State Socialism Versus State Capitalism


In comparative economic systems — to some extent a dying field — a distinction is often drawn between state capitalism and state socialism.

ByMark Thoma

Both are capitalistic at heart, but under each system the government owns industries such as railroads and the post office.

State socialists run these enterprises to maximize social good, e.g. the post office might be forced to deliver to unprofitable areas if the social good from doing so is large enough. Thus, profit maximization is not necessarily the main goal of state socialist governments.

State capitalists would operate these enterprises to maximize profit. A railroad would only go to areas where it is profitable, social considerations are off the table.

It seems to me that at least some aspects of the debate between Democrats and Republicans on how to run the government is really a debate over how the government should operate the enterprises it has control over (e.g. public goods). Should the government maximize profit, including outsourcing to the private sector whenever it might save a penny, or should social goals play a large role in how these entities are operated?

But this is, admittedly, a pretty unfamiliar area for me so I’m mostly fishing for comments and hoping to learn something from all of you …