Legitimization of State-Capitalism 2.0 & Unfettered Freemarkets Connection?

Wow, was I surprised when The Economist ran a debate between a Harvard professor in support of state capitalism "2.0," as he calls it, and a run of the mill free market professor.  I also thought of the new book, "No One's World" where the author points out how the state capitalist developing economies of Russia, India, & China, did not suffer the downward fluctuations like the Western, state independent economies of the US, Europe, and Japan.

Aside from Marx's evolution of state-capitalism being the final stages of an economy before a final proletariat take over, support of such a system seems so outrageous to my ingrained free market sensibilities.  I took a few deep psychic breathes and was thankful such a view was made explicit, in such a reputable way, being out of Harvard.

Next I started thinking of the prevailing ideological neo-conservative and neo-liberal extreme free market thought and practice of the past decades in business and government, i.e. Ayn Rand and Milton Friedman.  How this unbalanced thinking provided the huberous of our 2008 economic crisis and precident for bailouts to the largest financial entities, a little like, you guessed it: state-capitalism.  Hmmm?

I will reluctantly agree, on it's face, that a state sponsored corporation will be better able to compete against other Leviathans sponsored by, say, our Chinese friends.  But there is also something, on it's face, extremely sinister about "my" government essentially picking industry leaders to better compete in a globalized economy.  The risk for abuse seems so high.  No matter, it is the direction we are heading.