Norway is the odd man out in the Nordics. While its neighbours are flirting with free markets, Norway is embracing state capitalism. Its national oil champion, Statoil, is the largest company in the region. The Norwegian state owns large stakes in Telenor, the country’s biggest telephone operator, Norsk Hydro, its biggest aluminium producer, Yara, its biggest fertiliser- maker, and DnBNor, its biggest bank. It holds 37% of the Oslo stockmarket, but it also controls some non-listed giants such as Statkraft, a power-generator, which if listed would be the third-biggest company on the stockmarket.
The simple explanation for Norway’s penchant for state capitalism is oil. When it was discovered in the North Sea in late 1969 it transformed the country’s economy. Today Norway is the world’s eighth-largest oil exporter. Petroleum accounts for 30% of the government’s revenues as well as a quarter of the country’s value added.
There is also a more nuanced explanation. Norwegians have always looked to the state to help manage their abundant natural resources—minerals, fjords, forests, waterfalls—and to look after isolated and thinly spread communities. Norway has a population density of only 13 people per square kilometre. Norway also came up with the idea of the state owning shares in private companies: after the second world war the government nationalised all German business interests in Norway and ended up owning 44% of Norsk Hydro’s shares. The formula of controlling business through shares rather than regulation seemed to work well, so the government used it wherever possible. “We invented the Chinese way of doing things before the Chinese,” says Torger Reve of the Norwegian Business School.
Read more: Norway: The rich cousin | The Economist
Showing posts with label State Capitalism. Show all posts
Showing posts with label State Capitalism. Show all posts
5/11/12
The European Summer Revolution: Naomi Klein was right in her book "the Shock Doctrine"
The past four years have proved a total vindication of Klein's argument. A crisis of the market was cleverly transformed by free market ideologues into a crisis of public spending. Across Europe, the biggest slump since the 1930s has been used to push through policies straight out of some right-wing wet dream: the slashing of taxes on the rich and major corporations; the selling off of public services; and a bonfire of workers' rights. It is disaster capitalism on speed.
But, this week, the great revolt against the Shock Doctrine began. That is exactly how we must understand the sudden sea change in European politics: not least, the election of Socialist François Hollande in France, and the stunning breakthrough of anti-austerity leftists in the Greek elections.
Portugal after being bailed out by the EU and IMF – is pushing through a far-reaching free market agenda. The first wave of the most radical privatization program in the country's history is under way, including the selling off of energy, water, public transport and the national airline. VAT on electricity and gas has been hiked from 6 per cent to 23 per cent, driving up energy bills; many public sector workers are facing a drop in income of a quarter; and unemployment benefits have been slashed by nearly a fifth. Austerity has plunged the country into a deep recession, and debt-to-GDP ratio is soaring: but that is not the point. Portugal is being remade in the image of neo-liberal dogma.
For the first time since this crisis began, the momentum is with those taking on the Shock Doctrine. It has the potential to change the whole political climate also in the capitalist stronghold Britain. Polls show two-thirds reject the Government's economic program. The Tories and their Lib Dem allies got a kicking in the recent elections. Cameron's approval ratings are in free fall.
An attempt to use the so-called economic crises, which was actually a crisis which started from within the financial sector, to transform society in the interests of the top is now floundering in Europe and will soon also come tofull bloom in the US. The prospect of building alliances across Europe is no longer fanciful. It is a moment of transition: what happens next is uncertain - but the old ways are certainly dying.
EU-Digest
But, this week, the great revolt against the Shock Doctrine began. That is exactly how we must understand the sudden sea change in European politics: not least, the election of Socialist François Hollande in France, and the stunning breakthrough of anti-austerity leftists in the Greek elections.
Portugal after being bailed out by the EU and IMF – is pushing through a far-reaching free market agenda. The first wave of the most radical privatization program in the country's history is under way, including the selling off of energy, water, public transport and the national airline. VAT on electricity and gas has been hiked from 6 per cent to 23 per cent, driving up energy bills; many public sector workers are facing a drop in income of a quarter; and unemployment benefits have been slashed by nearly a fifth. Austerity has plunged the country into a deep recession, and debt-to-GDP ratio is soaring: but that is not the point. Portugal is being remade in the image of neo-liberal dogma.
For the first time since this crisis began, the momentum is with those taking on the Shock Doctrine. It has the potential to change the whole political climate also in the capitalist stronghold Britain. Polls show two-thirds reject the Government's economic program. The Tories and their Lib Dem allies got a kicking in the recent elections. Cameron's approval ratings are in free fall.
An attempt to use the so-called economic crises, which was actually a crisis which started from within the financial sector, to transform society in the interests of the top is now floundering in Europe and will soon also come tofull bloom in the US. The prospect of building alliances across Europe is no longer fanciful. It is a moment of transition: what happens next is uncertain - but the old ways are certainly dying.
EU-Digest
8/24/10
Is State Capitalism Overtaking Laissez Faire Capitalism
Well at least it seems so. Across Europe, and much of the rest of the developed world, the recent wave of state interventionism is meant to lessen the pain of the current global recession and restore ailing economies to health. It is believed that Reaganomics,Thatcherism, Bushonomics indirectly were the underlying cause of this world-wide economic disaster, which struck the world in 2008 and 2009.
China is today's world's leading practitioner of state capitalism, a system in which governments use state-owned companies and investment vehicles to dominate market activity. The primary difference between this form of capitalism and the Western, more market-driven laissez fair variety, is that decisions on how assets should be valued and resources allocated are made by political officials (not market forces) with political goals in mind.
Most economists suggest that in China, robust growth is a good thing, as long as it doesn't have second-order effects that undermine the leadership's monopoly hold on political power. Russia, Saudi Arabia, Venezuela, and other governments practice various forms of this system, but China gives state capitalism its global significance.
Even the US under the Obama Administration is now slowly moving towards more state capitalism, with the conservatives obviously crying wolf. What the conservatives seem to forget, say the economic experts, is that in the past the US succeeded with laissez faire capitalism because they were the center and the driving force of the world's most dynamically growing market.
Now the situation has changed and the US is not the most dynamically growing market in the world anymore. Today its China, which has the same advantage the Americans had in the past. To claim that their dynamism comes as a result of state capitalism — and illicit ways of combining political aims with corporate ones - is too far fetched. They earned it and we can learn a lot from them.
EU-Digest
China is today's world's leading practitioner of state capitalism, a system in which governments use state-owned companies and investment vehicles to dominate market activity. The primary difference between this form of capitalism and the Western, more market-driven laissez fair variety, is that decisions on how assets should be valued and resources allocated are made by political officials (not market forces) with political goals in mind.
Most economists suggest that in China, robust growth is a good thing, as long as it doesn't have second-order effects that undermine the leadership's monopoly hold on political power. Russia, Saudi Arabia, Venezuela, and other governments practice various forms of this system, but China gives state capitalism its global significance.
Even the US under the Obama Administration is now slowly moving towards more state capitalism, with the conservatives obviously crying wolf. What the conservatives seem to forget, say the economic experts, is that in the past the US succeeded with laissez faire capitalism because they were the center and the driving force of the world's most dynamically growing market.
Now the situation has changed and the US is not the most dynamically growing market in the world anymore. Today its China, which has the same advantage the Americans had in the past. To claim that their dynamism comes as a result of state capitalism — and illicit ways of combining political aims with corporate ones - is too far fetched. They earned it and we can learn a lot from them.
EU-Digest
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