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The theme issue ‘Making Space for the New State Capitalism’ brings together insights from critical economic geography and heterodox political economy through a series of papers to be published in three installments, each accompanied by an introductory essay written by the guest editors. In this, the first of these introductory commentaries, we highlight some of the potentially productive ambiguities that accompany the new state capitalism rubric. Subsequent introductory commentaries will consider the consequences of embracing relationality, spatiotemporality and uneven development (along with the second group of papers); and the challenges and opportunities of thinking conjuncturally (with the third group of papers).

Chinese outward investment is increasing in its relevance for the global economy, and its effects on host states are increasingly being scrutinized globally. While European policy-making was ambiguous about the question of hosting Chinese state-led investment (CSLI) in the early 2010s, we can observe a recent surge of protectionist legal measures across Europe. What explains this trend among different European countries? Through the lens of incremental ideational change, we hypothesize that the rise of China as a global investor shifts the perceptions of policy-makers away from being a source of investment toward a potential threat to national security. We argue that this China effect affects advanced European economies similarly. We provide evidence by studying the shift in perceptions among policy-makers in a coordinated and a liberal market economy, Germany and the UK. By drawing on document analysis and expert interviews, we unpack the policy processes in both countries in the last decade. Despite being two dissimilar cases, both show a similar outcome in increasingly curbing CSLI on the grounds of national security reasons. Our results add important insights to recent International Political Economy discussions on the “geopoliticization” of European trade and investment rules in the face of a rising China.

Official discourses of Development are being redefined. If the key geopolitical contexts shaping the post‐war Development project were decolonisation and the Cold War, the defining world‐historical transformations shaping the emerging vision of Development are the expansion of state capitalism and the rise of China. The IMF, the World Bank, the OECD, the G20, other multilaterals, and bilateral partners are increasingly taking stock of the rise of state capitalism, and acting as ideational vectors of this emerging regime. However, this new “state capitalist normal” is also portrayed as carrying risks. There is anxiety regarding the direction the political form of global capital accumulation is heading: with the unchecked proliferation of state capitalism possibly blunting competition, politicising economic relations, and intensifying geoeconomic tensions. This anxiety underwrites the current re‐articulation of Development, one which embraces the state as promoter, supervisor, and owner of capital; even as it critiques China’s use of similar instruments.

We may be witnessing the emergence of a new 'state capitalist' normal, a term this Forum proposes to problematise in its geopolitical dimensions. The growing prevalence of state-sponsored entities (encompassing state enterprises, policy banks, and sovereign wealth funds) as leading vehicles of economic activity is a defining feature of our times. This reassertion of state authority is altering configurations of state and corporate power across the world economy while generating a multiplicity of geopolitical tensions. This Forum reflects upon what it means, theoretically, methodologically, and politically, to articulate a geopolitics of contemporary state capitalism. It brings together interventions which draw on various theoretical approaches, including critical political geography, historical materialism, geographical political economy, and power structure research, in order to probe into the multiple spatialities at the core of contemporary state capitalism. The contributions aim to destabilise the assumptions and taken-for-granted ideas which have largely framed the debate thus far, including problematic binaries such as liberal/illiberal, state/market, commercial/geopolitical logics, and realist narratives of interstate power-maximising behaviour. Studying the (geo)political re-organisation of global capitalism requires moving beyond the castigation of a 'rogue' state capitalism as well as narratives of a clash between rival political-economic models, and disassembling the category state capitalism.

China’s state-led financialisation of infrastructure is an alternative narrative to prevailing accounts of neoliberal financialisation in the advanced capitalist core, where the expansion of private market-based finance-led growth is theorised to transform traditional forms of public infrastructure development and production-based growth. Drawing on the case of Chinese state capital investment in Europe, we demonstrate empirically how the imperative to financialise infrastructure development is emergent from and contingent upon a productivist mode of capitalist development. We articulate two key transformations in which Chinese state capital is being used to leverage financial best practice and its network properties in service of the real economy.

State enterprises, sovereign funds, and other state-capital hybrids have become major engines of global capitalism. How can we explain their global rise and organizational transformation into increasingly sophisticated and globally competitive forms? Why do they increasingly emulate the practices and organizational goals of comparable private-sector entities, adopt the techniques of modern finance, resort to mixed ownership, and extend their operations across geographic space? After critically engaging with arguments that emphasize the role of firm strategies, developmentalist logics, financialized norms, and Polanyian double movements, we develop an explanatory model of organizational change grounded in historic-geographic materialism and economic geographies of the firm. We locate the expansion of state ownership (the role of states as owners) in the historic development and geographic remaking of global capitalism and, in particular, the emergence of a new constellation of international divisions of labor. This created the conditions for a massive round of centralization of capital as state property (the mass of capital controlled by states) since the early 2000s. The modern, marketized, globally spread state-capital hybrid emerged as an organizational fix to mediate the geographic contradictions and imperatives associated with this process. Purposive organizational adaption consisted in developing new skills, operational capabilities, and mixed-ownership structures in order to leverage the financial system, allow for the development of liquid forms of state property, and facilitate the expansion of the latter into global circuits of capital. As such, the article contributes to debates on the role of the state in global value chains, the firm-state nexus, and state capitalism.

ESG metrics are increasingly important in the global investment management industry. Why this came to pass given the limited appetite for responsible investing in the industry is the subject of this paper. Although the business case for ESG provides an explanation for its increasing uptake whereby market actors are increasingly convinced of the merits of ESG as a profit centre, this explanation is insufficient. By contrast, the adoption the ESG programme offers a means of rewriting the terms of risk management and value creation that while grounded in the business case also serve to address challenges to the legitimacy of the global asset management industry. These developments are illustrated in a case study of the establishment and growth of TruCost and its purchase by S&P Global in 2016.

A defining feature of the global political economy, and the Eurasian region in particular, is the increasing growth of state capital. State-owned enterprises are now larger than the largest private...

This article interrogates the notion of state capitalism, exploring the contributions and limits of the concept as a means of theorizing the more visible role of the state across the world capitalist economy. We critically synthesize the key arguments, outlining commonly cited properties and practices of state capitalism, in three bodies of literature: strategic management, comparative capitalism, and international political economy. We find that the term not only lacks a unified definition, but actually refers to an extremely wide array of policy instruments, strategic objectives, institutional forms, and networks, that involve the state to different degrees. For this proliferation of competing usages to be productive and not lead to analytical impasses, we argue that there is a need for a heightened level of reflexive scrutiny of state capitalism as a category of analysis. In that spirit, we identify three issues that the literature must further grapple with for the term to be analytically meaningful, that is, capable of rendering (state)capitalist diversity amenable to analysis and critique: (1) the ‘missing link’ of a theory of the capitalist state, (2) the time horizons of state capitalism, or the question of ‘periodization’, (3) territorial considerations, or the question of ‘locating’ state capitalism.

Financing from institutional investors will be critical to achieving the sustainable development goals and curbing climate change. However, these large investors have been largely absent from multilateral initiatives to mobilise private capital. Partly as a result, such initiatives have been unable to reach the scale required for development finance to go “from billions to trillions”. Successful mobilisation of private capital – including from institutional investors – has instead frequently taken place at the local level, by strategic investment funds and some green banks. At the same time, some institutional investors have been changing their modus operandi, from an intermediary to a collaborative model, and are re-localising their operations. The elimination of financial intermediaries with a short-term focus removes a bottleneck between two categories of long-term investors – institutional investors and multilateral finance institutions. That opens new opportunities for collaboration, as discussed in this paper.

This article contributes to the development of state capitalism as a reflexively critical project focusing on the morphology of present-day capitalism, and particularly on the changing role of the state. We bring analytical clarity to state capitalism studies by offering a rigorous definition of its object of investigation, and by demonstrating how the category state capitalism can be productively construed as a means of problematising the current aggregate expansion of the state’s role as promoter, supervisor and owner of capital across the world economy. Noting some of the geographical shortcomings of the field, we outline an alternative research agenda ‘uneven and combined state capitalist development’ which aims at spatialising the study of state capitalism and revitalising systemic explanations of the phenomenon. Rather than the negation of an abstract model of free-market capitalism, or the rise of a nationally scaled variant of capitalism, we posit contemporary state capitalism as a global process of restructuring of the capitalist state (including in its liberal form) underpinned by secular transformations in the materiality of surplus-value production, such as the consolidation of new international divisions of labour driven by automation and labour-saving technologies. The political mediation of these transformations results in the combined expansion of state-capital hybrids and of muscular forms of statism, which develop in inter-referential and cumulative forms across territory, producing further state capitalist modalities. This is a particularly potent dynamic in contemporary state capitalism, and its tendency to develop in a spiral that both shapes and is shaped by world capitalist development.

With more than 72 million worldwide recorded cases of COVID-19 so far in 2020, 1.2 million deaths and more than 43 million people recovering from the virus, there a huge risk of further viral spread and mortalities, as well as severe health issues emerging in many survivors. This paper explores the COVID-19 infection mechanism and pathology from a dynorphin and oxytocin neuropeptide framework, and explores the angiotensin system, µ-opioid receptor, post viral pathology, and seasonal depression in a literature review and analysis. We details the many factors leading to the well documented elevated pre-infection levels of dynorphin surrounding COVID-19 which may predispose individuals to the virus and detail how oxytocin could be used as prophylactic antiviral, as well as treatment for during and after COVID-19 infection to reduce mortality and residual pathology. Vitamin D and anti-dynorphin agents (hypothetically identified within the actoprotector class) are identified as possible candidates for co-application with oxytocin in a synergistic manner. Furthermore, the paper identifies possible applicability of oxytocin and oxytocin-dynorphin axis adjusting combinations for HIV, which down-regulates the oxytocin receptor and suppresses the immune system. Lastly, the neuropeptides oxytocin and dynorphin are raised as potential biomarkers of disease risk, and assays that can rapidly screen populations for oxytocin and dynorphin levels are proposed, and requires further development.

Abundant natural resources for many countries have not been the elixir to either kick-start or sustain economic growth and development. Volatile revenues from natural resources often retard economi...

This chapter unpacks the concepts of trust and legitimacy as they pertain to sovereign funds in the global political economy. Its argument is divided into three parts. First, the importance of trust in finance and geopolitics, and the critical role of transparency, and how this relates to sovereign funds. Second, the legitimacy of sovereign funds at home and abroad in general with particular reference to how the regulatory regime surrounding public institutional investors in developed democracies is emulated in the Santiago Principles, and why it is significant for understanding the legitimacy of sovereign funds. Third, the current state of trust and legitimacy for sovereign funds is evaluated, with an explanation of why the continued opacity of some sovereign funds has not reduced trustworthiness. The chapter concludes on a speculative note, suggesting that the expected institutional form and function of sovereign funds may be at odds with the long-term interests of their state-sponsors.

We welcome the opportunity to respond to Pete Moore's comments on our paper. In doing so, we address the central issue raised by Moore concerning our use of the term “modern” in our analysis of the origin, structure, and management of Gulf states’ sovereign wealth funds. As it turns out, our use of the term modern is complex and multifaceted; we hope to show that the issue raised by Pete Moore runs in a variety of directions and is not so easily resolved, as he suggests.

Venture capital investing has been an unsatisfactory experience for many long-term institutional investors (LTIs). First, the asset class has not performed in line with expectations for more than a decade. For example, these investors have given more money to venture capitalists since 1997, in aggregate, than they have had in return over that period. Second, even among the top decile, managers that have demonstrated the (rare) ability to outperform VC benchmarks consistently, there have been few opportunities for newer or slower-moving investors to access their funds. As such, VC as an asset class has really only worked for those investors that were first in, such as endowments and family offices, because they have managed to hold on to their allocations at the top VCs. In large part, the challenges associated with this asset class stem from the fact that VC investing does not scale easily.

If a reorganization of the functional and spatial structure of institutional investment offers some new ways to align interests, it also poses profound organizational and governance challenges. Indeed, the shifts in investment philosophy and execution that characterize innovative beneficiary institutions pose challenges and complications for investment organizations, some of which result from the loss of economies of agglomeration. Large financial centres, such as New York, London and Honk Kong, gain many benefits from agglomeration, such as deep labour markets, a range of complementary services, and knowledge spillovers. As previous chapters have highlighted, attracting and retaining skilled and specialized workers, and accessing sufficient and attractive deal flows, are easier to achieve in international financial centres than in other locations. As such, insourcing asset management poses challenges associated with a loss of the networks of agents in the major centres. Similarly, working creatively with asset managers—either through separate accounts or co-investment platforms—demands a level of face-to-face interaction that can be difficult to achieve from staff located back at the head office.

Social scientists and policymakers alike have become critical of the pervasive short-termism embedded within finance and its associated markets, institutions and agents. On the one hand, short-termism can be seen as a structural issue that manifests in a number of forms, from the powerful data-engines that offer near-instantaneous views of portfolios to the emphasis many investors place on quarterly and even monthly reporting. In short, the environment in which firms and investors make decisions tends more towards the realization of short-term performance objectives rather than longer-term ones. On the other hand, short-termism can be seen as emanating from cognitive and behavioural biases, where the uncertainty inherent in long-term expectations draws people to shorter rather than longer-term investment horizons. Combining these structural and agential issues brings into question the capacity of investors to price long-term risks or incorporate inter-generational factors into investment decisions.

Around the world’s financial markets, the prudent person rule is seen time and time again as the guiding light for trustees, directors and fiduciaries of beneficiary investment organizations. In the US, for example, the rule says that fiduciaries must act solely in the interest of beneficiaries, ‘with the case, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims’.

A variety of macroeconomic factors have conspired against frontier investors globally. Pension funds in particular have been faced with the consequences of low interest rates, weaker growth prospects and ageing populations, leading to the ever-growing prospect that many will not be able to overcome their underfunded liabilities without doing something drastic. The threat of deep funding shortfalls is real. This precarious investment climate is making many plan sponsors (which are ultimately on the hook for the pension promises) uncomfortable, because the prospects of contribution increases or benefit cuts are not appealing.

The previous chapter stressed the importance of knowledge—of markets, of the organization and how the organization understands the markets and itself—in the investment management industry. At the centre of this knowledge development and management function rests the skills and competence of investment managers. If beneficiary financial institutions are to be successful, they must attract high calibre investment professionals and leaders. The reliance on human capital is compounded by the pervasive trend to invest in emerging markets and illiquid assets through in-house teams. However, frontier investors—such as public pensions or sovereign funds—face a human resource constraints that generally stem from weak governance arrangements and the simple reality of geography; the relatively low pay and small pools of labour generally mean that successful human resources policies for these funds tend to require creativity and innovation.

Thus far, our narrative has focused on beneficiary investors in middle to high-income economies. This is a simple function of where wealth is concentrated, and thus where a greater proportion of large beneficiary financial institutions are located. We would be myopic, however, if we did not include a discussion of potential frontier investors in the developing world. Many developing economies have made big strides in development and are becoming integrated with global financial markets. Indeed, frontier investors from the rich world continue to see growth opportunities and opportunities for collaboration in emerging markets, not least because of their comparatively young populations. And, many developing countries have recently established or intend to establish a sovereign fund. But including consideration of investors in developing economies also helps to reinforce the view that, ultimately, finance and investment should be about developing the real economy.

In its purest form, the financial system is simply the interface between people and entities that have capital and those that require capital, under conditions of risk and uncertainty. There are temporal dimensions as well as spatial dimensions. The parties concerned are probably working to different time scales and are likely to be dispersed geographically. Financial centres and a financial services industry emerge to intermediate and match these differences. If this is done efficiently, holders of capital earn a return for providing their capital to users of capital. These users put the money to use, whether it is to expand a company, building a bridge, or invest in the health and well-being of a nation. Everyone wins. And for facilitating these flows, intermediaries are paid a fee. These fees are supposed to cover the cost of infrastructure required to move the funds around and to reward the people who identify the most efficient and promising allocation of capital.

Financial markets have been the beneficiaries of a three-decade decline in interest rates. This has meant that generous passive market returns have added to overall portfolio returns. Adding value above market returns in this period was nice, but it was not critical for most funds to achieve their objectives. Looking to the future, however, we see a far more modest outlook for market returns, heightening the importance of adding value above benchmarks. Indeed, value-added returns will become a significant contributor to overall portfolio returns in the future. We believe that delivering this value requires a high quality, performance-driven organization. It is for this reason we think it is imperative for beneficiary institutions to reconsider, revise and, where necessary, restructure the way they approach investing.