National champions
National championsare corporations which are technically private businesses but due to governmental policy are ceded a dominant position in a national economy. In this system, these large organizations are expected not only to seek profit but also to "advance the interests of the nation"; the government sets policies which favor these organizations. The policy is practiced by many governments, in some sectors more than others (such asdefense), but by giving an unfair advantage againstmarket competition,the policy promoteseconomic nationalismdomestically andglobal pre-eminenceabroad contrary to thefree market.The policy also deters or preventsventure capitalism.
As the policy is the collective form of inequality of opportunity, it is irreconcilable with the paradigm of the neo-liberal (or“laissez faire”) economy. It was a major part of thedirigistepolicy of 1945–1975 France.
Definition
[edit]Under a national champion policy, governments expect one domestic corporation or anoligopolyof such corporations, typically in strategic sectors (whether private orstate-sponsored) to seek profit and to "advance the interests of the nation". The policy is practised or acquiesced to by every country in certain sectors (typically national defence and security and the printing ofbanknotesand often in the philanthropic, performing or subsidizing research and development of new technologies and through those National Institutes which produce marketable innovations).[1]By allowing corporations a real or perceivedmonopolydue to theamalgamationof enterprises and the active or supportive suppression of domestic and foreign-basedmarket competition,the policy over time operates as a form ofeconomic nationalismas it is contrary to thefree marketand enhanced innovation.
As the policy is a form of enforced inequality of opportunity, it is irreconcilable with the paradigm of the liberal economy advocated by 18th century economist Adam Smith, considered to be the intellectual father of modern capitalism.[2]
European national champions
[edit]Academics often cite post-World War IIGaullistdirigismeinFranceas the pinnacle of the national champion policy. Other examples include the creation of theBritish Steel Corporationby theUnited Kingdomwhich acquired the country's largest 14 domestic steel companies in 1967. The prototypical British example was the establishment ofImperial Chemical Industries(ICI) in 1926, formed from the merger of four companies with the support of the British government: in the 1960s this policy was pursued further in the UK, in order to concentrate capital and create firms which could make the large capital investments and establish the large scale production required to exploiteconomies of scaleandscope,with other examples including theGeneral Electric Company(GEC) andBritish Leyland.The policy was abandoned by the government ofMargaret Thatcherat the end of the 1970s, shifting instead to a more laissez-faire strategy aimed at maximising foreign investment. By 2005 all of Britain's "national champions" had come under foreign ownership, with the exceptions of the aerospace (BAE SystemsandRolls-Royce Holdings) and pharmaceutical (GlaxoSmithKlineandAstraZeneca) sectors.[3]
The risk involved with such policies is exemplified by the unsuccessful challenges to IBM's period of dominance of theinnovativecomputer market by UK'sICL,France'sBull,and Italy'sOlivettiduring the 1970s. Successful and rewarding challenges however are shown to be possible in recent years, as exemplified by European aircraft championAirbus,and Chinese train championCRRC.
Chinese national champions
[edit]In support ofJiang Zemin'saggressive promotion ofoverseas foreign direct investmentas part of "going out,"China's State Councilassembled a team of 120 state-owned industry groups to be national champions between 1991 and 1997.[4]The state-owned national champions received high levels of protection, state financial support, political advice and governmental support for operating in foreign environments, and special rights of management autonomy, profit retention, and investment decisions.[5]The Chinese government also brokers partnerships between foreign investors and China's national champions.[6]In addition to CRRC, notable examples of Chinese national champions includeHuawei,Bank of China,andSINOPEC.[7]Consistent with China'sBelt and Road Initiative,national champions "going out" remain a Chinese government priority.[8]
During the tenure of Chinese leaderXi Jinping,China has encouraged mergers in ofits state-owned enterprises,motivated by a desire to create larger and more competitive national champions with a bigger global market share by reducing price competition among SOEs abroad and increasing vertical integration.[9]
China has promoted its national champions particularly strongly since 2017, with a focus on national champions in the technology sector.[10]: 93 In 2018, China designatedBaidu,Alibaba,iFlytek,Tencent,andSenseTimeas "AIchampions ".[11]: 281
State-owned national champions in nonfinancial strategic sectors like energy, civil aviation, infrastructure, and strategic minerals are overseen by theState-Owned Assets Supervision and Administration Commission of the State Council (SASAC).[12]: 79
Russian renewal
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The policy is evident variously in the 21st century: Russia is its maximal exponent among the world'sG-20.Other examples are the merger ofE.ONwith Ruhrgas backed by the German government in 2000 or the merger ofGDFwithSuezbacked by the French government in 2008.[13]
Russian PresidentVladimir Putinhas made "national champions" a central axis of his policy. The concept was introduced by Putin in his 1997 dissertation "Strategic Planning of the Reproduction of the Resource Bases". Putin, in turn, may have gotten the idea from a textbook byUniversity of PittsburghanalystsWilliam Kingand David Cleland.[14]Putin later expanded on the subject in an article published in 1999 in the Journal of the St. Petersburg Mining Institute.[15]
Charles de Gaullehad also advocated similar ideas when he was the president ofFrancein the 1950s.[14]
Vertical integration
[edit]In his dissertation, Putin wrote: "The process of restructuring the national economy must have the goal of creating the most effective and competitive companies on both the domestic and world markets."
Putin's 1999 article proposes that the state should closely regulate and develop the natural resources sector through creating companies with close links to the power vertical, making the firms big enough to compete with multinationals. These companies would become "national champions", representing the state's interest in international commerce.[15]
Most national champions are likely to be 50% or more owned by the Russian government, but there is no reason why predominantly private companies could not also serve as national champions, given the right guidance and pressure.[14]
Advancing national interests
[edit]Instead of allowing the country's oligarch-controlled corporations to focus exclusively on making profit, Putin proposed that they should be used instead to advance the country's national interests, suggesting that Russia should reclaim some of the assets that were privatized during Yeltsin, and integrate them vertically into industrial conglomerates so they could compete better with Western multinational corporations.
Regardless of who is the legal owner of the country's natural resources and in particular the mineral resources, the state has the right to regulate the process of their development and use. The state should act in the interests of society as a whole and of individual property owners, when their interests come into conflict with each other and when they need the help of state organs of power to reach compromises when their interests conflict.
— Vladimir Putin[14]
One example of the concept is that energy corporations such asGazpromshould keep the prices inside Russia low, as a form of subsidy for the public, and only strive for maximal profit in foreign countries.[14]
See also
[edit]- Corporatism
- Flag carrier
- National oil company
- State capitalism
- Nationalization
- East Asian model
- Economic nationalism
- Intellectual property
- Barriers to entry
- Chaebol
References
[edit]- ^Mariana Mazzucato (June 25, 2013)."The Myth of the" Meddling "State".Public Finance International.RetrievedJanuary 5,2014.
- ^Eric Aaron,What's Right?(Dural, Australia: Rosenberg Publishing, 2003), 75.
- ^Georgiou, Christakis (April 2017)."British Capitalism and European Unification, from Ottawa to the Brexit Referendum".Historical Materialism.25(1): 90–129.doi:10.1163/1569206X-12341511.Retrieved14 September2019.
- ^Murphy, Dawn C. (2022).China's rise in the Global South: the Middle East, Africa, and Beijing's alternative world order.Stanford, California: Stanford University Press. p. 158.ISBN978-1-5036-3060-4.OCLC1249712936.
- ^Murphy, Dawn C. (2022).China's rise in the Global South: the Middle East, Africa, and Beijing's alternative world order.Stanford, California: Stanford University Press. pp. 158–159.ISBN978-1-5036-3060-4.OCLC1249712936.
- ^Davis, Stuart (2023).Sanctions as War: Anti-Imperialist Perspectives on American Geo-Economic Strategy.Haymarket Books. p. 113.ISBN978-1-64259-812-4.OCLC1345216431.
- ^Murphy, Dawn C. (2022).China's rise in the Global South: the Middle East, Africa, and Beijing's alternative world order.Stanford, California: Stanford University Press. p. 159.ISBN978-1-5036-3060-4.OCLC1249712936.
- ^Murphy, Dawn C. (2022).China's rise in the Global South: the Middle East, Africa, and Beijing's alternative world order.Stanford, California: Stanford University Press. p. 162.ISBN978-1-5036-3060-4.OCLC1249712936.
- ^CPC Futures The New Era of Socialism with Chinese Characteristics.Frank N. Pieke, Bert Hofman. Singapore:National University of Singapore Press.2022. p. 140.ISBN978-981-18-5206-0.OCLC1354535847.
{{cite book}}
:CS1 maint: others (link) - ^Marquis, Christopher;Qiao, Kunyuan (2022).Mao and markets the communist roots of Chinese enterprise.Kunyuan Qiao. New Haven:Yale University Press.ISBN978-0-300-26883-6.OCLC1348572572.
- ^Zhang, Angela Huyue (2024).High Wire: How China Regulates Big Tech and Governs Its Economy.Oxford University Press.ISBN9780197682258.
- ^Liu, Zongyuan Zoe (2023).Sovereign Funds: How the Communist Party of China Finances its Global Ambitions.The Belknap Press ofHarvard University Press.doi:10.2307/jj.2915805.ISBN9780674271913.JSTORjj.2915805.
- ^background note in OECD roundtable on "competition policy, industrial policy and national champions"(PDF).Paris: OECD. 2009.
- ^abcdeGoldman, Marshall I. (2008). "Chapter 5".Petrostate: Putin, Power and the New Russia.Oxford University Press.ISBN978-0-19-534073-0.
- ^abCrotty, Ivor (2009-10-06)."The Stereotypical Champion".Russia Profile. Archived fromthe originalon 2009-07-11.Retrieved2009-07-03.