Two recent extensive commentaries on changing economy deserve our attention.
Both reports offer analysis that relates to the current overwhelming concern of finding new economic paradigm.
The manufacturing jobs have already left or are leaving and “state capitalism” is somewhat of a “worn out” concept. China certainly leads the global pack (and much of the “emerging” world that is blamed for taking it all) in attracting most of those jobs under the auspices of the state-capitalism model. Perhaps rightly so, there is a temptation for those watching on the sidelines to read some of these occurrences through the “blueprints” of the West’s industrialization and Marx’s Capital at the very least.
Now, in a different world, state capitalism–loosely defined as an economic organizational form of large dominant corporations with controlling interests vested in the official state– has been credited for pulling domestic economies out of nightmares of chaotic liberalization reforms (e.g. Innovative Fiscal Policy…). In many places (e.g. Brazil, India, or UAE) the workings of such system are subdued by existence of relatively large domestic or foreign owned private corporations. It is more crude in the post-socialist landscape where return of the state into the economies has signified some relative macroeconomic stability and predicatability for business and general population alike.
There are certainly problems with all this and the scope of issues is vast. However it is also certain that a pragmatic combination of state-led actions aimed at wider business integration and human capital development may lead to the much needed answers pulling global economy on a new growth path.
In plain words: the world has changed, competitiveness of some economies has faded, it is time to wake up from good days slumbers and get to work.
The state-capitalism model offers the stability in nurturing future private enterprises, especially in places where capital demands cannot be met at a socially responsible scale, i.e. w/o outright monopolization. The key is to properly balance the pass through from state to private.
But most critical lesson to carry out must be in the urgency of human capital investment and development. Simply relying on the past models of perceived advantages and hoping for the best of free market is not enough. Human capital investment must center around: skills, workplace cooperation, self-development, innovation, but also, importantly, liveability. This latter term, overheard at a recent conference but offered here in a slightly modified interpretation , is a catchall for quality of living that in turn motivates individual’s drive for self-development and growth.
It’s fine to blame the financial industry for all its worth, but the “real” sector business seeking to locate operations aside from adequate financing searches for the right combination of professionalism, skill, knowledge, and integrity in its workforce. The human component plays a key role.
State-capitalism and jobs escape have both been ongoing for a while now. The two reports mentioned above are intriguing stories to tell though appear a bit delayed in timing. But if recognition of existing model requires substantial time, then one should not be surprised if zeroing down on an appropriate economic policy measures may come with even further delay as politics and emotions run full speed ahead.
In the current environment the state (fiscal policy) can be the leverage to rely on and investing in human capital development is critical, among other projects, in shaping the next phase of social and economic development.