David Brooks has an interesting article here about the difference between democratic capitalism vs. state capitalism. He focuses on the oil industry. American/European companies like BP and Exxon Mobil work under democratic capitalism and compete in a relatively free market, while state-run energy companies like Petrobras and Gazprom work under state capitalism. The difference in practice is that state run companies become an arm of the government for political aggrandizement, while privately and publicly owned companies serve the interests of shareholders.
I’m actually thinking that maybe state capitalism for oil companies could benefit citizens in the long run. If energy were state run, perhaps our government would have more substantive input with this BP oil leak. Government could better serve the people, stay financially afloat with energy as a means to help pay off our debt, AND also gradually take us off oil and into a more sustainable source of energy. Our postal service is state-run, and I’ve never had a letter lost in the mail.
Of course entrusting energy to politicians demands a lot of trust in our government.
Thoughts?
Edit 6/17/10: See TMM’s full apology here.
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Interesting thoughts. State capitalism is something libertarians and democracy proponents tend to despise because they feel it isn’t “market” or “free” enough, but governments are markets too, and if China’s competing with Japan, that can lead to innovation just like competition between two companies in the same borders. We’ll see if China’s experiment with state-run companies really works out for them, and Brooks ends his article with basically a tooth ache saying “we should stop using oil”. Tell that to countries making billions from it. Non-democratic states have very little incentive to use green energy because green energy’s not as profitable. If it were, there’d be more of it.
Legislation proposed and passed by the Democrat-controlled congress in 1990 (http://en.wikipedia.org/wiki/Oil_Pollution_Act_of_1990, http://en.wikipedia.org/wiki/101st_United_States_Congress) put a $75M cap on damage expenses for oil spills in the wake of the Exxon spill, which is a democratic-capitalism phenomenon. BP leaks oil because in the US it’s very cheap to do so. If USG owned BP, you could probably argue that they’d be quicker to clean up the spill, though it’s not easy to say they would be any better at it. Innovation is not strong in the public sector, despite the fact that the post office doesn’t lose your letters. They do shred mine on occasion and they’re not very polite, and they use FedEx to deliver urgent mail anyway.
Also, if the USG decides to break the law and confiscate BP, that would signal to energy companies that they might want to become ‘less important’ in certain ways to avoid being nationalized. Gas shortages perhaps? Shut down half the refineries? There’s a reason states don’t normally do this. Look at what happens when Chavez confiscates power companies. Suddenly there’s no power.
But basically your argument for state capitalism rests on the notion that the USG makes better decisions than private oil, but you forget that USG is a Democracy, unlike China. So mixing that with state-run oil would still subject them to lobbyists and the $75M cap begins to seem like a trivial problem.
Good point on the lobbyists. Since there’s more money in pumping oil than delivering mail, I would guess that there would probably be more lobbyists interested in sticking their hand in the pie. There are probably also more opportunities for contract work. I don’t think it’s possible to run oil rigs or build piping entirely through government work.
You’re also right about innovation. Oil requires innovation for new drilling techniques, etc. That might have to take place in the universities. I know that one reason some American companies are innovative is that the government gives money for research between universities and private companies. They’d probably have to find a way to make the new arrangement work.
I kind of half agree with you on the non-democratic/green energy thing. I think the record is pretty clear–governments who have NOTHING and suddenly discover oil on their land tend to follow the money without any kind of investment in other areas. A good example of this would be Brunei. They were poor without any real industry, and then they found out they had oil. Now the ruling class is extremely rich, and everyone else is still poor without any real industry. The system maintains itself–it’s hard for the poor to invest and create other industries because they’re poor, and the rich have little incentive to break their oil addiction.
However, China is non-democratic and now leads the world in green energy. The difference? I think it has to do with the fact that China has other industries. Plus, their form of socialism, at one point anyway, discouraged massive wealth income gaps.
Americans are so smug and arrogant about their bogus “democratic” capitalism, it’s hilarious.
Even at this late date, Americans still presume to lecture the world about (economic) democracy while they themselves represent anything but.
You want to see the true face of America’s precious “democratic capitalism”?
Look at Enron, Tyco, Worldcom, Halliburton, Arthur Andersen, the Sub-Prime mortgage scandal, Bernie Madoff, and Goldman Sachs for starters.
They are only the tip of the iceberg in the unending conga line of American corporate scandals, fraud, and deceit.
Indeed, the spectacular 2008 Wall Street implosion was correctly seen by people outside the USA as an indictment of the broader Anglo-American model of Neoliberal capitalism that the USA loves to push on the world.
American “democracy” is a fairy tale worthy of the Tooth Fairy or, better yet, the All-Benevolent “invisible hand of the market” that Libertarian ideologues worship.
America ain’t a democracy.
America is an Empire–a plutocratic one with a financial oligarchy that is rapacious to the core.
Just check out that trillion-dollar Wall Street TARP bailout masquerading as an “economic stimulus plan for Main Street.”
I’m kind of pessimistic about all of this, in big picture terms. in the end, does it matter what economic forms we have? the world is gonna sink with the weight of the human race and it’s lights out for us. these are the times that try our souls but if we don’t evolve as a species, as nation-states, and find ways to resolve our conflicts, we’re doomed. Hell, we can barely get anything done in the US congress!
there’ll be nothing left but the ashes of a dead planet, decaying into infinity. if there’s anyone left to care.
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows that the good guys lost
Everybody knows that the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows…
–Leonard Cohen
Fair point about green energy. I should clarify in that it’s just easier to dig up oil than start new sectors dedicated to green energy. But if you’ve got the capital sitting around (China), then investing in green is apparently a good idea.
Larry, your fairytale view of how Democracy should be conducted is the reason you’re so disappointed by it: real Democracy works exactly like this. All the corporate scandals are due to democracy and bad legislation thanks to elected policy-makers. In even the strongest democratic-economies of the world you still end up with parasites everywhere, shaky financial markets, ridiculous trade barriers, and a lot of war. Democracy is the reason you don’t like capitalism.
It’s also infrastructure and habits, I think. If Chinese people grow up seeing people making it big in manufacturing or movies, they might dream of being in manufacturing or movie making. It makes less of a difference if the oil industry exists or doesn’t.
On the other hand, if you come from a country that has no industry except agriculture, and all of a sudden someone discovers oil…well, it’s like having the political elite win the lottery while everyone else still has nothing.
“It has been said that democracy is the worst form of government except all the others that have been tried.”
-Churchill
Apparently Churchill didn’t hear about Hong Kong when he was Prime Minister of the country that held its lease.
hell, Churchill doesn’t care; he’s dead!
I have no faith in man or any institutions to fix the problems we’re in. There is no political will to look forward. The demise of bi-partisanship means continual hardline positions taken in an endless tug of war. You have nation-states that would rather acquirie and build nuclear weapons rather than feed their own people. You have the loss of all reason and enlightenment by those who are susceptible to snake oil salesmen touting the latest ideology of fear and hate.
It’s all about the here and now and mamximizing self interests; I understand that. Who wants to think about tomorrow when you’re struggling with today? But that sentiment will only provide the human race with the conditions ripe for long and painfully slow deaths and misery for those unlucky to be stuck at a time when all the oil dries up; water becomes scarce; more and more natural catastrophes (earthquakes, volcanic activities, hurricanes, severe flooding,. etc..) occur. I think we’re already seeing the warning signs of things to come and Jesus ain’t coming back to save us. If your’re a believer, the Cosmic Engineer gave us free will. And what did we do with our free will?
And when that reckoning time comes, perhaps the best thing is for an asteroid to come and smash us out of existence, or alien beings come to save the earth by exterminating us humans out of our misery. and all human life falls back into the sea.
Y’all might find this interesting:
http://www.nytimes.com/2010/06/22/world/africa/22zimbabwe.html?th&emc=th
Diamonds, oil…same principle. It’s not good if there is nothing else in place.
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows…
pull up a chair, sit back, and watch it run straight down the toilet.
This whole oil crisis is a nightmare. I wish BP was more thoughtful about the spill.
Joslyn,
It is indeed a nightmare. But it feels as if this continuing oil spill is some sort of metaphor. A harbinger of things to come. Also, I think it goes beyond wishing BP were more thoughtful.
How about wishing that the institutions designed to over see such drilling activity wasn’t corrupted by politics and money? And that ideology and dogma took a back seat to reason, civility, compromise, and real leadership? To having some sort of balance in our lives? Why is it that everything must be argued from extreme positions?
This paralysis and gridlock isn’t just happening here in the States, it’s happening world wide, if you ask me. Everybody’s getting polarized over something. Regardless of economic systems, it all goes back to Leonard Cohen:
“Everybody knows”
Ideologues and demagogues are more worried about big corporations over the individual. They’re so blinded by their dogma that they can’t see real life versus classroom theory. It’s astounding that people are apologists for BP
“Larry, your fairytale view of how Democracy should be conducted is the reason you’re so disappointed by it: real Democracy works exactly like this. All the corporate scandals are due to democracy and bad legislation thanks to elected policy-makers. In even the strongest democratic-economies of the world you still end up with parasites everywhere, shaky financial markets, ridiculous trade barriers, and a lot of war. Democracy is the reason you don’t like capitalism.”
Eric: I have no fairytale visions of democracy. It’s the freedom-loving (sic) American people that uphold these fairytales. I was merely mocking them.
Malcolm X put it best: “American democracy–nothing but disguised hypocrisy.”
You said, “America ain’t a democracy.” Democracy in America is exactly how Democracy works, though. Therefore, you have a fairytale view of democracy.
I said America is an Empire, not a democracy. How is that having a fairytale view of how so-called democracy works?
The people who uphold fairytales about democracy are usually those flagwaving, CNN/Fox News-watching drones called “American patriots.”
Here’s a test question: do you believe the voting results for Prop 8 here in California were legitimate? Or the immigration law change in Arizona? (I don’t know where you are and I’d hate to insult you, but here’s info just in case: http://en.wikipedia.org/wiki/Prop_8).
If yes, then you believe in Democracy.
If no, you don’t. These are products of pure, unadulterated Democracy that serve as proof that the majority actually believes how it votes. Rather, you think the other side is wrong, and when the wrong people are the majority, then Democracy somehow turns into Empire-ism. To you, the best way to fix this is to educate the wrong people using tools you like and direct tax dollars there, wherever that is.
And if no, then I take it back: you don’t have a fairytale view of Democracy. You just don’t believe in it.