Question

Do state capitalist enterprises tend to increase or decrease the power possessed by nation-states?

Answer 1

State Capitalism is where an economic activity is undertaken by the state. The most important means of production are owned by the state.

The state comprises of people in power and once they are is control of production and distribution which leads to an increase in wealth, there is an expansion in the power of the state. This is however, dangerous in the sense that there could be favouring of certain industries due to the political need at the moment. There could be pumping of money into one particular sector/industry. This could inevitably lead to a money crunch in other sectors. This could constrain economic growth or lead to only one-sided growth. This can be seen from the example of state-owned chineese banks who mostly invest in the infrastructual sectors.

Historically, we have seen that such enterprises can also be detrimental in the sense as they can start exercising influence on the citizen's rights as the East India Company did in India.

As the states are now incharge of production and distribution, they can use the huge amount of wealth they have in hand to invest it in areas that serve their political needs. The state acts like a dominant economic player for its own beneficial needs and not the general welfare for all - thereby maximizing their power and longivity in office and their survival.