State capitalism

Examples of State capitalism in the following topics:

• Free Enterprise

  • Political scientist Ian Bremmer describes China as the primary driver for the rise of state capitalism as a challenge to the free market economies of the developed world, particularly in the aftermath of the 2008 financial crisis.
  • Bremmer states, "In this system, governments use various kinds of state-owned companies to manage the exploitation of resources that they consider the state's crown jewels and to create and maintain large numbers of jobs.
  • This is a form of capitalism but one in which the state acts as the dominant economic player and uses markets primarily for political gain. "
  • There are multiple variants of capitalism, including laissez faire, mixed economy, and state capitalism.
  • Many states have what are termed mixed economies, referring to the varying degree of planned and market-driven elements in a state's economic system.

• Welfare State Capitalism

  • Welfare capitalism refers to a welfare state in a capitalist economic system or to businesses providing welfare-like services to employees.
  • Welfare capitalism refers either to the combination of a capitalist economic system with a welfare state or, in the American context, to the practice of private businesses providing welfare-like services to employees.
  • Business-led welfare capitalism was only common in American industries that employed skilled labor.
  • As workers became frustrated with meager or nonexistent benefits, they appealed to government for help, giving rise to the first form of welfare capitalism: welfare provisions provided by the state within the context of a capitalist economy.
  • In the United States, workers formed labor unions to gain greater collective bargaining power.

• Capitalism

  • An example of the state's involvement in capitalist economies is the development of minimum wage laws.
  • Capitalism is generally viewed as encouraging economic growth.
  • Hernando de Soto is a contemporary economist who has argued that an important characteristic of capitalism is the functioning state protection of property rights in a formal property system where ownership and transactions are clearly recorded.
  • However, in the 20th century, capitalism also accompanied a variety of political formations quite distinct from liberal democracies, including fascist regimes, absolute monarchies, and single-party states.
  • Examine the different views on capitalism (economical, political and historical) and the impact of capitalism on democracy

• The Death Penality

  • Capital punishment is a legal process whereby a person is put to death by the state as a punishment for a crime.
  • Between 1973 and 2005, 123 people in 25 states were released from death row when new evidence of their innocence emerged
  • Capital punishment is a legal process whereby a person is put to death by the state as a punishment for a crime.
  • Crimes that can result in a death penalty are known as "capital crimes" or "capital offenses. " Capital punishment has in the past been practiced by most societies.
  • Although many nations have abolished capital punishment, over 60% of the world's population live in countries where executions take place–the People's Republic of China, India, the United States, and Indonesia–the four most-populous countries in the world, that continue to apply the death penalty.

• Weighted Average Cost of Capital

  • The WACC is the cost of capital taking into account the weights of each component of a company's capital structure.
  • The weighted average cost of capital (WACC) is the rate a company is expected to pay, on average, to its security holders.
  • Stated differently, the return on capital of a new project must be greater than the weighted average cost of capital.
  • Since companies raise money using any number and combination of these sources - i.e. debt, common stock, preferred stock, retained earnings - it is important to calculate the cost of capital taking into account the relative weights of each component of a company's capital structure.
  • As the above equation states, the cost of debt, rD(1 - T), is multiplied by the ratio of debt to total market value of the company.

• Capital Letters

  • Proper nouns should always be capitalized.
  • A name or nickname should always be capitalized.
  • Names referring to a person’s culture should be capitalized.
  • Languages are also capitalized.
  • The names of cities, states, countries, continents, and other specific geographic locations are capitalized.

• Optimal Capital Structure Considerations

  • The optimal capital structure is the mix of debt and equity that maximizes a firm's return on capital, thereby maximizing its value.
  • The theorem states that in a perfect market, how a firm is financed is irrelevant to its value.
  • One of the major considerations that overseers of firms must take into account when planning out capital structure is the cost of capital.
  • For an investment to be worthwhile, the expected return on capital must be greater than the cost of capital.
  • Explain the influence of a company's cost of capital on its capital structure and therefore its value

• The Marxist Critique of Capitalism

  • Capitalism has been the subject of criticism from many perspectives during its history.
  • Criticisms range from people who disagree with the principles of capitalism in its entirety, to those who disagree with particular outcomes of capitalism.
  • In this sense they seek to abolish capital.
  • Capitalism is seen as just one stage in the evolution of the economic system.
  • Normative Marxism advocates for a revolutionary overthrow of capitalism that would lead to socialism, before eventually transforming into communism after class antagonisms and the state cease to exist.

• Trade-Off Consideration

  • It is often set up as a competitor theory to the pecking order theory of capital structure.
  • It states that there is an advantage to financing with debt—the tax benefits of debt, and there is a cost of financing with debt—the cost of financial distress including bankruptcy.
  • As more capital is raised and marginal costs increase, the firm must find a fine balance in whether it uses debt or equity after internal financing when raising new capital.
  • Therefore, trade off considerations change from firm to firm as they impact capital structure.
  • Trade-off considerations are important factors in deciding appropriate capital structure for a firm since they weigh the cost and benefits of extra capital through debt vs. equity.

• Equity Finance

  • The equity, or capital stock (or stock) of a business entity represents the original capital paid into or invested in the business by its founders.
  • The stock of a business is divided into multiple shares, the total of which must be stated at the time of business formation.
  • Firms need to acquire capital from others to operate and grow.
  • From a firm's perspective, they must pay for the capital it obtains from others, which is called its cost of capital.
  • If an investment's risk increases, capital providers demand higher returns or they will place their capital elsewhere.