The state of the study of the market in political economy: China’s rise shines light on conceptual shortcomings

Extending the growing literature within international political economy, this article puts forth the notion of transnational state capitalism, taking into account the anaemic growth gripping the global economy since the 2008 economic crisis and China’s massive efforts to export infrastructure following the launch of the Belt and Road Initiative (BRI) in 2013. Focussing on the agencies, practices and outcomes of the Jakarta-Bandung High Speed Rail, one of the largest infrastructure undertakings in Southeast Asia since the BRI’s inception, this article explores how and to what extent state capitalism has shaped the political economy of a rising China in Indonesia. We identify three characteristics of an emerging transnational state capitalism in Southeast Asia: state-centric in its overall direction and operation; simultaneous pursuit of economic-cum-geopolitical interests; and an inability to stem structural weaknesses associated with statist economic directives (which have been further complicated by its intertwining with host state dynamics). Our central argument is that although this project was initially conceived as a business-to-business arrangement, it has increased the appeal of state intervention in a transnational context. The driving forces include Indonesia’s political economy and the Chinese state-owned enterprises’ dual agenda of seeking profits and advancing geopolitical goals. We also argue that the project’s statist nature has brought about some side-effects such as inefficient resource allocation and incumbency bias, thus raising concerns about the vulnerability of state capitalist models. Our findings highlight the importance of conceptualizing the transnational state against the backdrop of a globalizing China, going beyond parochial understandings of this increasingly salient phenomenon.

Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

When the state goes transnational: The political economy of China’s engagement with Indonesia

Liu

Lim

2022

“…This article argues that the problem is conceptual in nature. While GPE literature has extensively analysed states and their variegated forms, differences between capital markets have been studied less (for a detailed discussion, see Massot, 2021). 2 In GPE literature, states and markets have long been analysed as opposing institutions prevailing over or constraining each other's actions (Schwartz, 2018;Strange, 1988).…”

Section: Global Finance State Capitalism and The Institutional Embeddedness Of Capital Marketsmentioning

confidence: 99%

Same same, but different: Varieties of capital markets, Chinese state capitalism and the global financial order

Petry

2020

Since 2009, China’s capital markets have developed and internationalized to an unprecedented degree, which has contributed to a lot of debates on China’s rise and its implications for the global financial order. Contributing to these debates, this article analyses the development of capital markets in China and their integration into global finance between 2009 and 2019, focusing on three aspects: how Chinese capital markets are developing domestically; how they are integrating with global markets; and how Chinese capital markets are internationalizing, i.e. expanding abroad. Thereby, the article analyses the crucial role of securities exchanges who as organizers of capital markets are powerful actors that exercise considerable influence over these markets and their development. This empirical investigation reveals that while they share some characteristics with ‘global’ capital markets, Chinese capital markets function quite differently. The article argues that China’s state-owned exchanges facilitate the development of state-capitalist capital markets – capital markets that follow an institutional logic derived from China’s state-capitalist economic system. Rather than giving in to a neoliberal rulebook, China’s capital markets represent an alternative to, resist and challenge the norms, principles and procedures of the contemporary global financial order. While different capital markets share some characteristics, they are institutionally embedded, and these institutional settings facilitate different institutional logics that underpin and inform the functioning of markets. Instead of viewing capital markets as homogeneous entities, the article therefore proposes to investigate a ‘varieties of capital markets’ that are shaped by different institutional logics.

“…In this article, I examine the confluence of these transformations and their consequences for how power and authority are exercised by, within and through markets. The field of political economy predominantly analyses markets within a binary 'states vs. markets' conceptual framework, which obstructs both a clearer and more nuanced view of the politicoeconomic function of markets and the possibilities for synergy rather than antagonism between market authority and state power (see Massot, 2020). To gain a better grasp of the evolving nature of markets in the 21st century, I return to the early theorizing by neoliberal thinkers of the market as an epistemic device that effectively and efficiently mediates information and knowledge between individuals and collective society.…”

Section: Introductionmentioning

confidence: 99%

The epistemic evolution of market authority: Big data, blockchain and China’s neostatist challenge to neoliberalism

Gruin

2020

Neoliberalism initially invoked the authority of competitive markets as the ideal epistemic mechanism for socio-economic coordination. Yet, the rise of neoliberal ‘market society’ in Western advanced economies since the 1970s has been underpinned by a normative political theory that advocates the reconfiguration of society and politics around the authority of economic theory and knowledge in both production, but especially finance. Conversely, the reform-era development of China’s ‘socialist market economy’ has been underpinned by an insistence on retaining centralized political power over the allocation of financial capital. This article argues that the rise of digital algorithmic technologies constitutes one means by which these contrasting politico-economic visions are being more closely reconciled. It investigates the ways in which China’s ongoing construction of an explicitly authoritarian capitalism is being facilitated by the deployment of complementary financial technologies that enable the Chinese Communist Party to embrace the micro-level epistemic coordinative function of markets without relinquishing macro-level political power and juridical sovereignty over these markets. Following a comparative historiography of the praxis of ‘neoliberal’ and ‘neostatist’ political theory in contemporary capitalism, two case studies of blockchain-enabled currency and big-data driven credit scoring in China illustrate the emergent Fintech foundations of Chinese authoritarian capitalism. The findings contribute to our understanding of how markets are being reshaped by new algorithmic technologies, as well as illuminate some of ideological contradictions in existing conceptions of markets as (neo)liberal institutions at the centre of capitalist political economy.