State capitalism
Topic: Schools of Economic Thought and Economic Laws · NCERT: Beyond NCERT
Meaning
State capitalism is a system where the state owns or controls large commercial firms, and these firms run for profit inside a market economy. The state acts like a big capitalist owner. It earns profits, competes in markets and uses the firms to meet national goals. Private firms can exist alongside them.
Example
China's state-owned enterprises (SOEs) compete for profit at home and abroad under state control. Sovereign wealth funds, which invest a country's surplus money in companies and assets worldwide, are another form of state capitalism.
Don't confuse with
- Market socialism: this aims at public or cooperative ownership as a socialist goal (for example, Yugoslav workers' self-management). State capitalism keeps a capitalist, profit-driven market, with the state as a major owner.
- Central planning: here the state sets output by plan, not by profit and market signals.
Related concepts
- Marxian economics
- Historical materialism
- Class struggle
- Surplus value
- Reserve army of labour
- Fabian socialism
- Democratic socialism
- Market socialism