The New Face of State Capitalism
The multi-decade experience of Western Europe's State Capitalism seemed to come to a definitive end by the end of the 1990s, after a prolonged agony which lasted for more than a decade. In reality, West-European State Capitalism is still very much in place. According to a 2011 OECD research, State-Owned enterprises (SOEs) still are relevant constituencies in the "Old Europe"'s corporate landscape, employing around 2.5 million people for a total value of more than 750 billions of USD. Including subsidiaries of whichever nature, European companies 'owned by an ultimate owner' which fall in the category of 'Public authorities, States and Governments' today number around 20 thousand. In addition to this, as an effect of the Covid-19 crisis and of its economic impact, in several countries of the area episodes of re-nationalization of former privatized companies are becoming more and more frequent.
SOEs have however been evolving in terms of ownership and governance structures, organization, degree of internationalization and market strategies. State-ownership can be still found among companies of every dimension, and almost in every industry. Some are very large employers: Deutsche Bahn, the German railway company, in 2018 had more than 318.000 employees, followed by SNCF, its French counterpart, with 270 thousand employees.
Governments tend to keep a close control over companies considered strategic, with ownership quotas which frequently exceed the 50% of the share capital, normally at the level of the main pyramidal holdings. For instance Airbus, the leader in the production of aircrafts and helicopters for civil and military use, is controlled by a shareholder agreement formed by three holdings each one emanation of the governments of Germany, France and Spain.
Governments take recourse to public agencies, ministries, and financial and non-financial holdings, banks, or even a mix of them, in order to exert their control together with a variety of control enhancing mechanisms as shareholders' agreements and pyramidal structures. Frequently, companies under the control of their Governments are listed too, on the domestic but also on foreign stock exchanges.
In both listed and non-listed companies State holdings coexist with a crowd of institutional investors, which include private entities but also, in some cases, sovereign wealth funds and other financial institutions held by foreign governments. This "coexistence" has an impact on the strategic behavior of modern SOEs, which display a much higher degree of internationalization than in the past. Together with the presence of global institutional investors the internationalization of activities is the other consequence of the impact of globalization on the operations of former national champions, which have been progressively transformed into global companies or State-Owned Multi-National Enterprises. Another crucial area in which deep changes have been and are under way is the nature of top management, far less appointed thanks to (only) political connections and expertise. Professional skills are the norm among Presidents and CEOs, frequently outsiders hired on the job market.
Of course, this situation is not immune to risks, some (as for instance those deriving from operations in areas characterized by high geopolitical instability) common to private companies, some more specific to entities in which governments keep direct, or even indirect, ownership. So far, liberal ideologies allowed companies still under the control of the State to act, to some extent, sheltered from the influence of governments. The persistence of this orientation, however, is not to be taken for granted any longer. The increasing populist and nationalist orientation of Western European governments may be conducive to a comeback of more 'dirigiste' behavior of politicians towards domestic, and also internationalized, SOEs.