The Past Speaks

This week’s Economist contains a special section on the rise of state capitalism, as exemplified by the great state-owned companies in the BRICS nations. Adrian Wooldridge, the editor of the Schumpeter Blog, discusses the strengths and weaknesses of state capitalism here. The special section contains a lot of historical material, which means that it will likely be suitable for business history courses. Wooldridge argues the state capitalism of the BRICS is hardly unprecedented –indeed, as recently as the 1970s there were plenty of nationalised industries in the West, even in Anglo-Saxon countries. Borrowing Alexander Gerschenkron’s ideas, Wooldridge argues that state capitalism might be suitable for a country trying to catch up by imitating the technologies of the advanced nations. However, state capitalism is unsuitable for the next stage of development, which involves innovation, not imitation. For that, you need genuine Steve-Jobs style capitalism.

Wooldridge’s historical perspective is welcome and not terribly surprising, given that he earlier co-authored an admirable short little history of the rise of the corporation. Scholars likely won’t learn much by reading The Company: a Short History of a Revolutionary Idea, but I’ve found that it is a great textbook for undergraduates.