Tom’s turn

Yesterday, I posted Tom Barnett’s interesting reaction to my new book, The End of the Free Market: Who Wins the War Between States and Corporations?.

Today, it’s Tom’s turn again:

In reply, Ian, I would simply say that you’re a bit guilty of trying too hard to sell the “unprecedented” nature of state capitalism’s rise (a small editorial sin, considering you’re selling a very good book). I think it’s misleading to suggest that the “past several decades” were some golden age for free markets and Western multinationals, because it’s not like OPEC’s national oil companies or China’s state-owned/-dominated enterprises came out of nowhere–they’ve been there all along. The rising relevance of these companies is real, but we’re talking a matter of degree and only in states that have historically featured authoritarian governments, so the structural impact on the system is, in my mind, not as significant as you make it out to be (so it’s taking longer than the optimists declared regarding political pluralism in recently marketized regions — big deal!). 

The vast bulk of wealth in the system remains in private hands; sovereign wealth funds control a mere fraction of that. So I just don’t recognize the “tipping point” that you do between a free market-dominated global economy of yesteryear and one that’s increasingly steered by single-party states, especially when, as you note both here and in your book, those regimes really don’t share any truly exportable ideological consensus. 

I do see the world moving through an extended period of frontier integration, and in such periods, the role of the state naturally grows, especially following a period of globalization’s stunning expansion as part of three decades of progressive deregulation. I think we were fortunate to add all the democracies that we did during that rapid expansion, but I wasn’t particularly surprised that most former socialist states didn’t complete the journey, given their respective political histories and the pervasiveness of their poverty. For most of those states, I think the usual historical expectations apply, meaning we’re looking at single-party states (with elections or not) for two to three generations (or four to five decades). That means we should expect a fourth great wave of democratization in the 2020s and extending into the 2030s — or 40 to 50 years after the great expansion of globalization began in the 1980s (opening these states up to wider market connectivity).

As you note, we don’t see the world all that differently (I will note that you are — just like me! — another expert on globalization who began his career in the Soviet studies sphere). I think we just have different comfort levels regarding how long it takes for these things to work themselves out. You spot a disturbing critical mass of state capitalism that portends a more uncertain future for free markets (i.e., an upper-hand argument), where I see a more natural course correction (i.e., more yin-yang) based on globalization’s growth — namely, a period of expansion through deregulation and less state involvement followed by a period of consolidation through re-regulation and more state involvement. But we both retain the same faith in the superiority of free markets accompanied by political pluralism, so it’s a question of the journey’s length and not of its final destination.