Etatism

Etatism - a kind of socio-economic policy of a mixed-state state (state-private) state meaning the taking over by the state of administration over private enterprises or the creation of new state-owned enterprises with the help of state capital.

Etatism (fr. l'État - state, état - state) in theory is the doctrine of state omnipotence, but in practice one can notice the connection with the state policy, which manages all matters and sets the network of orders and prohibitions. The ideal of etatism is a certain kind of socialism. The final definition was created during the Great Depression. From this moment, the concept of etatism is understood as the direct economic activity of the state, which consists in establishing and running state-owned enterprises. T. Parla and A. Davison believe that the assumption of the idea of etatism was the emergence of "national economics", parallel to "national politics". This was to stress the accumulation of capital and the development of national economies. The protection of local capital and the regime were to create a class of domestic buyers and sellers. The supreme goal of etatism was the interests of nations, not the society without classes, nor the liberal-capitalist system. It may be noted that individualism is rejected, but not all followers of etatism renounce liberalism in general, only economic liberalism.

According to J. Heller, etatism is defined as a set of concepts and opinions that oppose the rules of economic liberalism. The shortest one can be described as the fact that the economy has more influence on the economy in etatism than in liberalism, first of all in terms of production, distribution of income and property. Such a form of developed etatism can be observed in the countries in which the socialist system prevails, ie the system of non-market economy and socialized.

According to D. Drabińska, it is the result of the development of etatism in the narrow sense that the emergence of the state enterprise sector. The sphere of the development of etatism, without which it is impossible for the economy to function, is the economic infrastructure (e.g. transport, communication, energy). The development of this phenomenon arises first of all by taking over state-owned enterprises threatened by bankruptcy, but they must have some special significance for the country's economy. The group of these enterprises includes mining and processing of strategic raw materials. For the period in which etatism develops one can distinguish a period of intensified armaments or hostilities. Another reason is that the state strives to increase the state treasury income. You can then observe the formation of the so-called state monopolies. By observing economic reality and using the analysis of etatism on a global scale, one can conclude that it is only justified in one instance, when it stimulates, works for a better use of economic potential. However, in situations in which it does not contribute to it, one should strive to get rid of it.

Etatism and the possibility of economic development

Adam Krzyżanowski was the first to introduce a thesis that concerned the unprofitability of state-owned enterprises. He represented the view that the principle of economy is not the main factor in the private economy. He pointed out that these enterprises do not contribute to the development of the economy-accumulation, because they need permanent state subsidies, which are obtained from income taxes. As a result, tax overloads arise. "Krzyżanowski's Dogma" was developed by successive enthusiasts of liberal economics. It is worth paying attention to, Władysława Zawadzki, who emphasized the analogies between private and state enterprises and showed differences during the creation and operation of enterprises. He distinguished three differences between both types of enterprises:

• Purpose (state-owned enterprises can not be mainly profit-oriented);
• Relation to other economic units (the state should not treat citizens as a source of profit),
• Independence of the direct manager (in the state enterprise decisions are made by administrative bodies).

He argued that state-owned enterprises have less capacity to exploit the productive forces in comparison with private enterprises. This is influenced by the contradictions of the idea of the state and the idea of an economic enterprise. In turn, Adam Heydel defines the following reasons for the unprofitability of state enterprises.

• aiming for social, political and cultural activities, not profitability,
• not flexible operation,
• no anxiety before bankruptcy,
• not necessarily the right choice of management.

Unprofitable state-owned enterprises require fixed fees. Funds for this are provided at the expense of a private initiative. It is taking resources from advantageous enterprises to those less profitable. It is only after the Great Crisis that the development of criticism of etatism can be seen. At the end of the thirties, Adam Heydel is already talking about other anti-statistic arguments. He believes that state-owned enterprises, even if they could, would not bring a maximum profit. The profits gained will not be properly regulated, because the state can not divide them between investment and consumption. He also emphasizes that this reduces the increase in the rate of economic growth, which occurs under conditions of free competition. The reason for this phenomenon is the lack of indicators through which prices, costs, interest rates and the degree of risk can be compared

Examples of Etatism

• The modern economy of China is largely based on etatism, with the government playing a strong role in controlling and guiding the country's economy. The government has invested heavily in infrastructure and industry, and has implemented policies such as the “One Belt, One Road” initiative, which aims to create a new Silk Road between China and Europe, as well as the Made in China 2025 plan, which seeks to transform the country into a global manufacturing powerhouse.
• In the United States, the New Deal of the 1930s was an example of etatism. The government responded to the Great Depression by enacting a series of policies that sought to expand the role of the federal government in the economy. These policies included increased government spending, the establishment of new regulatory agencies, and the creation of numerous public works projects.
• In Russia, the government has implemented a number of etatist policies over the past decade, including the nationalization of some of the country's largest companies, the establishment of state-owned banks, and the creation of a number of government-supported investment funds. These policies are designed to increase the government's influence over the economy and to promote economic growth.

Advantages of Etatism

Etatism is a socio-economic policy of a mixed-state state (state-private) state that involves the taking over of private enterprises by the state or the creation of new state-owned enterprises with the help of state capital. The main advantages of Etatism include:

• Increased economic security: By taking over private enterprises or creating new state-owned enterprises, the state can ensure greater economic security by providing stable jobs and income sources to citizens.
• Increased public services: By taking over private enterprises or creating new state-owned enterprises, the state can increase public services, such as healthcare and education, to citizens.
• Greater investment: State-owned enterprises can help to attract foreign investment, as they are seen as more reliable investments than private companies.
• Improved infrastructure: State-owned enterprises can help to fund and improve infrastructure, such as roads and bridges, which can benefit citizens.
• More effective regulation: The state can use its ownership of enterprises to ensure more effective regulation of markets and industries.

Limitations of Etatism

Etatism is an economic policy that emphasizes the role of the state in managing the economy. While this may be beneficial in some cases, it is not without its drawbacks. The following are some of the limitations of etatism:

• The state may lack the expertise or knowledge necessary to effectively run certain businesses or industries. This can lead to poor decision-making and inefficient use of resources.
• The state may be too heavily involved in the management of the economy, leading to less competition and decreased innovation.
• The government may use etatism to favor certain businesses or industries, creating a form of crony capitalism that can lead to corruption and unfair practices.
• If the government’s financial resources are limited, it can become difficult for the state to adequately fund its businesses or industries, leading to inefficiencies or even bankruptcies.
• Etatism can lead to greater bureaucracy and less flexibility in the economy, making it difficult for businesses to respond quickly to changing economic conditions.

Other approaches related to Etatism

Etatism is not the only socio-economic policy that a state can pursue. Other approaches include:

• Laissez-faire: This is a policy of minimal government intervention in economic activities, allowing markets to run freely.
• Social Market Economy: This approach combines elements of a free market economy with government regulations and social welfare programs to ensure social justice and economic stability.
• Keynesianism: Named after economist John Maynard Keynes, this economic philosophy emphasizes government intervention to regulate aggregate economic demand and stabilize economic growth.
• Supply-Side Economics: This approach focuses on stimulating the supply side of the economy, such as tax cuts for businesses and individuals, to increase economic growth.

In sum, there are a variety of socio-economic policies that a state can pursue, and etatism is just one of them. Each approach has its own advantages and disadvantages, and the best policy depends on the context and the goals of the state.

Etatism — recommended articles

Interventionism — Internationalization — David Ricardo — Centrally planned economy — European Coal and Steel Community — Third sector — Global bank — Laissez faire government — Tourist policy

References

• Gordon, R. L. (1994). IAEE Convention Speech: Energy, Exhaustion, Environmentalism, and Etatism. The Energy Journal, 15(1), 1-16.
• Brandenberger, D. (1999). Proletarian Internationalism,“Soviet Patriotism” and the Rise of Russocentric Etatism During the Stalinist 1930s. Left History, 6(2), 80.
• Gordon, R. L. (2009). Hicks, Hayek, Hotelling, Hubbert and hysteria or energy, exhaustion, environmentalism, and etatism in the 21st century. Energy Journal, 30(2), 1.