Political Capitalism and the Rise of Sovereign Wealth Funds

Sovereign wealth funds are neither novel nor constitute any decisive shift towards state control. States and markets are co-constitutive, but states have power precisely because of their ability to define property rights and thus draw the boundary between public and private activity. The way they draw that boundary determines the nature of capitalism in any specific market. ‘Sovereign wealth fund’ is a nominal label covering three distinct types of organization that distribute property rights in different ways. The first acts to buffer states from the economic problems associated with large-scale resource exports. The second helps states simultaneously develop industry and an industrial bourgeoisie. The third is a vehicle for patrimonial rent extraction via political capitalism. The current spectacular increase in the number and holdings of sovereign wealth funds thus does not presage a distinct shift away from the (easily exaggerated) neoliberalism of the last two decades.