TY - JOUR
T1 - Through the looking glass
T2 - Inefficient deregulation in the United States and efficient state ownership in China
AU - Guthrie, Doug
AU - Slocum, David
N1 - Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2010
Y1 - 2010
N2 - We discuss the ways in which the tensions between deregulation and bailouts create fundamentally inefficient markets. Although there is an appetite for the rhetoric of a laissez-fair economic system in the United States, we do not have the political will to operate such a system, as there are always cries for bailouts when a crisis emerges. And bailouts rob markets of the crucial ability to discipline capital for risky behavior. Using the case of China as an example, we argue that the post-Cold War conclusion that state ownership is fundamentally inefficient is premature. The key issue is not state versus private ownership per se but, rather, how well aligned the incentives are within a given system. Some of the economic models we find in reform-era China are actually better aligned and perhaps as transparent as their counterparts in the market economies of the capitalist West. Finally, because China is not caught up on the categorical assumption that private firms are efficient while state-owned firms are inefficient, the country has been able to be an institutional innovator in the area of public-private partnerships, leading to radical new corporate forms.
AB - We discuss the ways in which the tensions between deregulation and bailouts create fundamentally inefficient markets. Although there is an appetite for the rhetoric of a laissez-fair economic system in the United States, we do not have the political will to operate such a system, as there are always cries for bailouts when a crisis emerges. And bailouts rob markets of the crucial ability to discipline capital for risky behavior. Using the case of China as an example, we argue that the post-Cold War conclusion that state ownership is fundamentally inefficient is premature. The key issue is not state versus private ownership per se but, rather, how well aligned the incentives are within a given system. Some of the economic models we find in reform-era China are actually better aligned and perhaps as transparent as their counterparts in the market economies of the capitalist West. Finally, because China is not caught up on the categorical assumption that private firms are efficient while state-owned firms are inefficient, the country has been able to be an institutional innovator in the area of public-private partnerships, leading to radical new corporate forms.
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U2 - 10.1108/s0733-558x(2010)000030b013
DO - 10.1108/s0733-558x(2010)000030b013
M3 - Article
AN - SCOPUS:79956173683
SN - 0733-558X
VL - 30
SP - 283
EP - 311
JO - Research in the Sociology of Organizations
JF - Research in the Sociology of Organizations
IS - PART B
ER -