Beyond State Capitalism?

Abstract

The main emphasis of the new policy imperatives so far outlined lies in control of the location of firms. A government need not control the location of all firms, nor need impose the same general rule for location on all stages of a firm’ s production cycle. But the key to unlocking the underlying imbalance between the regional distribution of capital and labour lies in the control of capital. Labour will not move from problem areas in sufficient quantity to offset even major differences in unemployment and income, while capital not only tends to stay, either at its original location or near metropolitan areas, but also increasingly locates abroad in tax or labour havens in the Third World. In other words, quite apart from the political infeasibility of major involuntary population migration, this would have to be into centre areas which already tend to be over-developed in terms of social congestion costs. And even this emigration would not absorb the labour reserve of problem regions so long as leading national firms could up and away to the much lower-cost labour havens of the Third World. At the same time, any regional policy which is seriously attempting to cope with differences in the structural composition of main regions will have to control the location of leading firms in the meso-economic sector. It is the competitive inequality between such firms and other national and regional companies which underlies the differences in regional growth rates for the same industries.