Marxism Research Network
Unofficial English Translation

Qin Meng: The Law of Alternation Between "Nationalization and Privatization" in Developed Western Capitalist Countries: Logic, Reality, and Trends

Marxism Abroad

I. Introduction

Looking across the history of the development of the state-owned economy in Western capitalist countries, its generalized expansion began after the Second World War. With the formation and development of the relations of production of state monopoly capitalism, the state-owned economy underwent large-scale development. Upon entering the 1980s, under the influence of neoliberal trends, developed countries in Europe and the United States set off a wave of privatization of state-owned enterprises (SOEs), leading to a significant decline in the proportion of the state-owned economy. Following the outbreak of the 2008 financial crisis, a trend toward re-nationalization appeared once again in Western capitalist countries. It is evident, therefore, that since World War II, several alternations between nationalization and privatization have occurred in developed Western capitalist countries. In the 21st century, although neoliberalism faces multiple challenges, it still maintains a firm grip on mainstream discourse, and markets continue to expand. This will inevitably sharpen internal contradictions within developed capitalist countries and exacerbate global conflicts, perhaps triggering a new round of shifts toward nationalization once more.

Domestic scholars [1] have conducted extensive research and summaries of the waves of nationalization and privatization experienced by Western capitalist countries. However, these are fundamentally retrospectives of the historical phenomenon of alternating nationalization and privatization in developed capitalist countries, as well as summaries of the respective motivations, results, or performance effects of these waves; they lack a theoretical analytical framework. The potential innovations of this article are: first, based on Marxist political economy theory and Karl Polanyi’s "double movement" theory, it constructs a theoretical framework for analyzing the law of alternating "nationalization-privatization" evolution in capitalist countries from a Marxist-Polanyian perspective; second, based on this theoretical framework, it summarizes the historical facts of the alternating nationalization and privatization reforms in major developed capitalist countries during the 20th century, as well as the latest trends in the development of the state-owned economy in developed capitalist countries against the backdrop of the 21st-century governance crisis. Through an analysis of the law of "nationalization-privatization" alternation in developed Western capitalist countries, this article emphasizes that under the socialist market economy system, the organic combination of public ownership and the market economy is its essential characteristic. As the carrier of public ownership, the state-owned economy is directly related to the basic socialist system. We must remain vigilant against the erosion of the state-owned economy by neoliberal privatization trends, correctly understand the reform direction of the socialist market economy, continuously deepen the reform of SOEs, and resolutely make state-owned enterprises stronger, better, and larger.

II. Theoretical Analytical Logic of the Law of "Nationalization-Privatization" Alternation in Developed Western Capitalist Countries

From the perspective of Marxist political economy, the development of the basic contradictions of capitalism leads capitalist society to face periodically erupting economic crises. This requires a continuous adjustment of capitalist relations of production to adapt to the requirements of the development of the productive forces, thereby determining a continuous increase in the socialization of the ownership structure and the methods of private appropriation of the means of production. According to Polanyi’s "double movement" theory, the history of the capitalist market economy is a history of the evolutionary contradiction between the continuous expansion of the market and the counter-movements for social protection it encounters. Nationalization and privatization reforms in capitalist countries occur alternately following the contradictory movement between marketization waves and counter-movements for social protection. Polanyi’s theory can be understood as a supplement to traditional Marxism: the alternating trend of "nationalization-privatization" in capitalist society is not only the result of the adjustment of relations of production induced by economic crises, but is also directly influenced by superstructure factors such as political power and ideology. Therefore, on the basis of respectively synthesizing the Marxist political economy theory regarding the basic contradictions of capitalism and their development, and Polanyi’s "double movement" theory, this paper proposes a theoretical analytical framework for understanding the law of "nationalization-privatization" alternation from a Marxist-Polanyian perspective.

  1. The Theory of the Basic Contradictions of Capitalist Society and its Development

The founders of Marxism, Marx and Engels, utilized dialectical materialism and historical materialism to profoundly analyze the dialectical process of the movement between the productive forces and the relations of production—the basic contradiction of human society. In capitalist society, this basic contradiction manifests as the contradiction between the socialization of production and the private ownership of the means of production. Marx emphasized that the development of the basic contradictions of capitalism would inevitably trigger periodic capitalist economic crises characterized primarily by the relative overproduction of goods. Capitalist society must continuously adjust the socialized forms of capital ownership to alleviate these basic contradictions (such as the joint-stock companies and private monopoly capital ownership forms that appeared in the mid-19th century). When the concentration of the means of production and the socialization of labor reach a point where they are incompatible with their capitalist integument, "the knell of capitalist private property sounds," and the proletariat will "wrest, by degree, all capital from the bourgeoisie" to thoroughly eliminate capitalist private ownership. Engels further emphasized that when the degree of socialization of production develops to the point where the state must undertake the management of production, the basic contradiction of capitalist society reaches its limit: "Neither the transformation into joint-stock companies and trusts, nor the transformation into state property, eliminates the capital-character of the productive forces... The modern state... the more productive forces it takes over into its possession, the more it actually becomes the national capitalist, the more citizens it exploits. The workers remain wage-workers, proletarians. The capitalist relation is not done away with; it is rather brought to a head." Thus, the capitalist "mode of production increasingly forces the transformation of the great socialized means of production into state property," "the proletariat seizes state power and to start with transforms the means of production into state property," eventually moving toward socialism and communism.

Following the analytical paradigm of Marx and Engels, Lenin analyzed the process by which monopoly capitalism develops into state monopoly capitalism, as well as the inevitable doom of capitalism. Lenin pointed out that the imperialist wars of the 1940s [2] accelerated the concentration and internationalization of capital in developed capitalist countries. As state power combined with financial monopoly capital, "monopoly capitalism is developing into state-monopoly capitalism... many countries are introducing social regulation of production and distribution." This further increased the level of socialization of production while simultaneously intensifying the basic contradictions of capitalist society. The proletariat became prepared to achieve comprehensive public ownership through socialist revolution, as state monopoly capitalism is the "fullest material preparation for socialism, its threshold."

Currently, accompanied by the influence of factors such as economic globalization, the financialization of capital accumulation, and the new quasi-technological revolution, the basic contradictions of contemporary capitalist society exhibit new characteristics and forms of expression. Capitalist society also continuously carries out limited adjustments and transformations of the relations of production and the superstructure to adapt to the laws of the development of the socialization of production. However, more socialized forms of capitalist private ownership will only lead contradictions to move and develop at a deeper level and on a larger scale. Only by achieving the complete replacement of private ownership of the means of production with public ownership and establishing socialism and communism can the capitalist crisis be fundamentally resolved.

  1. Polanyi’s "Double Movement" Theory

In his book The Great Transformation, Polanyi utilized the concepts of "embeddedness" and "disembeddedness" and the "double movement" theory to refute market liberalism (the self-regulating market economy). He argued that the capitalist free-market economy would inevitably fail and turn toward a "new, non-market-based industrial civilization," eventually realizing a Great Transformation. Polanyi’s main arguments include the following three aspects: First, in pre-capitalist societies before the 19th century, the market and the economy were an organic part of the social system and were "embedded" in social relations. Second, with the rise of capitalism in the 19th century, key factors of production such as labor, land, and money were transformed into commodities ("fictitious commodities"). The market began to dominate not only economic life but also gradually political, religious, and social life, ultimately leading to the "disembeddedness" of the market and the economy and the formation of market liberalism. This "disembeddedness" process did not arise spontaneously but relied on government interventionism. Third, the emergence of fictitious commodities brings the risk of social disintegration and triggers a counter-movement for social protection. Western society thus initiated a so-called "double movement," where one side is the market expansion movement guided by laissez-faire, and the other side consists of various social forces rising up to protect society from the ravages of the market. The destructive tension accumulated by the contradictory movements of these two directions causes capitalist society to fall into chaos, ultimately resulting in the great shifts—crises, wars, and revolutions—that endanger capitalism.

Based on these arguments, Polanyi emphasized that the self-regulating market economy is a "stark utopia." The contradictory movement between market and society inevitably leads to irreconcilable contradictions in capitalist society. Only when the operation of the market is "embedded" in institutions outside the market can the effective operation of the market itself be guaranteed. Such a market "embedded" in institutions was considered by Polanyi to exist in a socialist market economy. Although Polanyi’s identity as a socialist was not formally recognized by the Marxist school, and the Great Transformation of capitalism he predicted has not been realized, the concepts of "embeddedness," "disembeddedness," and "double movement" he proposed remain of great significance for analyzing why capitalist market society moves toward failure.

  1. The Theoretical Logic of the Law of "Nationalization-Privatization" Alternation in Developed Western Capitalist Countries: A Marxist-Polanyian Perspective

According to the traditional Marxist view, the development of the contradiction between the socialization of production and the private ownership of the means of production leads capitalism to continuously experience periodic economic crises characterized primarily by the relative overproduction of goods. To deal with crises, capitalism carries out limited adjustments and transformations of the relations of production. The trend toward socialization of the ownership structure and the methods of possession of the means of production gradually increases. This increase in the degree of socialization of the relations of production, in turn, causes the basic contradictions of capitalism to develop at a deeper level and on a larger scale, and capitalism eventually moves toward its end through the outbreak of even more serious crises. The contradictory movement between productive forces and relations of production always governs the process of capitalist socialization. Achieving the social ownership of the means of production is the final development trend and form of expression of the socialization of production in capitalist society, the ultimate result of which is the non-existence of any ownership forms other than public ownership, or of commodity-money relations (this theoretical logic is represented as Path A in Figure 1). In Polanyi’s view, the main contradiction of contemporary capitalist society is the conflict between the trend of unlimited market expansion and the counter-movement for social protection. It is difficult to achieve a balance between these two conflicts, which ultimately results in a "pendulum-like" trend between market expansion and social protection movements. Consequently, capitalist nationalization and privatization also exhibit characteristics of periodic switching (this theoretical logic is represented as Path B in Figure 1). [2] Only when institutional forms such as the state (government) are "internal" to the market and economic relations are "re-embedded" into socio-political relations can the operation of the market itself and the stability of society as a whole be guaranteed. Polanyi’s thought can be understood as a supplement to traditional Marxism. In opposing market liberalism, Polanyi launched a critique of the "monistic determinism of productive forces" or economic determinism of traditional Marxism, a critique that points directly to the defect of the institutional separation of politics and economics.

Scholars within the Marxist school have already noted the defects of deterministic historical materialism. [3] In his later years, based on the practice of the Russian October Revolution, Lenin reflected on the "monistic determinism of productive forces" that had become popular since the Second International. [4] Mao Zedong, based on the practice of the Chinese Revolution, innovated the basic assumptions of historical materialism, pointing out that while the productive forces and the economic base play a decisive role—which is the general law of the development of world history—the relations of production and the superstructure may play a decisive "counter-role" under "certain conditions," which is the particular law of the development of world history. Marxist scholars such as Louis Pierre Althusser and Zhang Wentian further elaborated on the two possible causal relationships between the productive forces and relations of production, as well as the dual functions of the relations of production. [5] On the basis of a critical summary of the views of these scholars, Meng Jie completed the reconstruction of historical materialism with the concept of "changes in the organic mode of production": the relations of production possess a duality in function; on the one hand, they express and adapt to the productive forces, while on the other, they serve the appropriation and dominance of surplus value. These two functions of the relations of production are not always harmonious, which means that the transformation of the relations of production may be influenced by factors other than the productive forces. Only when these two functions are unified...

...changes in the relations of production will only then be accompanied by an irreversible transformation of the mode of production as a whole (the transformation of the organic mode of production).

What factors, then, aside from the productive forces, bring about changes in the relations of production? Drawing from the thought of Karl Polanyi, we find that the economy is never independent; rather, it is "embedded" in social relations or institutions such as politics and religion. When these social relations or institutions can functionally serve as relations of production, they become part of the economic base and play a decisive role in changing the relations of production and the economic base itself. In human history, institutional forms such as kinship, religion, and the state have all shouldered the functions of relations of production, thereby directly becoming components of the economic base and playing a decisive role in the configuration of economic systems and the economic base. In this sense, the distinction between the economic base and the superstructure—or between economy and politics, market and state—is not a distinction between two different systems, but rather a distinction between the different functions of an institution.

By combining the theory of the transformation of organic modes of production with Polanyi's thought, one can construct a complete analytical framework to elaborate on the interactions between productive forces and relations of production, and between the economic base and the superstructure. This framework provides a theoretical foundation for explaining institutional change in capitalist societies and serves as a theoretical cornerstone for understanding the alternation between nationalization and privatization in capitalist states. Generally speaking, the process of nationalization is the process of bringing the means of production of private enterprises into state ownership, encompassing both full nationalization and partial nationalization. According to the Marxist-Polanyian theoretical framework, in order to alleviate its fundamental contradictions and harmonize the socialization of the relations of production with the socialization of the productive forces, capitalist society adopts an ownership structure that combines state power with monopoly private capital. When superstructural factors such as political power and ideology assume the functions of relations of production and become constitutive principles for constructing those relations, they directly lead to changes in the ownership structure and modes of private appropriation in capitalist society (this theoretical logic is represented as path C in Figure 1). Specifically, when the state is embedded into the capitalist market economy as an institution, it drives the process of nationalization in capitalist society: on the one hand, the state acts as a productive subject assuming the supply of means of production and means of consumption; on the other hand, the state acts as a tool to coordinate interests between the bourgeoisie and society as a whole, playing an important role in the public sector and social welfare and redistributing wealth and power. Conversely, when bourgeois political parties ideologically insist on the instrumental attribute of the state toward capitalist relations of production, the state withdraws from the market economy, triggering what Polanyi called the "disembedding" process and embarking on a path of market expansion dominated by privatization.

III. The Reality of the Alternation between "Nationalization and Privatization" in Advanced Western Capitalist Countries since the 20th Century

Surveying the history of economic development in capitalist countries, nationalization and privatization frequently alternate in the socio-economic developmental practice of capitalist societies. Since the 20th century, advanced capitalist countries—typically represented by the United States, Britain, France, and the Federal Republic of Germany (FRG)—have experienced at least three shifts between nationalization and privatization reforms. The first was the wave of large-scale nationalization from the 1930s to the late 1970s; the second was the wave of privatization reforms starting with "Thatcherism" between 1979 and 2008; and the third was the minor wave of re-nationalization following the 2008 financial crisis. Based on the aforementioned theoretical framework, we introduce the historical reality and underlying causes of the alternating nationalization and privatization in typical advanced capitalist countries to summarize the "periodic law" of nationalization in these nations.

1. The Wave of Large-Scale Nationalization from the 1930s to the Late 1970s

Advanced capitalist countries, typified by the US, Britain, France, and the FRG, implemented relatively large-scale nationalization movements during and after the Great Depression of the 1930s. This was primarily due to the following two factors. First, the new technological revolution following World War II increased the level of socialization of production in capitalist countries. The rapid development of productive forces demanded a higher degree of socialization of the relations of production (i.e., the nationalization trend described by path A in Figure 1). Consequently, capitalist forms of production organization and ownership structures changed: on the one hand, Taylorism and semi-automated assembly line production became the primary production modes after WWII; on the other hand, ownership structures and modes of private appropriation became more pluralistic and diverse, with ownership of the means of production becoming highly socialized as state power continuously merged with private monopoly capital. Second, the ideology of Keynesian state interventionism was accepted by capitalist political parties during the Great Depression and the postwar recession, becoming the constitutive principle for capitalist relations of production in this period. The state, as an institutional form, was "embedded" into the economy and required to participate as a productive subject [32]. Nationalized economies thus developed rapidly (i.e., the nationalization trend described by path C in Figure 1). Under the influence of the new technological revolution and the trend of Keynesian state interventionism, state monopoly capital in advanced capitalist countries accumulated rapidly, and the socialization of capitalist production reached full development: industrial assembly lines were replaced by automated production modes, and the state assumed the dual identity of owner and manager of the means of production. State-owned enterprises (SOEs) existed not only in sectors with public good and natural monopoly attributes—such as postal services, electricity, and telecommunications—but also gradually ventured into competitive sectors such as construction, manufacturing, and aviation, as well as high-tech industries, to guide domestic economic and industrial policies (see Table 1). The rapid development of state capital during this period effectively mitigated the fundamental contradictions of capitalism and spurred a long period of prosperity for over 30 years (the postwar "Golden Age").

The United States is an advanced capitalist country with a very low degree of nationalization. However, from 1945 to the late 1960s, the US government continued the Keynesian economic development plans of the Roosevelt New Deal era and created government enterprises operated by three subjects under the federal system—including state governments, municipalities, and the federal government. These were mainly involved in industries such as postal services, transportation, public utilities, and land transactions, often implementing nationalization through holding or equity participation [33]. Britain, France, and the FRG launched wider-ranging nationalization reforms after WWII. Among them, Britain saw three peaks of nationalization: 1945–1951, 1964–1968, and 1974 to the late 1970s. The first and second waves were concentrated in finance, infrastructure, public services, and steel; through the acquisition of private firms and state investment, the state established a large number of SOEs in postal services, radio broadcasting and communications, power stations, rail transport, aviation, steel, and automobiles. The third wave, beginning in 1974, expanded into competitive and high-tech industries, conducting nationalization reforms in aerospace, computers, and automobile manufacturing through holdings or equity stakes. By the late 1970s, British nationalization in infrastructure industries such as postal services, radio broadcasting and communications, power stations, and rail transport reached 100%, with SOEs numbering 18,283 and their output accounting for 10.5% of GNP [35].

In France, after three "nationalization" movements (1936–1938, 1944–1959, and 1981–1982), the French government successively nationalized banks, insurance companies, and public service sectors. A number of public-private joint-stock companies were established in transportation and communications, alongside SOEs like Charbonnages de France (French Coal) and Électricité de France. By the late 1970s, the French nationalized economy reached a significant scale, with the state directly operating over 20% of the nation's assets. SOEs accounted for 100% of the postal, telecommunications, and rail industries; over 70% of the steel and air transport industries; and over 50% of the basic chemicals and synthetic fiber industries [36]. Although Germany (the FRG) did not implement large-scale nationalization after WWII, it formed a unique Social Market Economy model, which, while giving full play to free market competition, supplemented it with state intervention to compensate for defects in market operations. The government implemented nationalization, state-holding, or equity participation in strategic economic sectors. Infrastructure sectors like rail transport, telecommunications, and postal services were basically fully nationalized, and the state held substantial shares in the coal, coke, petroleum, and steel industries.

2. The Wave of Privatization Reforms Starting with "Thatcherism" (1979–2008)

Although economic policies dominated by the ideology of Keynesian state interventionism temporarily mitigated the fundamental contradictions of capitalism, they simultaneously caused these contradictions to manifest in new forms within the realms of production and distribution. This eventually led to the "stagflation crisis" of 1973–1975, marking the end of the capitalist Golden Age. Economic stagflation caused capitalist contradictions to intensify once again. Neoliberalism and its economic ideology seized the opportunity to rise, replacing Keynesian ideology as the constitutive principle for capitalist relations of production in this period, thereby ushering advanced capitalist countries into the neoliberal era. [11] In the neoliberal era, neoliberal ideology became the new economic orthodoxy for regulating public policy in advanced capitalist countries, playing a decisive role in the transformation and configuration of the economic systems and economic bases of capitalist states in this period. Comprehensive privatization became the primary economic policy of advanced capitalist countries (i.e., the nationalization trend path described by path C in Figure 1). The capitalist state apparatus was reconstructed; state power was utilized to rebuild the free market, while public assets, public power, and environmental public resources were privatized on a large scale [38]. Private capital "disembedded" itself from the constraints of the Keynesian state-interventionist period and gained entry into vital productive sectors and public sectors previously off-limits. The final result was a sharp decline in the proportion of nationalized economies across advanced capitalist countries, with public property and income once again transferred from the masses into the hands of the grand bourgeoisie.

Paul Volcker, Chairman of the US Federal Reserve, launched reforms to US monetary policy in October 1979 to curb inflation. The Reagan administration further advanced neoliberal reforms centered on cutting federal spending, tightening the money supply, deregulation (from aviation and telecommunications to finance), and tax cuts. Subsequent administrations, like the Clinton administration, pursued policies of economic liberalization, advocating for "minimal government" and the "reshaping of the free market." Consequently, the scale of US SOEs significantly contracted; between 1988 and 1992 alone, the US federal government sold state assets and cut various subsidies totaling $25 billion. In Britain, Conservative leader Margaret Thatcher vigorously promoted conservative reforms, with the privatization of SOEs as the core. Between 1979 and 1990, the British government privatized different types of SOEs in stages, selling off SOEs in competitive industries such as oil and aerospace, followed by parts of SOEs in natural monopoly and public utility sectors. Through privatization reforms, the scale of the British nationalized economy significantly contracted: British Aerospace, British Telecom, British Airways, as well as steel, electricity, gas, oil, coal mines, railways, and many small SOEs were all sold off. By the late 1980s, the total sale of British state assets reached £25 billion. France began implementing SOE privatization reforms in the mid-1980s; in 1986, the Chirac government promulgated two privatization laws and began selling SOEs. In 1993, the Balladur government initiated joint-stock reforms for SOEs characterized by opening equity to private capital, resulting in the privatization of thousands of SOEs. Thereafter, the number of French SOEs decreased markedly, existing only in basic economic sectors like electricity and coal mining.

Germany...

The (West) German government began reforming state-owned enterprises (SOEs) through privatization as early as the 1960s, with the primary objective of improving economic efficiency and the international competitiveness of its firms. Starting in the 1990s, influenced by the ideological trend of neoliberalism and the consensus of a liberalized European Single Market, Germany's privatization reforms further deepened. The federal government significantly reduced its holdings in SOEs across industries such as culture, healthcare, automobiles, and steel, while adhering to principles of corporate management [18]. In the early 21st century, competitive regulations were gradually lifted in the fields of post, telecommunications, transport, and energy. Consequently, the privatization of the three major public sectors—Federal Railways (DB), Federal Post (Deutsche Post), and Federal Telecommunications (Deutsche Telekom)—was essentially completed. As a result, the number of German SOEs decreased on a massive scale; the number of companies with direct federal equity participation and federal special property enterprises dropped from 214 in 1991 to 120 in 2002, while major direct-equity enterprises decreased from 136 to 37 over the same period.

3. The minor wave of re-nationalization after the 2008 financial crisis

The privatization reforms of the state-owned economy, dominated by neoliberal ideology, did not fundamentally resolve the basic contradictions of capitalism; rather, they triggered the 2008 global financial crisis. Following the crisis, a trend toward nationalization briefly emerged within developed capitalist countries. This was primarily because neoliberal privatization policies caused the basic contradictions of capitalism to intensify and erupt in a concentrated manner, leading to growing public dissatisfaction with the free market and a rising social clamor for protection. To respond to the crisis, stabilize financial markets, and alleviate various social contradictions, Western capitalist countries were forced to implement nationalization measures to alter the relations of production and social relations. Specifically, these included financial bailout plans and economic stimulus packages, featuring measures such as lowering reserve requirement ratios, establishing bailout funds, nationalizing financial institutions, subsidizing the unemployed, creating jobs, and increasing government investment.

The George W. Bush administration in the United States enacted the Troubled Asset Relief Program (TARP) in September 2008. This program provided massive financial assistance to major U.S. financial institutions by subscribing to preferred or common stock—providing at least $125 billion in aid to nine major banks and $40 billion to the insurance giant AIG; simultaneously, it provided $17.4 billion in bailout funds to General Motors and Chrysler. The subsequent Obama administration passed the American Recovery and Reinvestment Act (ARRA) in February 2009. The ARRA primarily subsidized the unemployed, created jobs, and increased government investment through healthcare reform plans, tax cut plans, and infrastructure spending programs [46]. The British government launched a £500 billion rescue package in October 2008, of which £250 billion guaranteed interbank lending, £200 billion provided short-term loans to banking institutions, and £50 billion injected capital into large financial institutions such as the Royal Bank of Scotland and Halifax Bank of Scotland (HBOS) through the purchase of preferred shares to stabilize financial markets. After the Cameron government took office, it announced the launch of a government industrial strategy, identifying 11 key sectors—including aerospace, agricultural technology, life sciences, and the nuclear industry—as priority areas for government support. In 2008, France launched a €360 billion rescue plan, including €40 billion for direct capital injections into banks and €320 billion to guarantee bank lending. Meanwhile, the Sarkozy government implemented a series of new economic stimulus measures, including the establishment of a strategic investment fund and the strengthening of bank loan supervision. The German Parliament passed a €500 billion financial rescue package in October 2008, of which €400 billion guaranteed interbank loans; €80 billion and €20 billion served as special and precautionary funds, respectively, to help banks increase their own capital or weather the crisis [47]. In April 2009, Germany spent €102 billion to bring mortgage bank Hypo Real Estate under state ownership.

IV. The Alternation of Nationalization and Privatization in Developed Capitalist Countries Under the 21st-Century Crisis of State Governance

1. The crisis of state governance and nationalization in the era of neoliberal capitalism

The outbreak of the global financial crisis forced capitalist states to adopt a series of bailout policies and restart nationalization, particularly in the financial sector. What were the effects of these bailout policies and this new round of nationalization? Does it mean that developed capitalist countries in Europe and America have begun to pursue the sublation of neoliberalism? Will this new round of nationalization continue to advance, or will it switch to another round of privatization? From the public growth data of major developed capitalist countries, it can be observed that while bailout policies and nationalization measures stabilized the banking systems to a certain extent and allowed for some economic recovery, this limited recovery was accompanied by severe fiscal deficits and debt, high unemployment, and a continued worsening of inequality. This is because neoliberal ideology did not reach its end in capitalist countries; instead, it developed toward polarization and conservatism. Crisis governance policies were, in essence, still using neoliberal policies to save neoliberalism itself. These policies inevitably dragged capitalist countries into long-term economic stagnation or even "stagflation," while politically foreshadowing an era of intensified class contradictions and chaotic democratic politics. The capitalist world thus fell into a crisis of state governance.

Under the guidance of neoliberal ideology, the capitalist state apparatus was molded into a protector of the interests of private property owners, corporations, multinational companies, and financial capital. The state must submit to the commands of monopoly financial capital and create conditions for its high profitability. Faced with the financial crisis, capitalist countries transformed financial institutions from privatized to partially nationalized by injecting capital to obtain equity, thereby stabilizing financial markets. However, most of this financial assistance flowed to monopoly financial capital and its institutions, while the fiscal pressure was shifted to public finances. Between 2008 and 2010, the public fiscal deficit rates of Western countries generally rose, with average annual deficit rates in the U.S., UK, France, and Germany reaching 7.2%, 8.8%, 6.0%, and 2.5%, respectively. To alleviate fiscal pressure and reduce deficits and debt, these countries shifted from fiscal expansion to fiscal austerity, implementing policies such as tax cuts (primarily cutting top-tier tax rates) and downsizing public sector employment. The interests of the working class were continuously eroded, the bottom-tier unemployed population surged, and the divide between rich and poor grew increasingly severe. Since 2010, in most European countries, the wealthiest 10% have held nearly 60% of national wealth; in the U.S., between 2010 and 2011, the top 10% held 72% of the wealth, while the bottom half of the population held only about 2%.

The worsening social inequality intensified the class contradictions between the bourgeoisie and the masses. Voices demanding equality and public resentment toward ruling parties swept the Western world, leading to the rise of radicalized mass movements and populist politics in Europe and America. For example, the Occupy Wall Street movement in the U.S., the election of Donald Trump, the Brexit referendum in the UK, and the rise of the National Front in France and the Alternative for Germany (AfD) are all manifestations of this radicalization [41-44]. Ideology is one of the decisive factors in constructing relations of production. Given the chaos of democratic politics in Europe and America against the backdrop of the crisis of state governance, could the post-financial crisis trend of nationalization continue? The realistic answer is no. Neoliberal ideology still firmly holds the mainstream discourse; developed capitalist countries continue to pursue neoliberal economic policies, and privatization has once again replaced nationalization.

2. Renewed privatization in the post-crisis era of capitalist countries

(1) The combination of American neoliberalism and populism promotes a new round of public asset privatization

Donald Trump gained strong support from middle- and lower-class white groups by utilizing populist discourse and advocating against immigration and economic globalization. At the same time, the wealthy and highly educated were also the backbone of support for the Republican Party represented by Trump; they used sufficient funds to support his campaign and, through him, successfully diverted domestic social contradictions toward racism, globalization, and the rapid rise of China. With the support of both the lower-middle and wealthy classes, Trump successfully defeated the neoliberal establishment elite represented by Clinton to become the 45th President of the United States. Clad in the mantle of a populist movement, Trump combined populism with market liberalism, continuing neoliberal economic policies and reconstructing the free market through government intervention. He continued to promote the privatization of public assets, thereby consolidating the hegemony of financial capital and expanding the accumulation space of the financial capital empire.

In terms of specific policy implementation, the Trump government focused externally on anti-immigration, anti-minority, and anti-globalization measures, implementing trade protectionism and tightening visas. Internally, it leaned toward conservatism, continuing neoliberal economic policies beneficial to capital groups: "privatization, massive tax cuts, weakening unions, and deregulation." On the one hand, Trump signed the Tax Cuts and Jobs Act in December 2017, expected to reduce taxes by $1.45 trillion over the coming period. Through tax cuts, the government reduced intervention in the market while increasing the rate of profit on capital and stimulating private investment [57]. On the other hand, in the same year, the Trump administration withdrew or delayed 1,570 planned regulations and issued 67 deregulation measures, including the repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to promote the liberalization of financial markets and continuously advance the privatization of public assets—allowing financial capital to enter the realm of public assets for speculation. Statistical data shows that by 2017, the value-added of U.S. government enterprises as a share of national income was only 0.7%.

(2) Political fragmentation and privatization in European countries

As the scale and depth of European integration increased, the authority of the EU within European countries grew, but this also led to and reinforced disagreements and political fragmentation regarding European affairs. Since the outbreak of the European debt crisis, the EU has adopted austere fiscal policies, which have had a severe impact on the lives of citizens in member states and triggered many social protests. Public support for the EU and European integration plummeted, and extremist parties—especially populist ones—in various European countries took the opportunity to challenge the ruling status of mainstream parties. Britain, Germany, and France, as the three most influential countries in the EU, made different choices when facing the populist impact on European integration and EU policies. Under the leadership of Angela Merkel, Germany continued to support integration; France modified the EU austerity policies; and Britain chose to leave the EU via referendum [58]. The privatization of public assets in these countries also accelerated under the influence of political factors.

Despite the increasing public support for the Alternative for Germany (AfD) since its founding in 2013, the development of right-wing populist forces in Germany has been significantly restricted due to Germany's unique historical factors and its relatively stable party system [54]. Merkel, as chair of the CDU, was successfully re-elected as German Chancellor in 2013 and 2018. The German government led by Merkel continued to support the development of European integration, took the lead in promoting the "Fiscal Compact" and the "European Stability Mechanism (ESM)," and advocated for structural reforms centered on restoring competitiveness across EU countries, including fiscal austerity and welfare cuts. French President Nicolas Sarkozy's adherence to fiscal austerity and the reduction of public spending ended with his failure to win re-election, as Socialist leader François Hollande...

In order to win over far-right voters, Francois Hollande advocated for the implementation of policies within the EU that better aligned with French interests, while also proposing amendments to the existing "Fiscal Compact" [17] by adding policies to promote growth and job creation. However, Hollande's campaign promise to "promote growth and employment" was not materialized after his election; unemployment in France continued to rise, and economic growth remained largely stagnant. The United Kingdom, meanwhile, embarked on the path of a referendum to leave the EU. Following the success of Brexit, the UK pursued an even more neoliberal path, implementing policies such as tightening government spending, scaling back labor welfare, reducing taxes on the wealthy and large-scale capital, and cutting immigration and childcare benefits. Overall, the combination of neoliberalism and populism led to a further acceleration of the privatization process in major advanced capitalist countries in Europe, with the scale of state-owned assets declining rapidly. Statistical data shows that in 2012 alone, the UK, Germany, and France sold off state-owned assets worth 300.6 billion euros, 186.9 billion euros, and 42.9 billion euros, respectively.

V. Conclusion and Several Implications

Based on the theory of the basic contradictions of capitalism in Marxist economics and Polanyi's theory of "double movement" [18], this paper constructs a theoretical framework to analyze the law of "nationalization-privatization" alternation in major advanced capitalist countries. Under this Marxist-Polanyian analytical framework, we have summarized the three cycles of switching between nationalization and privatization experienced by four representative advanced capitalist countries—the United States, the United Kingdom, France, and Germany—since the 1930s, as well as the developmental trends of various state-owned economies against the backdrop of the capitalist state governance crisis in the 21st century. An in-depth analysis and accurate understanding of the law of "nationalization-privatization" alternation in Western advanced capitalist countries provides important insights for further understanding the laws of capitalist economic operation and correctly recognizing the special position and role of our country’s state-owned economy in the operation of the market economy.

First, nationalization and the market economy are not completely antithetical. In the Western capitalist market economy, the existence and development of the state-owned economy possess an internal necessity; however, nationalization in capitalist countries is always aimed at maintaining capitalist private ownership. This causes nationalization and privatization in capitalist countries to exhibit a pattern of alternating emergence. Based on the Marxist-Polanyian theoretical framework: on the one hand, fundamentally speaking, nationalization is an inevitable requirement for overcoming the contradiction between the socialization of production and the private appropriation of the means of production. As a concrete form of the socialization of the means of production, state-owned enterprises thus become effective tools for managing economic crises. This is the fundamental reason for the waves of nationalization that appeared across capitalist countries after the Great Depression of the 1930s, the Second World War, and the 2008 financial crisis. On the other hand, nationalization is also directly influenced by superstructure factors such as political power and ideology. After WWII, Western capitalist countries, especially those in Europe, were influenced by the ideologies of state interventionism and the welfare state. They emphasized the necessity of state intervention and viewed nationalization as a necessary means to coordinate the tripartite relationship between the state, the market, and society to achieve balanced economic and social development. For example, at that time, the British Labour Party, the French Social Democratic Party, and the German Social Democratic Party all regarded nationalization as one of the important means of de-commodification and social protection. This was specifically manifested in the increasing degree of nationalization in areas involving public power and public services, such as pensions, healthcare, education, and housing. However, under the basic capitalist system, nationalization inevitably encounters limits to its own development. Large-scale nationalization is bound to undermine the principle of the "sacrosanct" nature of private property. When the scale of nationalization—due to efforts to manage governance crises or coordinate overall social interests—encroaches upon the profit margins of private capital, the ideology of the big monopoly bourgeoisie—namely, neoliberal ideology—forces nationalization to pivot toward privatization. Consequently, the number, scale, and level of influence of state-owned enterprises on the overall economy drop significantly.

Second, the hegemonic status of neoliberal ideology ensures that the privatization reform of state-owned enterprises remains the mainstream trend in the current development of state-owned economies in Western advanced capitalist countries. This has severely squeezed the survival space of the state-owned economy within the capitalist market economy and eroded the space for capitalist state governance; the basic contradictions of capitalism and various social contradictions will inevitably deepen further. Since the 1980s, advanced capitalist countries, represented by the US and the UK, have actively promoted neoliberal ideology globally. Neoliberal policies—such as the privatization of the public sector, cuts to social security and welfare, the weakening of labor unions and the creation of flexible labor markets, the opening of commodity and capital markets, and financial deregulation—have allowed capital to gradually "disembed" [19] itself from various state and social constraints. According to neoliberal logic, a true market economy must implement comprehensive privatization; the state (government) must be completely subordinate to capital or the market and be shaped into a tool serving the big bourgeoisie or financial monopoly capital. It no longer represents or maintains the public will or public interest, and the management of financial crises is merely transformed into bailouts for large monopoly financial firms. After the financial crisis, the combination of neoliberalism and populism continued to occupy the mainstream discourse in advanced capitalist countries. Privatization, liberalization, and de-statization remain the primary policy tools adopted by European and American countries, further exacerbating polarization and unequal development, and sowing the seeds for the ultimate demise of capitalism.

Third, the socialist market economy system established by our country has greatly liberated and developed the productive forces. The organic integration of public ownership and the market economy is the essence of the socialist market economy. As the carrier of public ownership, the state-owned economy is directly related to the basic socialist system and is a direct manifestation of socialist ideology. The foundation of the socialist economic system is the public ownership of the means of production. In the primary stage of socialism, our country implements a basic economic system where "public ownership plays the dominant role while multiple forms of ownership develop together." This requires that in the socialist market economy, the dominant position of public ownership in the national economy must always be maintained, and the leading role of the state-owned economy must be fully utilized. Only by adhering to the dominant position of public ownership in the market economy can the institutional advantages of the socialist system—such as distribution according to work and planned development within the state-owned economy—be manifested. Only then can we fundamentally resolve the contradiction between the socialization of production and the private appropriation of the means of production, and overcome the defects and maladies inherent in the capitalist market economy, such as blindness, spontaneity, and lag, as well as periodically erupting economic crises and income polarization. [67] Therefore, in the socialist market economy, we must make the state-owned economy stronger, better, and larger, enhancing its vitality, control, and influence, and resolutely leap out of the "nationalization-privatization" alternation law of capitalist countries.

Fourth, we must remain vigilant against the encroachment of the neoliberal trend of privatization on the state-owned economy, correctly understand the reform direction of the socialist market economy, and continuously deepen the reform of state-owned enterprises (SOEs) to form an organic whole where a capable government and an effective market are better integrated. According to the "Marxist-Polanyian" theoretical logic, the relationship between the state and the market is not an institutional dichotomy between politics and economics, but rather a relationship of mutual embedding and fusion. By adhering to the dominant position of public ownership, the socialist state "embeds" economic relations into socio-political relations through two aspects: first, by undertaking the function of overcoming "market failure" and guiding the development of the market economy; second, by acting as the representative of the public ownership of the means of production and the public interest, regulating the social reproduction process in a planned manner according to social needs on a societal scale, and rationally allocating social resources to meet the people’s growing material and cultural needs. [68] Therefore, in the process of deepening the reform of the socialist market economy system, the priority must be to adhere to the system of socialism with Chinese characteristics, develop and strengthen SOEs with total confidence, and improve the state's capacity for macroeconomic governance, while never taking the neoliberal path of privatization. At the same time, we must continuously deepen the reform of SOEs on the basis of following market laws, further streamlining administration and delegating power, and regulating the management systems of SOEs—including improving corporate governance structures and supervision mechanisms for state-owned capital. Through these two aspects of reform, we will ultimately form an organic whole where a capable government and an effective market are better integrated. This is the best interpretation of the proposition emphasized by General Secretary Xi Jinping: "to allow the market to play the decisive role in resource allocation and to better play the role of the government."