritarian "closed" societies to democratic "open" ones leads through a "dip in the curve"–that is, a prolonged moment of dangerous instability. In this way, authoritarian societies that begin to democraticize become paradoxically more unstable in the early stages of "opening." The J Curve is an explanatory model. But the book is normative as well: If "closed" states are ultimately to emerge on the other, "open" side of the curve, they require sustained international support, in particular from Western democracies. (- Amazon reader-review)

Interesting! Bremmer's current book apparently preaches that Western "free-market" economies must continue to work cooperatively. His J Curve book points out that closed states need "sustained international support" to become more open. The thread binding these concepts together is a determined, global activism on the part of Western regulatory democracies. He is calling for more of the kind of substantive regulatory and diplomatic activities that such democracies are unfortunately too good at.

We write "unfortunately" because we have a different take on free-markets. We think free-markets actually ought to be fairly free – as free as possible in fact. We don't believe, therefore, that free-markets and the governments that run them need to become even less free than they already are in order to combat state capitalism.

Let us, like so many American politicians, be perfectly frank for a moment. If state capitalism is, in George Orwell's words, "a boot stamping forever on the human face," then from our point of view the kind of regulatory democracy that Bremmer considers "free-market" is "a boot stamping forever" on the human NECK.

Yes, face or neck, take your pick. We think they are both pretty bleak options. We would rather discuss making Western societies freer, returning to some sort of private-market gold and silver standard, perhaps a form of common law instead of the authoritarian state justice now available, etc. In fact, Bremmer makes a big deal of how Western corporatism is at a disadvantage against statist capitalism. But, really, his idea is that because state capitalism is so terribly powerful, Western regulatory democracies will have to get even bigger and more cumbersome as well. This will entail not only more (and better) international regulation, it will also involve taking more care of the environment as responsible, market stewards. Here's Bremmer, for instance, on Russia, statist capitalism and global warming:

The big-plus wild card in Russia is who benefits more from the polar cap melting in terms of availability of resources and also sea lanes. I don't have a good way of handicapping that, but that's one of these interesting upsides that the Russians could really make a lot of hay out of. Of course, that's one of the reasons why you saw them stick this titanium rod in the North Pole with their submarine a year and a half ago.

We can see from this excerpt that Bremmer has somehow managed the trick of conflating free-markets with both regulatory capitalism and global warming. This is surely a dominant social theme for the history books. There is no doubt from our point of view that the current economic system is continuing to collapse. The elite, we believe, is desperate to frame an argument to explain this generational collapse using tried-and-true thesis/antithesis programmatic tools. Whether Bremmer knows it or not, his latest ideas are most valuable within this context.

What Bremmer has done, in fact, is to provide a baseline. There is an identifiable enemy, he writes, and it is a formidable one. Western free-market capitalism and the corporations that drive it are in jeopardy. The only way to combat the challenge of state capitalism is to rein in, just a bit, the raw, unadulterated "free-market" system that has made the West so successful.

It is sort of awe-inspiring. From our point of view Bremmer has manufactured an argument that begins with the assumption that the West is in fact free-market oriented. It then logically proceeds to propose the proposition that the West must continue down its regulatory road in order to remain competitive with state capitalism!

We are well aware that much we have written is certainly speculative. Bremmer may be simply supporting his own enthusiastic business and intellectual interests. But his message does mesh with what the elite currently needs – new and convincing themes that justify additional governance in the name of freedom.

The elite needs a steady stream of convincing arguments to govern – and thus to manufacture the additional wealth and power that governance provides. Unfortunately, the Internet is ruining the elite's ability to promote the arguments that it needs to maintain its grip on society. But powers-that-be won't give up easily; such thematic paradigms as Bremmer has provided are likely to prove valuable within this context, whether he means to supply them or not.

After Thoughts

Yes, theses such as the ones that Bremmer offers – generating reasons for international activism and global governance – are invaluable to such an elite. Bremmer may simply be an independent actor with an enthusiastic perspective, a talent for sociopolitical observation and an energetic affection for what he does. But we are not surprised his ideas have found a warm reception at the pinnacle of mainstream thought-organizations. He is providing new justifications for a muscular internationalism.

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