FRANKFURT—Western governments are taking a page from their Asian rivals and moving away from the free-market doctrine that defined their economic thin
FRANKFURT—Western governments are taking a page from their Asian rivals and moving away from the free-market doctrine that defined their economic thinking for decades, instead embracing greater state control of business activity.
The shift reflects a deep anxiety about the West’s ability to maintain its living standards and technological edge while competing with giant state-backed companies in China and elsewhere in Asia.
The trend is being accelerated by the Covid-19 pandemic, which has prompted a rethink of the balance between the state and private sector, as well as fresh ideas about how giant stimulus programs in Europe and the U.S. could be deployed to reshape economies.
In the European Union, an export powerhouse that had long prized laissez-faire policies and free trade, leaders last month vowed to erect barriers to foreign competitors, repatriate production of key technologies, reduce dependencies in sensitive industries such as health, and create new digital champions.
Italian state-backed lender Cassa Depositi e Prestiti last month took a stake in European exchange operator Euronext NV to support its buyout of the Italian stock exchange. Germany’s government recently demanded a 20% stake in national flag carrier Deutsche Lufthansa AG , which was privatized in 1997, and two supervisory board seats, in return for a $10 billion bailout.