Through the looking glass: Inefficient deregulation in the United States and efficient state ownership in China

Doug Guthrie, David Slocum

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)283-311
Number of pages29
JournalResearch in the Sociology of Organizations
Volume30
Issue numberPART B
DOIs
StatePublished - 2010

ASJC Scopus subject areas

  • Sociology and Political Science
  • Organizational Behavior and Human Resource Management

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