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The Developmental State underGlobal Neoliberalism

HUGO RADICE

ABSTRACT The developmental state remains one of the chief points ofreference, both analytical and political, for those who reject the currentneoliberal global order. In this paper the validity of this approach is examinedtheoretically and historically. After a preliminary description of the develop-mental state, the paper investigates in turn the four terms contained in thetitle—neoliberalism, globality, the state and development—from a historicalmaterialist standpoint. It is then argued that any approach that aims to providean effective roadmap for a progressive alternative to neoliberalism needs tocentre its analysis on the Marxian concept of class.

This paper explores the current usefulness of the concept of the develop-mental state in the present framework of global capitalism, which manypeople have characterised as shaped by the ideology of neoliberalism.1 Theapproach taken is primarily an examination of the ontological, epistemolo-gical and theoretical foundations of the developmental state (hereafter DS)concept.Given the marginalisation of dependency theory and of Marxism more

broadly in the past twenty years, the DS became by about 1990 the majorideological rallying point for those who wish to contest the appropriatenessof neoliberalism and the Washington Consensus as a framework for effectivegovernance and economic development in the global South. In so far as theDS concept can be stripped down to the idea that the state can play a centralrole in economic development, it has a very long pedigree, stretching back tothe mercantilist period at the dawn of capitalism, via the 19th-centurycritiques of free trade (Hamilton, List), to the period of ‘late development’(that is, after Britain) as analysed by Gerschenkron.2 While importantaspects of these earlier debates are still very much present, the locus classicusof the modern DS concept was undoubtedly East Asia, and in particular thework of Amsden on South Korea and Wade on Taiwan.3 Their insistencethat the East Asian ‘miracles’ were the result of effective and many-sidedpolicies of state intervention in markets, rather than the ‘opening-up’advocated by the World Bank, won widespread support in the 1990s. Much

Hugo Radice is in the School of Politics and International Studies, University of Leeds, Leeds LS2 9JT, UK.

Email: [email protected].

Third World Quarterly, Vol. 29, No. 6, 2008, pp 1153 – 1174

ISSN 0143-6597 print/ISSN 1360-2241 online/08/061153–22 � 2008 Third World Quarterly

DOI: 10.1080/01436590802201121 1153

of the progressive wing of the academic development community thenadvocated the DS approach as a model for the rest of the global South, andindeed for post-communist Eastern Europe and the ex-USSR.4 Theachievements of the classic East Asian developmental state are undeniable,in terms of higher living standards especially; what this paper is concernedwith in interrogating the concept of the DS is, first, its generalisability acrossspace and time and, second, the extent to which the DS is progressive, eitherin the limited sense of seriously challenging present inequalities of wealth andpower, or in the more fundamental sense of nurturing social forces whichmight challenge the capitalist system as such.At the heart of the DS thesis is the relationship between the state and the

business sector, especially with regard to the direction and funding ofindustrial investment. In contrast to the conventionally polar models ofliberal free-market capitalism and the state-socialist planned economy, the DS

is seen as a distinctive political economy that combines elements of marketand plan, linking a mixed economy to a political–ideological approach thatcombines authoritarian technocracy with a relatively egalitarian distributionof income and wealth. It is also assumed that development meansindustrialisation and urbanisation, following a path laid down by earliersuccessful developers.The key DS instruments are designed around the principle that existing

price relativities and other market signals should be deliberately distorted,through selective tariffs, subsidies and access to finance, in order to induce astep-change in the pace and direction of capital accumulation. While thismight reasonably be seen as emulating the Soviet experience in so far as aplanning authority identifies the sectors to be privileged, the DS harnessesrather than suppresses the private sector and the profit motive. Meanwhile,the authoritarian character of the state ensures that competing interestsbased on class, class fraction or sector are subordinated to the state’s goals,which are presented as largely determined by the requirements ofindustrialisation and technological change. The state can also, insofar as itwishes, command through taxation the resources required to provide publicgoods such as education and public health, while its effectiveness as aWeberian rational bureaucracy ensures that these are produced anddistributed in line with the needs of industrial development.In the East Asian context DS advocates have recognised regionally specific

factors that have shaped both policy practice and the practice of politics. Formany writers the East Asian DS was underpinned by cultural factors (notablyan idealised Confucianism) which supposedly predispose ordinary citizens toconformity and the powerful to compromise; others cite the externalgeopolitical environment, in particular that Taiwan and South Korea were,at least in the formative period, front-line states in the struggle againstcommunism, and therefore beneficiaries of US largesse. Unsurprisingly suchhighly contingent factors are given less prominence by those like Linda Weisswho seek to generalise the DS model in time and space,5 while critics of the DS

analysis see them as much more important. In addition, with the passage oftime, and indeed with the very success of the DS strategy, the East Asian

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archetypes have themselves been transformed by the rise of consumerism, thegradual democratisation of their polities, the end of the Cold War, and theeconomic and geopolitical consequences of the conversion of the Chinesecommunist elite to capitalism.Despite the changes in the political economy of the East Asian DS since the

publication of Amsden’s and Wade’s analyses, and the lack of evidence for itseffectiveness outside its original historical and regional context,6 in thecurrent context of neoliberal globalisation the DS model may still offer analternative that appears both theoretically and practically viable. Certainly itremains an important point of reference for scholarship on the East Asianregion, including the People’s Republic of China.7 Elsewhere the concept isless visible at present,8 but the crisis in global financial markets since thesummer of 2007 is inevitably leading to a loss of faith in market forces and aconcomitant renewal of interest in the state’s capacity to manage economicaffairs. It is therefore pertinent to examine the conceptual underpinnings ofthe DS. The next four sections of this paper deal in turn with the four termscontained in the title, taking them in reverse order: are these four terms beingdeployed in ways that, broadly speaking, accord with the historical evidenceand shed light on the experience of capitalist development? On the basis ofthe investigation of these four terms, the subsequent section asks whether theDS really does provide a general alternative to neoliberalism, rather than atemporally and spatially contingent variety of the more general spread ofcapitalism as a mode of production.

Neoliberalism

The ideology now called neoliberalism is usually regarded as a modernvariant of classical economic liberalism, seen as centred on a belief in the self-regulating capacity of the market, and correlatively the need to restrict thescope of action of the state. These twin beliefs highlight two features of thisideological tradition: the antinomies of state and market on the one hand,and of politics and economics as their respective spheres of operation on theother.In classical political economy, and in Marx’s critique, the ideology of

liberalism is historically intrinsic to the rise of capitalism as a mode ofproduction and of the bourgeoisie as its ruling class. In this transition the‘political’ move from absolutism to bourgeois or constitutional democracy isintimately connected to the ‘economic’ move from the remaining feudalrestrictions on property rights to the rule of money and the commodificationof all resources (especially labour-power). They are two sides of the samecoin, inseparable facets of the project that Polanyi called the ‘marketsociety’.9

As the most appropriate political ideology of the new ruling class,liberalism naturally denies both its historical demarcation and its conceal-ment of the exploitative character of capitalism. It does this partly bypresenting its key elements as eternal necessities (as, for example, the state inrealist IR, or the market in economics), and partly by the construction or

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reconstruction of modernity, enlightenment, community, justice, efficiency,etc, to form a set of mutually defining and self-referential concepts. At thesame time, like any hegemonic ideology, it retains the capacity forredefinition and refinement: it has strength in depth, embedded in thecommon-sense as well as in structures of power, which give it the flexibility tomeet the challenges that arise during its historical evolution. From thestandpoint of the 1940s it is surely remarkable that liberalism, then reelingfrom the general collapse of the world economy and the more limited collapseof bourgeois democracy between the wars, has been so successfully revampedsince the 1970s as—neoliberalism.10

While the classics and Marx were justified in seeing the rise of capitalism asa revolutionary break centred on the mode of production, this break hasclearly been contested over wide spans of time and space: even in WesternEurope it was barely complete by the late 19th century after 200–300 years ofstruggle. Indeed, the present period of neoliberal globalisation may be seen ascompleting the process of primitive capitalist accumulation in the post-colonial world.11 However, before turning to its currently global nature, weneed to look a bit more closely at certain features of generic liberalism,abstracting from the existence of separate territorial states and from thedivergence of levels of development within global capitalism, with a view toensuring the robustness of a critique that at present is clearly inadequate interms of informing political practice.The first feature is the relation between the classical political economists

and Marx. Marx repeatedly acknowledged his debt to the classics, butnevertheless insisted on the sharp epistemological and theoretical breakbetween Capital and the classics (not to mention their epigones, theneoclassicals).12 Different ways of ‘bridging’ the divide could be constructedfrom the 20th century contributions of Keynes, Schumpeter, Polanyi andothers; while they should to varying extents be credited with the best ofmotives, it can be argued that these bridges have all been demolished bymodern Marxian critics such as Mattick and Clarke through effectiverestatements of Marx’s original critique.13 That critique is based on Marx’sanalysis of capitalist relations of production: the apparent regulation ofproduction by the law of value conceals, under the veil of equal exchange, theexploitation that results from the division of society into two classes definedby their access to the means of production.14 The 20th century bridge-builders, like their Ricardian-socialist predecessors, present a powerful moraland practical critique of liberal capitalism, but they remain entranced by thatveil; once it is torn aside, it becomes clear that the break cannot (eitherlogically or historically) be bridged.Second, and consequentially, reformist ideologies such as Keynesianism

end up, despite the best intentions of their adherents, providing protectivedefences that shore up the core beliefs and the political acceptability ofliberalism. Once we move from the abstract terrain of ideological constructsto the terrain of practical political economy (or economic policies), theperception that those bridges are actually built with the materials andtechniques of liberalism is substantiated in the common sense of institution

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building and policy practice. This elision of subject and critique occurs intools of economic policy analysis such as the Phillips curve,15 as much as ininstitutions of governance such as those created at Bretton Woods.Third, if we turn from economics to what bourgeois social theory defines

as the politics of liberalism, we can observe the same kind of phenomena inrelation to the nature of power and the adequacy, or rather inadequacy, ofcritiques rooted in concepts of democracy. The ideology of liberalismpromoted a reconstitution of the state as a public realm separate from theprivate realm of civil society; the state is legitimated within this public realmby its internal relation to individualised citizenship. As Rupert puts it, ‘In afully developed bourgeois republic, explicit class relations are banished fromthe public sphere, as all citizens are recognised for political purposes to beformally equal individuals’.16

Abstracted as bourgeois political thought thus necessarily is from thestructures of production and the material interests rooted in them, in the 20thcentury these interests with equal necessity asserted themselves in the realmof actual everyday politics. For a century, roughly 1870 to 1970, across mostof the core capitalist states at least, this realm was dominated by competitionfor power between political parties; furthermore, class, broadly as defined byMarx, was arguably the most influential basis for party politics.17

Political sociology struggled against Marxism for decades, seeking to dealwith the problem of reconciling theory and reality by finding ways in whichthe politics of class could be rendered compatible with the basic tenets ofliberalism. This process of recuperation has passed through several phases. Inthe 1960s theoretical constructs such as modernisation, civic culture,pluralism and the end of ideology challenged Marxism by offering alternativediscourses linked closely to the practical politics of postwar Keynesianwelfare-state reformism and postcolonial development.18 Economic andpolitical developments in the late 1960s and 1970s—the end of the postwarboom, the US defeat in Vietnam, East–West detente, the rise of OPEC anddemands for a new international economic order—fuelled a progressiveagenda which appeared to bridge the divide between Marxism and themainstream, for example the concepts of corporatism and dependency.19

However, a refoundation of political analysis on methodological individu-alism and economic reductionism was also under way, for example inBuchanan’s ‘public choice’ critique of the activist state.20 In the late 1970sand 1980s mainstream political sociology sought to displace class analysis infavour of ‘bringing the state back in’ and of reviving forms ofinstitutionalism,21 allocating to classes as organised economic interests asecondary and contingent role in politics.In the 1990s the refusal of class to disappear from the lives and

consciousness of citizens led to a further reformulation of liberal ideology,by now widely labelled neoliberal, in which concepts such as governance andcivil society were deployed in ways that deflected the citizen from classidentification in favour of a contractual relationship with the state.22 Inpractice this relationship has increasingly become one of individualconsumption of services organised through the state, but provided by


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private-sector capitalists. The representative-politics component of therelationship has been largely reduced to a circulation of political elitesthrough a banal and etiolated electoral form of democracy,23 prefigured 50years ago by Anthony Downs.24 Effectively today’s neoliberalism seeks tocommodify the state–citizen relationship in a way that reduces thatrelationship entirely to individual economic self-interest—still as ever theliberal holy grail.

Globality

What does it signify to add the qualifier ‘global’ to neoliberalism? A first takeon this might start from the debates on globalisation, and postulate anantinomy between the global and the national; on that basis, neoliberalism isregarded by many of its critics as a ‘globalisation project’ aimed precisely atoutflanking the bastions of collectivism in the welfare state and organisedlabour.25 It seems obvious that ‘social market capitalism’ is necessarilynational in character, rooted in national social contracts among organisedinterests, while ‘Anglo-Saxon capitalism’, embodying neoliberal ideology, isglobal and rooted in an emerging and many-sided transnational order. Thecompetition between these two alternative orders, and their associatedvisions of what is and what should be, has in this view replaced the Cold Warcompetition between capitalism and communism in shaping the range ofpossible futures for the world.26

Many writers have questioned the way in which the national and the globalare related in the popular discourse of globalisation.27 The very term denotesa process of evolution from the former to the latter, and it seems only naturalto imagine forms of social organisation as appearing first as localisedphenomena within particular territories, and then gradually spreadingthrough wider linkages in cultural and political affairs as well as in economyand technology. If we treat of globalisation within capitalism, this fits withthe old stories of pioneers and followers, of the sequence of ever-more-fully-capitalist hegemons shaping the extent and character of ever-deepeningglobal integration,28 or more recently of the gradual predominance of anemerging transnational capitalist class whose ideology is global neoliberal-ism.29 Some writers detach globalisation from the limits of the capitalistmode of production, tracing the historical process back much furtherthrough earlier social orders: there is a growing literature which argues thatan ‘oriental globalisation’ preceded the rise of Western Europe, and that therecent rise of Asia as the focus of global wealth and power signals merely anend to a 200–300-year interval in which Europe or ‘the West’ briefly tookover the guiding of world affairs.30

Most analysts, however, restrict the historical scope of globalisation to theepoch of capitalism, or of modernity. While it is currently fashionable toargue that such approaches are unnecessarily Eurocentric, that complaintdoes not get us very far, given the extraordinary rise of the West to globaldominance precisely in the framework of capitalism: it is only if one adds thecorollary that this order is natural and eternal, or is in some sense necessarily

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morally and/or materially superior, that the complaint is valid. But if we domake this restriction, then it seems abundantly clear that the transition tocapitalism in Europe was at once national and global, both in terms ofobservable economic impulses and the correlative changes in political order,and of the consequences for ‘ways of life’. This was every bit as much the casein the 17th century as it is in the 21st century.The naive ‘national to global’ story seems to arise from a convenient

historical and geographical elision, in which the starting point is seen as theperiod leading up to 1914, in which the nation-state supposedly become theexclusive form of sovereignty, and the world order defined as ‘inter-national’.As well as ignoring the earlier history of capitalism, this story also treats therest of the world—above all, the colonial South—as marginal, or indeed inimportant parts terra nullius, an empty world to be occupied and shaped forinclusion in the modern world, which was precisely how Europeanimperialism acted on the wider world. In an important but still neglectedanalysis, Nikolai Bukharin sought to give some historical and theoreticaldepth to Lenin’s programmatic characterisation of imperialism, arguing thatit should be seen as precisely the dialectical interaction of two trends intrinsicto capitalist expansion, which he termed ‘nationalisation’ and ‘internationa-lisation’.31 Drawing, like Lenin, on Hilferding’s analysis of finance capital,32

he suggested that, in the high period of pre-1914 imperialism, thenationalisation trend was dominant, shaping internationalisation into itsimperialist form. The increasing salience of the state in national economiclife, coupled with the growing power of finance, pushed the political economyof the advanced industrial states towards neo-mercantilist policies of tariffsand currency blocs, and the competitive annexation of territory in pursuit ofraw materials and markets. Importantly, while Lenin roundly rejectedKautsky’s perception of the possibility of ‘superimperialism’ by theassumption that socialism would arrive first, Bukharin put forward theargument that the trend of nationalisation could not be reversed—thatnational monopolies and national finance capital could not be undone—andthis gave some substance to Lenin’s view.Nonetheless, both Bukharin and Lenin fail, in their major texts at least, to

place these developments in their full historical context, and as a result theiranalysis has been open to essentialist and teleological interpretations. Inmore recent Marxist scholarship the history of the last 400–500 years seesboth the rise of the modern sovereign nation-state and the creation of a globaleconomy as integral parts of the emergence and spread of capitalism: asBromley puts it:

In short, Marx’s theory of capitalism dispels the illusion that modernity andglobalisation are fundamentally different phenomena, since both are shown tobe aspects of the social forms through which the worldwide expansion ofcapitalism has been constructed and reproduced.33

This allows us to see the period of ‘deeper’ globalisation since the 1980s as anew phase in the spread of capitalism across the globe, characterised by


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changes in institutional structures and state policy practices at both nationaland global levels. As Rosenberg has argued,34 the ‘new’ globalisation needsto be understood not as a cause of economic, political, social and culturalchange, but as the historical consequence of global capitalist developmentwithin the actual historical context of the post-1945 settlement. Much earlierMurray considered that what Bretton Woods permitted was the mutualaccommodation of the powers of state and capital in a process of ‘territorialnon-coincidence’,35 something that can of course also be seen historically inthe long gestation of capitalism before the late 19th century, and thatpersisted even in the shadows of liberal retreat in the interwar years. Keynes’own struggles over the tension between national and global, theoretical aswell as political, illustrate this very well.36 From the early 1970s it is preciselybecause profitable accumulation could no longer be contained by the‘embedded liberalism’ of the postwar settlement that the national models ofwelfare state interventionism in the ‘North’ and developmentalism in the‘South’ came under attack, as business and political elites promoted the newinstitutional and policy order of neoliberalism.But if there is, in effect, no fundamental antinomy between the national

and the global—if it is a matter of contingent configurations or solutions tothe tensions that arise from territorial non-coincidence—it could still beargued that because neoliberalism is somehow more appropriate to the newphase of globalisation, opposition to neoliberalism should take the form ofespousing the restoration of a progressive national capitalism.37 Given thehighly uneven development of both neoliberalism and globalisation in recentdecades, empirical evidence can readily be found to knock down the strawman of ‘hyper-globalisation’. But as long as the opponents of economicneoliberalism wish to retain liberal political values and institutions—notablythe continued recognition of property rights with only carefully delimitedqualification in the interests of the public good—they have to advance theirdiagnosis of the superiority of their alternative to neoliberalism on the terrainof liberal–democratic politics, which has of course become itself ‘re-globalised’. Rather than neoliberalism being global and anti-neoliberalismnational, the struggle between the two is, like other contradictions incapitalism, played out at both levels. In order to examine the prospects fordifferent varieties of capitalism, and eventually that of the developmentalstate, we have first to look more closely at the nature of the capitalist state.

The state

The nature and role of the state and its relation to society has been central tothe debate over the relative merits of neoliberal capitalism (NLC) and social-market capitalism (SMC) touched on in the previous section.38 In NLC thestate ideally stands apart from, or indeed over and above, society: it performsspecific required functions for an essentially self-regulating market society. Inthe ideal SMC, on the contrary, the state both represents and integratessociety: it is not superordinate to or merely contiguous with society, butimbricated with it and a necessary part of societal self-regulation (it is thus

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compatible with more traditional forms of political liberalism). But what isthe ontological status of this distinction? Does it serve perhaps to concealrather than reveal the range of possible forms of social relations?Marx’s critique of the state in capitalism centred on the role of political

authority in embedding the reproduction and accumulation of capital in livedsocial relations. The old chestnut of ‘the executive committee of thebourgeoisie’ actually summed this up rather well, but was wide open toreductionist interpretations, especially when combined with the misinterpre-tation of historical materialism as a mechanical stages theory of history. Thefailure of 1917 to trigger a global revolution, and the consolidation of a‘Soviet’ state that showed no signs of withering away as Marx had hoped,eventually led to a theoretical re-examination of the capitalist state in the1960s and 1970s, drawing on themes of class struggle and social praxisdeveloped earlier by Gramsci, Lukacs, Korsch and others. In WesternMarxism this crystallised first in critiques of orthodox communist ‘statemonopoly capitalism’ theory, which in the UK led to the debate betweenMiliband and Poulantzas.39 Other views, however, also emerged from therenewal of the Marxist tradition, including Regulation Theory, value-formanalysis, Italian ‘operaismo’ and ‘open Marxism’; all sought to reinvigoratethe critique of the state through historical approaches which accepted thecomplex and contingent nature of state–society relations. For many of theseexplorers in social theory the Poulantzas/Miliband debate only reallytouched the surface; Clarke argued, indeed, that both sides remained lockedin an analytical tradition running from Smith to Weber, basically a‘sociological’ interpretation of Marx that neglected especially the constitutiverole played in Marx’s analysis by the theories of value and surplus value.40

A key argument in the renewed debate was that the state in capitalism isfirst and foremost a form of capital: that is, its very existence as a social form,institutionally separated from society, is rooted in the social relation ofcapital. As Poulantzas puts it:

As regards the relationship between State and economy, this structure [ofcapitalist relations of production] further generates the relative separation of theState and the economic sphere . . . This separation of the State and the space ofthe reproduction of capital is therefore specific to capitalism: it must not beunderstood as a particular effect of essentially autonomous instances composedof elements that remain constant whatever the mode of production. It is rathera peculiar feature of capitalism, insofar as it maps out new spaces for the Stateand the economy by transforming their very elements.41

The problem lies, however, in understanding how the shape of these ‘newspaces’ and their interrelations are transformed through the historicaldevelopment of capitalism. In particular, the concept of the ‘relativeautonomy’ of the state—the idea most firmly associated with Poulantzas’own work—is in practice impossible to distinguish from the ‘essentialautonomy’ that he disavows. What is needed is an explanatory frameworkthat instantiates the limits placed by capitalist relations of production on the


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variation in the scope of state action. Reviewing the classical positions of theearly 20th century, on the one hand dogmatic Marxism–Leninism adopted aneconomic–technological reductionism in which the ‘forces of production’compelled changes in the ‘relations of production’, which the all-seeingrevolutionary party of the working class could foresee and perhaps hasten.On the other hand, revisionist social–democratic Marxism took as reality theappearance of state autonomy, and thought that the political forms ofbourgeois society could be given a radical ‘class content’ through theelectoral success of workers’ parties. The historical failure of both thesepolitical ideologies in the 20th century should be attributed, at least in part,to their failure to break definitively from the bourgeois conception ofeconomics and politics as separate spheres.Put more practically, perhaps the real difficulty for critics of capitalism is

that the predominantly liberal political hegemony that shapes the form andfunctions of the state entails a congruence of ideas, interests and institutionsthat form a self-referential totality. The historical constitution of the liberal–democratic state creates a common sense that steers critical oppositiontowards compromise, through promises of accommodation as much asthrough threats of repression. Thus attempts in the 1970s to push the statebeyond the limits of the post-1945 settlement—from embedded liberalism toembedded social democracy, if you like—required a risky and ambitiousstrategy of being ‘in and against the state’ at the same time.42 Understandingthe subtle ways in which the state-in-society sought to head off the challengeof an increasingly demanding working class had to start with a return tobasics: the critique of political economy.43 From this standpoint the defenceof the egalitarian gains of the postwar Keynesian welfare state, while beingpreferable to mere acquiescence in its demise, runs the risk of drawing a veilover its historical inadequacies in transforming capitalism.44

Returning to the understanding of economics and the state in contempor-ary comparative political economy, we find that the advocates of SMC adopta fundamentally Keynesian framework, as if this of itself constituted anepistemological break with (neo)liberalism. However, as argued above, thismeans accepting the limits that Keynes himself placed upon his critique. Asan old-fashioned political liberal Keynes found the forced egalitarianism andsociopolitical repression of Soviet-style state socialism deeply unpalatable;more important is his insistence that, with appropriate instruments ofeconomic intervention to hand that could correct the deficiencies of marketself-regulation, capitalism could be preserved in a form that provided not thebest, but the best feasible, combination of economic efficiency and politicalfreedom.45 Keynes’ rhetorical flourish about the euthanasia of the rentier,and thus the practical need for a ‘somewhat comprehensive socialisation ofinvestment’,46 should be attributed to the degree of pessimism engendered inKeynes by the long series of debacles in international decision making fromVersailles through to the 1930s.The contemporary critics of NLC, true to their Keynesian inclinations, view

the state as intrinsically politically neutral, if potentially subject to capture byspecial interests such as high finance or radical trade unions, and they view

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the market as an instrument of resource allocation rather than exploitation.For this tradition the experience of incomes policies in the 1960s and 1970sserved to illustrate the dangers of carrying state intervention too far, tippingthe balance of the ‘mixed economy’ towards a fundamental breaking-point,in which the value of labour-power and the sectoral pattern of capitalaccumulation would no longer be the outcome of market competition, but ofstate decision.47 The clearest illustrations of the real limits placed by capitalupon the role of the state in the advanced industrial world can be discerned inkey events in the 1970s: at the global level, the demise of the gold–dollarstandard;48 in Britain, the blocking of Labour’s 1974 manifesto commitmentto extensive industrial planning;49 and, perhaps most of all, the revolt of thebourgeoisie in Sweden against the Meidner Plan, under which workers woulddeploy their pension contributions to buy the companies that employed themthrough union-managed investment funds.50

In short, it is hardly surprising that not only Keynesian economics, butalso the political–sociological concepts of pluralism and corporatism, seemedto be heading for the dustbin of intellectual history once Mrs Thatcher andPresident Reagan began their assault on the welfare state and the workingclass at the end of the 1970s. In these ideas, so central to the dominantunderstanding of the postwar consensus, the state was envisaged as inprinciple not only neutral between distinct organised social interests, asalready noted, but also capable of effective action. Such a state inevitablyrisked capture, under conditions of electoral democracy, by political forcesaiming at a real transformation of society: in other words, there was anirreducible ‘proto-socialist’ element in the political practice of Keynesianism.From the standpoint of the capitalist class this called for a return to a liberalconception of the state with a clearly restricted role and functions, andpreferably hated and mistrusted by a majority of tax-paying citizens.The eventual response of progressive social scientists to this dramatic shift

in the political landscape centred on the defence of the old order. In the early1980s the deep economic recession engineered by the new regimes in the UKand USA was transmitted, via increasingly integrated global financialmarkets, across the entire world economy. In France this derailedMitterand’s initial Keynesian–interventionist programme; in non-oil-produc-ing less developed countries and in Eastern Europe, it led to the Mexicandebt default of 1982 and thence to the traumatic debt crisis and the re-emergence of the Bretton Woods institutions as global debt collectors forcapital. However, during the rest of the 1980s those societies whoseinstitutional systems resisted the neoliberal tide appeared to be the mosteconomically dynamic and competitive, and the relatively weak performanceof the neoliberal heartlands provided dissidents with powerful argumentsagainst the mantras of privatisation and deregulation. In the USA Japanbecame the role model, particularly in relation to its industrial policies andinnovatory capacity, while in the UK it was Germany’s regulated labourmarkets and ‘patient’ finance.51

These empirical comparisons formed a solid foundation for the newcomparative political economy of the 1990s, notwithstanding the abrupt end


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of the Japanese ‘miracle’ and the post-unification slowdown in Germany, andthe parallel recoveries, at least in terms of macroeconomic performance, ofthe Anglo-Saxon economies.52 Although corporate governance, innovationsystems and labour markets were important arenas for comparative analysis,the dominant focus in this literature is on the role of the state. As globalneoliberalism continued its relentless advance, the defence of Keynesianismand state interventionism was mobilised on two fronts. First, it was arguedon theoretical grounds that free-market capitalism remained in realitycritically dependent on the institutions and actions of states: the apparentretreat of the state concealed a shift in certain state functions to collectiveprovision by international institutions, coupled with a reconfiguration ofstate institutions to reflect deliberate shifts in government policies (notablythe growing importance of finance ministries). Second, it was argued onempirical grounds that states could, if they wanted to, retain high levels ofstate expenditure, intervention and welfare: any shift towards the neoliberalorder was a matter of political choice, not externally enforced necessity.53

Surveying the advanced industrial countries in early 2008, however, it ishard to deny that the centre of gravity within the continuing diversity of statepractices has shifted markedly in the neoliberal direction, and for the pastquarter-century every riposte from the ‘centre-left’ has accommodated thatshift. The immediate problems in global banking and credit markets indicateonly that capitalism remains prone to periodic crises, not that it is about toreturn to a supposed social-market capitalist norm. But has neoliberalismalso subordinated the developmental state in the global South?

Developmentalism

When the Third World emerged as a more-or-less organised force in worldpolitics in the 1950s, its leading anti- and postcolonial political movementsshared the then current Northern belief in the neutrality and effectiveness ofthe state as an agent of social change. Postwar decolonisations wereundoubtedly helped by the undermining of the established imperial powersoccasioned by the US assumption of hegemony over the West and the onsetof the Cold War, but the institutions and practices of independent statehoodwere still strongly shaped by the heritage of colonial capitalism. In addition,the UN Charter and the Bretton Woods institutions provided a globalframework within which anti-colonial movements could move on frompolitical independence to programmes of state construction.54

At the national level development became the order of the day, and withrather few exceptions it was assumed that the predominant role in bothnation building and economic transformation would be played by a modernstate apparatus using tools drawn, for the most part, from the experience ofcentralised administration among the belligerent powers in 1939–45. Theobjective for each new nation-state was national industrialisation andurbanisation, with the state ensuring the planned transfer of resources fromagriculture to industry. It was widely assumed that planning techniquesbroadly similar to those of the USSR—at that time universally seen as the

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most dramatic example of industrial modernisation in history—could beseparated off from the political system of that state; thus every self-respectingpostcolonial state had its five-year plans, its state corporations (usuallymodelled on those of the former colonial power), its fiscal and monetaryactivism guided by Keynesian principles, and of course its parliamentarydemocracy, to ensure political legitimacy in a period in which rapiddevelopment would entail massive social upheaval. Given the widespreadpopular support enjoyed by the veterans of anti-colonial struggle, and theunity of purpose across the Third World from the 1956 Bandung Conferenceto the stillborn New International Economic Order of the 1970s, it is not sohard to understand why there were such great expectations in the 1960s thatdevelopment would rapidly bear fruit under the benevolent guiding hand ofthe state—although, even then, there were dissenting voices at the margins.55

The euphoria was not to last. By the mid-1970s the enormity of the taskwas only too clear in the aftermath of the first oil crisis and subsequentNorthern recession. While respectable rates of economic growth wereachieved by many Southern states, this was all too often on the basis ofchronic balance of payments deficits and growing internal and externalindebtedness. Prominent among the explanations put forward for develop-ment failure was the idea that it resulted from structural dependency, atheory that emphasised first and foremost the consequences of highly unequaltrade and investment relations between the industrial North and the primary-producing South. Trapped in global market sectors suffering secular relativeprice declines (apart from oil) and short-term revenue volatility, Southernstates were unable to generate the large and stable export revenues needed tofinance development, or even to maintain the living conditions of the middleclasses staffing the state and directing the process. Economic dependencyincluded important financial and technological components, and demandsfor aid, trade preferences and investment flows necessarily generated politicaldependency, whether on former colonial masters or on the competingneocolonial superpowers.However, although the theorists of underdevelopment and dependency

proposed a quite different analysis of North–South relations from that of themainstream,56 it is striking that they broadly shared the latter’s understandingof the desired objective of development. Immanuel Wallerstein put it thus:

In a formal sense, what we mean by development is first of all increase of theoverall productivity of an economy to increase the surplus, and secondlyexpansion of its capital base, presumably by foregoing a certain amount ofimmediate consumption of this surplus in favor of investment.57

He went on to argue that both the capitalist and the socialist ‘models’ ofdevelopment place the state at the centre of the process, and within a contextof imperialism and international inequality,

the essential problem of development can be posed as follows: how is it possibleto install and maintain in state power a regime with the will and the possibility


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to transform the social structure in a way that would make possible a dramaticrise in productivity and investment . . . how to maintain it in power over a longperiod of time, perhaps thirty to fifty years, during which time sufficient capitalaccumulation could take place, a national economy could be erected, andnational (as opposed to sub-national) classes could be sufficiently organised sothat the state machinery is structurally resistant to outside intervention, internalsecession and palace coups d’etat.58

It is immediately apparent that Wallerstein shares with the mainstream anessentially ‘economic’ understanding of development, and at the same timederives from this the ‘political’ requirement of a ‘regime’ that can carry itthrough. The difference lies in identifying the obstacles to successfuldevelopment, their causes and their cures. The dominant paradigm marriedan optimistic economics based on the Keynesian–neoclassical synthesis, witha project of political ‘modernisation’ based on structural–functionalistsociology.59 The critics offered instead a pessimistic left–Keynesianeconomics, which highlighted structural obstacles to sustained accumulation,coupled with a radical pluralist political sociology, typified by the criticalanalysis of authoritarianism and corporatism in Latin America.60

Either way, however, the paradigm of development was taken to be that ofthe advanced capitalist societies and states. This is perhaps surprising, giventhe context of the Cold War, which, as Saull has argued, pitted against eachother not only two states in a secular balance-of-power struggle, but two verydifferent socioeconomic systems.61 Desai explains this apparent contradictionby the sustained attachment of Soviet power to Lenin’s original evaluation ofthe potentially progressive role of the national bourgeoisies in the rebelliouscolonies, although Lenin’s own position was more nuanced than that of hissuccessors.62 The implication is that the capitalist character of developmentarose not simply because of the external environment of global capitalism,but also from the class interest of Third World elites. The demise of theUSSR and its distinctive socioeconomic system in 1989–91 removed anypossibility for these elites to play off East against West in obtaining aid andmilitary hardware, but by that point only North Korea, Cuba and (for a fewmore years at least) Vietnam made any pretence of emulating the Sovietmodel.63

In any case, when the Third World debt crisis exploded in August 1982, itseemed to signal the death-knell for postwar developmentalism. Yet while thedisaster scenarios played out across Latin America and Africa, in East Asia adifferent story had begun to emerge: of effective states that repaid debts,successfully climbed the ladder of industrialisation, educated their workers,reformed their agricultures—in short, developed. The Bretton Woodsinstitutions, restructured under the neoliberal mantra, put this down toopen markets, most notoriously in the World Bank’s 1993 report The EastAsian Miracle. But developmental state theorists such as Amsden and Wadeargued that the East Asian miracle owed more to extensive, well co-ordinatedstate intervention, by a state that was effectively autonomous fromcompeting social interests.64 Even if originally the fiscal capabilities of these

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states owed more to US largesse towards front-line states in the fight tocontain communism, their continued success came from creating competentinstitutions and cadres who could allocate resources for development betterthan the market. By 1990, despite the slide into stagnation in Japan, theebullient ‘tigers’ appeared to signal the potential rebirth of developmental-ism. Even the World Bank had eventually to acknowledge the DS modelobliquely in developing its ‘good governance’ agenda,65 although it alwaysseemed more comfortable lecturing on the risks of state failure than hailingstate success.However, as noted in the introduction, changes were under way in East

Asia in the years before and after the 1997 crisis that were not in the DS recipebook. First South Korea, and then Taiwan, abandoned key tools in the DS

armoury, including planning, widespread public ownership and the selectivestate direction of private investment. South Korea under Kim Young-Sam(1993–98) adopted a strategic philosophy of globalisation, and morepractically permitted the chaebol to emancipate themselves from financialsubservience to the state by moving into banking, and to borrow and investheavily around the world66—a far cry from the DS focus on the nationalcultivation of comparative trade advantage. Rapid financial liberalisationexposed the entire region to speculative risk, with consequences even forSouth Korea in 1997, although Taiwan was protected by its peculiar role inthe very different Greater China miracle. The two countries also underwentsubstantial political change, with significant liberalisation of their author-itarian regimes, the emergence of electoral competition and burgeoningorganisations of ‘civil society’ such as trade unions and environmentalmovements; an important consequence was the establishment of moreinclusive welfare states.67

The implications of these changes for the developmental state concept aretaken up in the next section. But where does developmentalism now stand? Inkeeping with the fashion for ‘postisms’ of all kinds, some writers have arguedthat the age of development, as an explicitly modernist form of socialengineering, has now ended; instead, the remaining diverse fragments of theformer Third World have no choice but to embrace the opportunities andrisks associated with neoliberal globalisation. Others simply eschew any‘grand theories’ of social change, and seek pragmatically for ways to alleviatethe very visible ills of poverty, disease, unemployment, landlessness andenvironmental degradation through whatever agency comes to hand.A third approach, embraced especially by Northern governments and the

Bretton Woods institutions, is to focus on improving the capacity andperformance of actors private and public, national and transnational. Thenew literature of the 1990s on failed states is typical of this approach, whichclaims to shift the emphasis from development ends to means: ‘goodgovernance’, enforced by forms of political conditionality, becomes aprecondition for successful development. But once we examine criticallythe causes of state failure,68 it becomes clear that capabilities can only beimproved through concrete policy initiatives, and that these in turn—perhapsmost notably in the dismal story of the World Trade Organization’s (WTO)


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Doha Round—continue to serve first and foremost the economic andstrategic interests of global capital. In these unpromising circumstances,Wade has joined forces with other critics of neoliberalism, notably Stiglitz, toargue in effect that, in the context of globalisation, the developmental agendacan still be advanced by reforming the Bretton Woods institutions;69 thisapproach has been especially notable in the campaign waged by bothSouthern governments and NGOs over the Doha trade round. In effect, this isa return to the 1970s agenda of the New International EconomicOrder, pressing for institutional reform of the Bretton Woods institutionsand the UN system as a necessary precondition to a more equitable globalcapitalism, within which benevolent and effective states can promote—development.

Bringing class back in: or, who is doing what to whom?

Having examined, both theoretically and historically, the four terms in ourtitle, this final section reconsiders the status of the developmental state, bothas a practical framework for development policy, and as an analytical focusfor opponents of neoliberalism.This can be addressed first by asking how DS advocates understand the

dynamics of global capitalism today: in other words, who is doing what towhom? Are world dynamics fundamentally structured around oppositionbetween beleaguered nation-states, valiantly still pursuing national develop-ment objectives largely unchanged since the 1950s, and the unchained (orperhaps unhinged) forces of neoliberal darkness? Forgive the caricature, butthat is how the DS idea is expressed outside academe, for example by manydevelopment NGOs: it is ‘them’ (the Bretton Woods institutions, transna-tional corporations (TNCs), global finance, US imperialism) against ‘us’(peoples and governments of the global South—or for that matter the SMC

North). In this last section I want to suggest that this is a mirage, because thekey social actors are not states or interstate organisations or TNCs, butclasses: without denying the role of the former as institutions of capitalistgovernance, we cannot discover who does what to whom in globalneoliberalism unless we reinstate class at the centre of our critique. Amongstudents of the politics and political economy of development, this meansbreaking with the dominant discourse epitomised by Bringing the State BackIn:70 whatever the original intention of that discourse, it had the effect ofmarginalising class except as a category of descriptive sociology.In particular, a crucial issue is the allegiance of ruling classes in the global

South. For Baran, among a host of other critical observers of postcoloni-alism, indigenous bourgeoisies remained fundamentally comprador incharacter.71 As peripheral industrialisation accelerated, the compradorrelationship extended from the trade patterns of the old colonial divisionof labour to the modern form of global sourcing by or for TNCs: this had theeffect of embedding significant parts of the subaltern classes in the samestructure of external dependency.72 As we have seen, the role of the stateexpanded throughout the South around the project of development, just as it

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did in the North around the provision of growth, welfare and security: but inthe capitalist world the state first and foremost represented and promoted therule of capital.73

In this context a critical alternative to the DS perspective starts from theproposition that globalisation has not entailed fundamental changes in howthe ideas, interests and institutions that constitute the capitalist politicaleconomy are configured. I remain cautious about endorsing the concept of atransnational capitalist class (TCC), in the sense of either the AmsterdamSchool of international political economy or the radical developmentsociology of Sklair or Robinson;74 while there is abundant evidence thatelite interests in the global South are now substantively the same as those ofthe North, the concept of the ‘progressive national bourgeoisie’ has alwaysbeen more rhetoric than reality.75 In particular, political developments indiverse parts of the world point to the recognition that neoliberal capitalismoffers in general a more effective framework for reproducing exploitation andclass rule, both nationally and transnationally, than political forms based ondirect appropriation and force. At the same time, contrary to the widespreadview that the working class has ceased to exist in advanced capitalism, andwas politically stillborn in the postcolonial South, the world is immenselymore proletarian than ever before in history—in the sense of being bereft ofdirect access to means of production and relying of necessity on theperformance of wage-labour. The social forces that engender awareness ofcommon interests and thence class consciousness operate as they always havedone under capitalism—that is, in the teeth of ideological hostility and staterepression—with the important, but nonetheless ontologically secondary,distinction that these forces increasingly operate at a global level.In this context, the DS, like SMC in the North, rests on the historical terrain

of reformism. As a political strategy for citizens who believe that capitalismcan and should be terminated, reformism rests now as always on twin beliefsin the existence of 1) a politically neutral core of institutions and practicesthat can be redeployed to undermine the existing order from within; and 2) asubstantial part of the ruling classes that can be won over to the cause. Thereformist credentials of the DS thesis are not always easy to see, but we canaccept that its ‘cause’ has indeed been the improvement of living conditionsand life chances for the masses of ordinary citizens in the global South, andas already noted at the outset, this cause was indeed advanced at least in theclassic East Asian cases. The actual politics of the DS and their unfoldingthrough time, however, are another matter. With the benefit of hindsight, andfrom the standpoint of those masses, the developmental trajectory of the EastAsian archetypes up to the early 1990s repudiates any suggestion that the DS

ever contained the seeds of anything other than the consolidation ofcapitalism. The dismantling of core mechanisms of state direction, even ifliberalisation and democratisation have remained incomplete since then, hasin general confirmed this judgement. Above all the state even in Korea andTaiwan during the apogee of the DS remained a capitalist state: since then ithas continued, in the time-honoured manner of such states, to absorb orrebuff challenges from below.76


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This leads to two significant conclusions. First, the political economy ofthe DS represents an important exemplification of the historical processthrough which capitalist classes advance and consolidate their overthrow ofearlier social formations, whether pre-capitalist or colonial. The appeal tonationalism or religion, as cross-class ideologies of mobilisation; the use ofstate force to wrest resources away from groups not disposed to capitalistaccumulation; the formation of the state itself, and the capacity to containdivergent internal interests (eg of exporters as against importers) and defendinsiders against predatory external forces; these are part and parcel of how,historically, states and societies have become capitalist. Second, in so far asthe DS concept can be and has been extended in response to both changes inthe archetypes and the realities of conditions elsewhere in the world, it nolonger contains the potential for the transcendence of capitalism, as opposedto an amelioration of living conditions. It certainly continues to offeralternatives at the level of the economic and social policies of the capitaliststate, and in my view there will continue to be circumstances in which, withinparticular states, it can function effectively to raise living standards andimprove life chances for substantial sections of society, but of itself, it has noradical emancipatory content.What is more, whatever its shortcomings in terms of the DS agenda, the

Washington Consensus has succeeded in globally embedding what we mightcall ‘normal capitalism’. Normal capitalism includes periodic financial crisesand mass unemployment; grotesque inequalities of income, wealth and lifechances; unconstrained consumerism; Downsian electoral democracy; andthe subordination of public finances to private capital markets. It includes thereal possibility of state failure and state collapse, and the consequentpredation of natural and human resources by both state and private actors. Italso includes the military policing of such zones by the great powers,notwithstanding the figleaves of multilateralism.We remain therefore in the world order analysed by Marx and Engels in

1848—with the critical difference that we now face an ecological catastrophethat requires an end to material economic growth and an end to uncons-trained privilege, and thus an end to capitalism as we know it. It seemsunlikely, however, that capitalist states as presently constituted are going tosurmount this coming crisis, whether their overt allegiance is to the DS or theWashington Consensus model. What we seek are popular movements, basedon production for human need, that can see beyond the choices currentlyavailable and challenge the available common senses of class rule.

Notes

Earlier versions of this paper were presented at the Universities of York, Nottingham, Warwick andLimerick: I thank colleagues for their comments. I am particularly grateful to Anthony Barzey, MarkBeeson, Ilan Bizberg, Werner Bonefeld, Ha-Joon Chang, Ben Fine, Adrian Leftwich and Adam Mortonfor their help and encouragement. The paper is part of a larger project on the political economy of globalcapitalism, which is rooted in Marx’s critique of political economy.1 For example, D Harvey, A Brief History of Neoliberalism, Oxford: Oxford University Press, 2005; andA Saad-Filho & D Johnson, Neoliberalism: A Critical Reader, London: Pluto Press, 2005.

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2 A Gerschenkron, Economic Backwardness in Historical Perspective, Cambridge, MA: HarvardUniversity Press, 1962.

3 A Amsden, Asia’s Next Giant: South Korea and Late Industrialization, Oxford: Oxford UniversityPress, 1989; and R Wade, Governing the Market, Princeton, NJ: Princeton University Press, 1990.The literature on the DS frequently cites Chalmers Johnson as their immediate precursor. Johnson,MITI and the Japanese Miracle, Stanford, CA: Stanford University Press, 1982. For a brief and clearintroduction to the DS, see A Leftwich, States of Development: On the Primacy of Politics inDevelopment, London: Polity Press, 2000, ch 7. A good range of views can be found in FC Deyo (ed),The Political Economy of the New Asian Industrialism, Ithaca, NY: Cornell University Press, 1987; andM Woo-Cumings (ed), The Developmental State, Ithaca, NY: Cornell University Press, 1999.

4 See A Amsden, J Kochanowicz & L Taylor, The Market Meets its Match, Cambridge, MA: HarvardUniversity Press, 1994.

5 L Weiss, The Myth of the Powerless State: Governing the Economy in a Global Era, London: PolityPress, 1998.

6 Schneider points out that the term (or near equivalents such as desarrollismo) was widely used in LatinAmerican debates in the 1970s. BR Schneider, ‘The desarrollista state in Brazil and Mexico’, in Woo-Cumings, the Developmental State, pp 276–304. However, for most observers the debt crisis of the1980s indicated the failure of the Latin American DS actually to achieve development in the senseimplied. For more specific comparisons between East Asia and Latin America, see also G Gereffi & DLWyman (eds), Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia,Princeton, NJ: Princeton University Press, 1990; and R Jenkins, ‘The political economy ofindustrialization: a comparison of Latin American and East Asian NICs’, Development and Change,22, 1991, pp 197–232.

7 On South Korea, see J Cherry, ‘‘‘Big deal’’ or big disappointment? The continuing evolution of theSouth Korean developmental state’, Pacific Review, 18 (3), 2005, pp 327–354; J Minns, ‘Of miraclesand models: the rise and decline of the developmental state in South Korea’, Third World Quarterly, 22(6), 2001, pp 1038–1039; D Hundt, ‘A legitimate paradox: neoliberal reform and the return of the statein Korea’, Journal of Development Studies, 41 (2), 2005, pp 242–260; H-J Chang & PB Evans, ‘The roleof institutions in economic change’, in G.Dymski & S de Paula (eds), Re-imagining Growth, London:Zed Press, 2005; and I Pirie, ‘The new Korean state’, New Political Economy, 10 (1), 2005, pp 25–42.On Taiwan see YP Wu, ‘Rethinking the Taiwanese developmental state’, China Quarterly, 177, 2004,pp 91–114; and CM Dent, ‘Taiwan’s foreign economic policy: the ‘‘liberalization plus’’ approach of anevolving developmental state’, Modern Asian Studies, 37 (2), 2003, pp 461–483. On the PRC, see JHowell, ‘Reflections on the Chinese state’, Development and Change, 37 (2), 2006, pp 273–297.

8 On Latin America, see RHiggott &NPhillips, ‘Challenging triumphalism and convergence: the limits ofglobal neoliberalization in Asia and Latin America’, Review of International Studies, 26 (3), 2000, pp359–379;MKurtz, ‘State developmentalismwithout a developmental state: the public foundations of the‘‘free market miracle’’ in Chile’, Latin American Politics and Society, 43 (2), 2007, pp 1–25; and ASchrank, ‘Asian industrialization in Latin American perspective: the limits to institutional analysis’,Latin American Politics and Society, 49 (2), 2007, pp 183–200. Elsewhere, see DO’Hearn, ‘Globalization,‘‘new tigers’’ and the end of the developmental state? The case of the Celtic tiger’, Politics and Society, 28(1), 2000, pp 67–92; and SO Riaın, ‘The flexible developmental state: globalization, informationtechnology and the ‘‘Celtic Tiger’’’,Politics and Society, 28 (2), 2000, pp 157–193, on Ireland; and BFine,‘State, development and inequality: the curious incident of the developmental state in the night-time’,paper presented at the Sanpad Conference, Durban, 26–30 June 2007, on South Africa.

9 K Polanyi, The Great Transformation: The Political and Economic Origins of Our Times, New York:Rinehart, 1944.

10 To get a sense of how enfeebled liberalism was at that time as a result of economic depression, fascismand war, see the diagnoses of JM Keynes, The General Theory of Employment, Interest and Money,London: Macmillan, 1936; JA Schumpeter, Capitalism, Socialism and Democracy, New York: Harper,1942; WH Beveridge, Full Employment in a Free Society, London: Allen & Unwin, 1944; and Polanyi,The Great Transformation.

11 See, for example, TJ Byres, ‘Neoliberalism and primitive accumulation in less developed countries’, inSaad-Filho & Johnston, Neoliberalism, ch 8; and, from a very different standpoint, H de Soto, TheMystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, New York: BasicBooks, 2003.

12 The significance of this break is set out very fully by Postone, who argues that traditionally Marxistshave failed to build on Marx’s insight. M Postone, Time, Labor and Social Domination: AReinterpretation of Marx’s Critical Theory, Cambridge: Cambridge University Press, 1993, esp ch 2.

13 See P Mattick, Marx and Keynes: The Limits of the Mixed Economy, Boston, MA: Porter Sargent,1969; and S Clarke, Keynesianism, Monetarism and the Crisis of the State, Cheltenham: Edward Elgar,1988.


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14 In K Marx, Capital, Vol 1, Moscow: Progress Publishers, 1954.15 The economist AW Phillips identified an apparent trade-off between inflation and unemployment in

the long-term historical record of the UK. Phillips, ‘The relation between unemployment and the rateof change of money wage rates in the United Kingdom, 1861–1957’, Economica, new series, 25 (100),1958, pp 283–299. In monetarist hands this was transformed into the modern theory thatunemployment is caused by labour-market rigidities. For a critical account, see D Baker, ‘TheNAIRU: is it a real constraint?’, in D Baker, G Epstein & R Pollin (eds), Globalization and ProgressiveEconomic Policy, Cambridge: Cambridge University Press, 1998, pp 369–387.

16 M Rupert, Producing Hegemony: The Politics of Mass Production and American Global Power,Cambridge: Cambridge University Press, 1995, p 24.

17 It is no coincidence that this is also the period of the ‘age of the nation-state’, as the next section makesclear.

18 On modernisation, see WW Rostow, The Stages of Economic Growth: A Non-Communist Manifesto,Cambridge: Cambridge University Press, 1960; and S Huntington, Political Order in ChangingSocieties, New Haven, CT: Yale University Press, 1968. On civic culture, see GA Almond & S Verba,The Civic Culture, Princeton, NJ: Princeton University Press, 1963. On pluralism, see RA Dahl, WhoGoverns?, New Haven, CT: Yale University Press, 1961. On the end of ideology, see D Bell, The End ofIdeology, Glencoe, IL: Free Press, 1960.

19 On corporatism, see PC Schmitter & G Lehmbruck (eds), Trends Towards Corporatist Intermediation,London: Sage, 1979; and JH Goldthorpe (ed), Order and Conflict in Contemporary Capitalism, Oxford:Oxford University Press, 1984. On dependency, see AG Frank, Capitalism and Underdevelopment inLatin America, New York: Monthly Review Press, 1967; FH Cardoso & E Faletto, Dependency andDevelopment in Latin America, Berkeley, CA: University of California Press, 1979; and PB Evans,Dependent Development: The Alliance of Multinational, State and Local Capital in Brazil, Princeton,NJ: Princeton University Press, 1979.

20 JM Buchanan & RD Tollison, The Theory of Public Choice: Political Applications of Economics, AnnArbor, MI: University of Michigan Press, 1972.

21 See PB Evans, D Rueschemeyer & T Skocpol, Bringing the State Back In, Cambridge: CambridgeUniversity Press, 1985; and JG March & JP Olsen, Rediscovering Institutions, Glencoe, IL: Free Press,1989.

22 See, for example, World Bank, Reforming Public Institutions and Strengthening Governance,Washington, DC: World Bank, 2000; and F Fukuyama, State Building: Governance and World Orderin the Twenty-First Century, Ithaca, NY: Cornell University Press, 2004.

23 See B Gills, J Rocamora & RWilson (eds), Low Intensity Democracy: Political Power in the NewWorldOrder, London: Pluto Press, 1993; and P Cammack, ‘Globalization and the death of liberaldemocracy’, European Review, 6 (2), 1998, pp 249–263.

24 A Downs, An Economic Theory of Democracy, New York: Harper & Row, 1957.25 Representative overviews of the vast literature on globalisation include D Held & A McGrew,

Globalization/Anti-Globalization, London: Polity Press, 2002; MB Steger, Globalisation: A Very ShortIntroduction, Oxford: Oxford University Press, 2003; JA Scholte, Globalisation: A Critical Introduction,London: Palgrave, 2005; and N Bisley, Rethinking Globalization, London: Palgrave, 2007. See also thereadings collected in D Held & A McGrew (eds), The Global Transformations Reader: An Introductionto the Globalization Debate, London: Polity Press, 2003. For a survey of theoretical perspectives in thefield of global political economy more widely, see R Palan (ed), Global Political Economy:Contemporary Theories, London: Routledge, 2000.

26 The forms of advanced industrial capitalism are discussed further in the following section. For anexamination of the methodology of the comparative political economy literature, see H Radice,‘Comparing national capitalisms’, in J Perraton & B Clift (eds), Where are National Capitalisms Now?,London: Palgrave, 2004, pp 183–194.

27 See notably the essays in M Rupert & H Smith, (eds), Historical Materialism and Globalization,London: Routledge, 2002.

28 See especially G Arrighi, The Long Twentieth Century: Money, Power and the Origins of Our Times,London: Verso, 1994.

29 For example, WI Robinson, A Theory of Global Capitalism: Production, Class and State in aTransnational World, Baltimore, MD: Johns Hopkins University Press, 2004.

30 See J Niederveen Pieterse, ‘Oriental globalization’, Theory, Culture & Society, 23 (2–3), 2006, pp 411–413.

31 N Bukharin, Imperialism and World Economy, London: Merlin Press, 1972 (originally published in1918).

32 R Hilferding, Finance Capital, London: Routledge & Kegan Paul, 1981 (originally published in 1910).33 S Bromley, ‘Marxism and globalisation’, in A Gamble, D Marsh & A Tant (eds), Marxism and Social

Science, London: Macmillan, 1999, pp 285–286. See also C von Braunmuhl, ‘On the analysis of the

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bourgeois state within the world market context’, in J Holloway & S Picciotto (eds), State and Capital:A Marxist Debate, London: Edward Arnold, 1978, pp 160–77; H Lacher, The International Relations ofModernity: Capitalism, Territoriality and Globalization, London: Routledge, 2003; and B Teschke, TheMyth of 1648: Class, Geopolitics and the Making of Modern International Relations, London: Verso,2003.

34 J Rosenberg, The Follies of Globalisation Theory, London: Verso, 2000, ch 1.35 RMurray, ‘The internationalization of capital and the nation state’, New Left Review, 67, 1971, pp 84–

109.36 See H Radice, ‘Keynes and the policy of practical protectionism’, in JV Hillard (ed), JM Keynes in

Retrospect, Cheltenham: Edward Elgar, 1988, pp 153–171.37 For a critique of this approach within the 1990s globalisation debates, see H Radice, ‘Responses to

globalisation: a critique of progressive nationalism’, New Political Economy, 5 (1), 2000, pp 5–19.38 This has been the main focus in recent years of the field of ‘comparative political economy’. See, for

example, JR Hollingsworth, P Schmitter & W Streeck (eds), Governing Capitalist Economies:Performance and Control of Economic Sectors, Oxford: Oxford University Press, 1994; S Berger & RDore (eds), National Diversity and Global Capitalism, Ithaca, NY: Cornell University Press, 1996; CCrouch & W Streeck (eds), Political Economy of Modern Capitalism: Mapping Convergence andDiversity, London: Sage, 1997; and PA Hall & D Soskice (eds), Varieties of Capitalism: TheInstitutional Foundations of Comparative Advantage, Oxford: Oxford University Press, 2001. Althoughthere are many variations in taxonomy and nomenclature, the bimodal approach presented here is thenorm.

39 See, for example, R Miliband, ‘Poulantzas and the capitalist state’, New Left Review, 82, 1973, pp 83–92; Miliband, The State in Capitalist Society, London: Weidenfeld & Nicholson, 1979; N Poulantzas,Political Power and Social Classes, London: Verso, 1973; and Poulantzas, ‘The capitalist state: a replyto Miliband and Laclau’, New Left Review, 95, 1976, pp 63–83.

40 S Clarke, ‘Marxism, sociology and Poulantzas’ theory of the state’, Capital and Class, 2, 1979, pp 1–31.41 N Poulantzas, State, Power, Socialism, London: New Left Books, 1978, p 18 (author’s emphasis).42 London–Edinburgh Weekend Return Group, In and Against the State, London: Pluto Press, 1980.43 See Clarke, Keynesianism, Monetarism and the Crisis of the State.44 Apple argues that even the supposed Keynesian commitment to full employment through fiscal

activism was only actually honoured for a few years in the 1950s. N Apple, ‘The rise and fall of fullemployment capitalism’, Studies in Political Economy, 4, 1980, pp 5–39. As the global economicturmoil of January 2008 attests, however, the idea of fiscal activism is still wheeled out when monetarypolicy falters in the face of a threat of recession.

45 JM Keynes, ‘National self-sufficiency’, The Yale Review, XXII (4), 1933.46 Keynes, The General Theory of Employment, Interest and Money, ch 24.47 Incomes policies entail the setting by the state of permissible rates of increase in wages or earnings.

They were the pre-eminent tool for controlling inflation, especially in the Anglo-Saxon economies, inthe 1960s and 1970s. See, for example, F Hirsch & JH Goldthorpe, The Political Economy of Inflation,London: Martin Robertson, 1978.

48 See, for example, M Hampton, ‘Hegemony, class struggle and the radical historiography of globalmonetary standards’, Capital and Class, 89, 2006, pp 131–164.

49 See Clarke, Keynesianism, Monetarism and the Crisis of the State, pp 311–316.50 See S Wilks, ‘Class compromise and the international economy: the rise and fall of Swedish social

democracy’, Capital and Class, 58, 1996, pp 89–111; and G Ramia, ‘The downturn of the Swedishmodel: inevitable?’, Journal of Australian Political Economy, 38, 1996, pp 63–97.

51 On US ‘Japanolatry’, see P Burkett &MHart-Landsberg, ‘The use and abuse of Japan as a progressivemodel’, Socialist Register 1996: Are There Alternatives?, London: Merlin Press, 1996, pp 62–92. OnUK admiration for Germany, see W Hutton, The State We’re In, London: Cape, 1995.

52 See the references in note 38 above.53 Both lines of defence are developed in detail across a wide range of policy areas in the essays in L Weiss

(ed), States in the Global Economy: Bringing Domestic Institutions Back In, Cambridge: CambridgeUniversity Press.

54 Leys argues that the pragmatic orientation of early development ‘theory’ can be attributed to threefactors: the scale and urgency of the problems revealed by decolonisation, the political constraintsplaced on social science by the Cold War, and the scope and effectiveness of state action apparentlypermitted by the Bretton Woods institutions. C Leys, The Rise and Fall of Development Theory,Oxford: James Currey, 1996, ch 1.

55 See notably PT Bauer, Dissent on Development, London: Weidenfeld & Nicholson, 1971. Fascinatinginsights into the early period of development theory and practice can be found in the essays by 10‘pioneers’ of development economics in GM Meier & D Seers (eds), Pioneers in Development,Washington, DC: World Bank, 1984.


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56 See references in note 19.57 I Wallerstein, ‘The state and social transformation’, Politics and Society, 1, 1971, pp 359–364. The

quotation is from a reprint in H Bernstein (ed), Underdevelopment and Development: The Third WorldToday, London: Penguin Education, pp 277–278.

58 Ibid, p 280.59 As in Huntington, Political Order in Changing Societies.60 See, for example, J Malloy (ed), Authoritarianism and Corporatism in Latin America, Pittsburgh, PA:

Pittsburgh University Press, 1977.61 R Saull, ‘Locating the global South in the theorisation of the Cold War: capitalist development, social

revolution and geopolitical conflict’, Third World Quarterly, 26 (2), 2005, pp 253–280.62 R Desai, ‘From national bourgeoisie to rogues, failures and bullies: 21st century imperialism and the

unravelling of the Third World’, Third World Quarterly, 25 (1), 2004, pp 169–185. However, Lenin onlyoffered communist support to the ‘more revolutionary elements’ in the bourgeois-democraticmovements for national liberation, and in 1920 explicitly reasserted this view in proposing to supportonly ‘national-revolutionary’ movements. It was the Comintern that elided this distinction duringStalin’s rule. See J Smith, ‘Lenin and the national bourgeoisie’, private communication available fromthe author.

63 For a wide-ranging review of the consequences of the end of the Cold War for the Third World, see theessays in L Fawcett & Y Sayigh (eds), The Third World Beyond the Cold War, Oxford: OxfordUniversity Press, 1999.

64 See references in note 3.65 World Bank, Reforming Public Institutions and Strengthening Governance.66 Chang & Evans, ‘The role of institutions in economic change’.67 See H-J Kwon, ‘Transforming the developmental welfare state in East Asia’, Development and Change,

26 (3), 2005, pp 477–497.68 L Cliffe & R Luckham, ‘Complex political emergencies and the state: failure and the fate of the state’,

Third World Quarterly, 20 (1), 1999, pp 27–50; and J Milliken & K Krause, ‘State failure, state collapseand state reconstruction: concepts, lessons and strategies’, Development and Change, 33 (5), 2002, pp753–774.

69 See RWade, ‘What strategies are viable for developing countries today? TheWorld Trade Organizationand the shrinking of ‘‘development space’’’, Review of International Political Economy, 10 (4), 2003, pp621–644; JE Stiglitz, Globalization and its Discontents, New York: Norton, 2002; and Stiglitz, MakingGlobalization Work: The Next Steps to Global Justice, New York: Norton, 2006.

70 Evans et al, Bringing the State Back In.71 P Baran, The Political Economy of Growth, New York: Monthly Review Press, 1957.72 See, for example, O Sunkel, ‘Transnational capitalism and national disintegration in Latin America’,

Social and Economic Studies, 22 (1), 1973, pp 132–176.73 It is at least arguable, in the light of events from 1989 onwards, that the same ultimately was true of the

so-called communist alternative. See H Radice, ‘Gramsci, Marx and the emancipation of labour’,paper presented at the Nottingham workshop on Global Restructuring, State, Capital and Labour,October 2007.

74 K van der Pijl, Transnational Classes and International Relations, London: Routledge, 1998; L Sklair,The Transnational Capitalist Class, Oxford: Blackwell, 2001; and Robinson, A Theory of GlobalCapitalism.

75 Desai, ‘From national bourgeoisie to rogues, failures and bullies’.76 For the case of South Korea, see K Gray, ‘Challenges to the theory and practice of polyarchy: the rise

of the political left in Korea’, Globalizations, forthcoming.

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