State capitalism facts for kids

State capitalism is an economic system where the government controls many or most of the businesses and how things are made. In a regular capitalist system, private people or companies own the factories and tools needed to make products. These are called the "means of production."

In a free-market capitalist system, private owners control the businesses. Even though workers make the products, the owners decide how the business runs. State capitalism is different because the government itself acts like a big owner.

What is State Capitalism?

State capitalism means the government owns or controls a lot of the country's economy. This includes important industries like energy, transportation, or banks. The government might own these businesses completely. Or, it might own a large part of them. It could also just control them very strictly.

How is it Different from Regular Capitalism?

In regular capitalism, private individuals or companies own most businesses. They make decisions about what to produce and how much to charge. They aim to make a profit for themselves.

In state capitalism, the government makes many of these decisions. It might decide what industries are important for the country. It might also set prices or control how much is produced. The goal might be to help the country grow or to achieve social goals, not just to make money.

Why Do Countries Use State Capitalism?

Governments might choose state capitalism for several reasons.

• Quick Growth: It can help a country develop quickly. The government can direct resources to specific industries.
• National Control: It allows the government to keep control over important resources. This can include oil, gas, or minerals.
• Stability: It can help keep the economy stable during tough times. The government can support businesses that might otherwise fail.
• Social Goals: Sometimes, governments use it to provide services. This could be healthcare or education, to all citizens.

Examples of State Capitalism

Many countries have used or still use elements of state capitalism.

• China: China has a mix of state-owned and private companies. The government plays a big role in guiding the economy.
• Singapore: Singapore has strong government-linked companies. These companies operate like private businesses but are owned by the state.
• Norway: Norway's government owns a large part of its oil industry. This helps fund public services for its citizens.

State Capitalism vs. Socialism

State capitalism is sometimes confused with socialism. In socialism, the community or the state owns the means of production. The goal is often to share wealth more equally.

State capitalism still uses market principles like competition and profit. But the government is a major player in the market. It's like a big company that also happens to be the government.

Historical Views on State Capitalism

Many thinkers have discussed state capitalism.

• Friedrich Engels: He was a German philosopher. He believed that if the state owned industries, it didn't automatically get rid of capitalism. He thought true change needed more than just state ownership.
• Ludwig von Mises: He was an Austrian economist. He saw state capitalism as a form of "state socialism." He thought it limited economic freedom.
• Benito Mussolini: He was an Italian dictator. He claimed that modern capitalism was moving towards state control. He called it "state socialism turned on its head."

These thinkers had different ideas about what state capitalism meant. They also had different ideas about its effects on society.

Images for kids

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  Friedrich Engels, who argued that state ownership does not do away with capitalism by itself.

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  Murray Rothbard, who advanced a right-libertarian analysis of state capitalism

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  Ludwig von Mises, who described state capitalism as a form of state socialism

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  Benito Mussolini, who claimed that the modern phase of capitalism is state socialism "turned on its head"

See also

In Spanish: Capitalismo de Estado para niños