A truly government run firm is a national SOE: enter State Capitalism. The founder of the political risk consulting firm, Euroasia Group, Mr. Ian Bremmer wrote an insightful book “The End of the Free Market.” He claims that countries such as china, Russia and Venezuela intertwine complete government support to strengthen the strategic benefit of the country (NPR, 2010.) He explains that free-market economies such as the US, Japan and many nations in Western Europe are in danger. More specifically, companies based in those countries are in danger.
In an interview on National Public Radio, Bremmer purports that “We are no longer in a global, free-market economy. There are now two systems out there. There is a free-market system, largely in the developed world. There is a state capitalist system in China, Russia and the Persian Gulf. The systems are mutually incompatible,” Bremmer says. “When your principal actors are multinational corporations in the private sector and they rely for their growth on unfettered access to global markets, and state capitalist systems don’t do that, you are going to have a problem. And we are just at the beginning of that problem.”
In section 3 we will take a closer look at specifically the challenges that SOEs face in terms of corporate governance. The notion of State Capitalism and the SOEs that accompany it are currently very much in vogue, with the People’s Republic of china at the forefront of the movement. Despite its current re-emergence, State Capitalism has come in and out of favor with world leaders.