State capitalism vs. the alternatives

Noah Smith has a nice column on state capitalism vs. democratic capitalism, and argues that it’s a battle of ideas akin to communism vs. capitalism. As he writes in the beginning:

The great experiment that Vladimir Lenin and Joseph Stalin began is over. And that experiment was a colossal failure. Market economies are necessary for getting rich.

The whole thing is in line with my post the other week about the case for capitalism and the mixed economy. Here’s a bit more from Smith:

Why are democratic countries turning to redistribution, while authoritarian powers seem to be reducing the role of government? One reason is that democracies tend to be richer, and wealthier nations simply have more money to spend on safety nets for their poorer citizens. It’s possible that as autocracies like China grow richer, their citizens will also demand generous welfare states — or even a transition to democracy.

But this isn’t written in stone. Many see Singapore as an authoritarian capitalist success story. The tiny nation is wealthier than almost any democratic nation, yet it remains a one-party state with low levels of government spending and a light regulatory touch. It seems possible that instead of following the path of the democratic-socialist nations, China and other post-communist countries will end up looking more like Singapore. They certainly seem to be aiming for something along those lines.

So although it’s too early to know for sure, it looks like a new division is replacing the old Cold War dichotomy of democratic capitalism versus authoritarian communism. In the new system, democratic-socialist countries will face off against authoritarian state-capitalist ones. It will be the Denmark model versus the Singapore model.