Saturday 24 February 2018

We must find a new form of capitalism to take on China

If the West wants to avoid sliding into irrelevance, governments must be much more active in taking control of the economy, writes Anatole Kaletsky

THE most important statements are often those that are left unsaid. Among the millions of words spoken at last week's World Economic Forum in Davos, the comment that nobody quite dared to utter was clear. After the crisis of 2007-9, the global capitalist system is in a period of transition, comparable to the great transitions of the 1930s and 1970s.

The question that nobody wants to raise is whether the new model of capitalism that emerges to dominate the world will be a radically reformed version of the Western democratic system or some variant of the authoritarian state-led capitalism favoured in China, Russia and many other emerging economies.

As a leading US diplomat told me: "Since the crisis, developing countries have lost interest in the old Washington consensus that promoted democracy and liberal economics. Wherever I go in the world, governments and business leaders talk about the new Beijing consensus -- the Chinese route to prosperity and power. The West must come up with a new model of capitalism that's consistent with our political values. Either we reinvent ourselves or we will lose."

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