First Draft: October 1997形容淡定的成语
An Institutionalist Perspective on
the Role of the State
- Towards an Institutionalist Political Economy形容树叶的词语
forthcoming in
L. Burlamaqui, A. Castro & H-J. Chang (eds.),阑尾炎术后饮食
Institutions and the Role of the State
(Edward Elgar, 2000)
Ha-Joon Chang
Faculty of Economics and Politics
University of Cambridge
*This is a slightly revid version of the paper prented at the International Conference on "Institutions and Economic Development - Towards a Comparative Perspective on State Reform", November 12-14, 1997, Rio de Janeiro, Brazil. I thank the organirs of the Conference, Ana Celia Castro, Leonardo Burlamaqui, and John Wilkinson, for their financial, intellectual, and organisational supports.低热量早餐
向日葵花语1. Introduction
What is the appropriate role of the state? This has been one question that has constantly occupied economists for the last 2-3 centuries since the birth of the subject (for some excellent historical reviews, e Deane, 1989, and Shonfield, 1965). During this period, there have been a number of swings in the dominant opinion on the subject, but the two major swings that have occurred during the last half century after the Second World War are particularly remarkable in their scope and suddenness (e Chang & Rowthorn, 1995a, who Spanish translation appears in Chang, 1996).
The early postwar years witnesd the world-wide rejection of the laisz faire doctrine that failed so spectacularly during the interwar period, and the resulting emergence of a widespread connsus on state activism. By the 1960s, the end of laisz faire capitalism was announced in many quarters an
d there was a widespread connsus that we are now living in the "mixed economy" (alternatively, "modern capitalism" or "organid capitalism"). However, this new connsus was dramatically overturned since the mid-1970s, following the Neo-Liberal counter-offensive, which sought to end the mixed economy and re-introduce market principles to the extent that would have been unimaginable during the early postwar years.
The upsurge of Neo-Liberalism during the last two decades or so has fundamentally changed the terms of debate on the role of the state (for more details, e Chang, 1994a, chs. 1-2). The state is no more assumed to be an impartial, omnipotent social guardian and is now analyd either as a “predator” or as a vehicle for politically powerful groups (including the politicians and the bureaucrats themlves) to advance their ctional interests. No other motives than maximisation of material lf interests are accorded to any agent even in the “public” domains of life, denouncing the role of politics as a legitimate way to correct the market outcomes according to the “collective will”. The resulting “minimalist” bias in the terms of debate means that tho who want to make a
ca for state intervention have to fight their adversaries at each and every step of their arguments, whatever the merits of their arguments may be, whereas tho who want to discredit state activism can often do so with a very simplistic logic supported by, often unreprentative, anecdotes.
Although the Neo-Liberal agenda itlf has a lot of intellectual limitations and bias, as we will discuss in the rest of the paper, the legacy of Neo-Liberal counter-offensive has not been entirely negative. For one thing, it expod fundamental problems with the “technocratic” view on the role of the state that prevailed in the heyday of welfare economics (‘50s and ‘60s) and brought politics back into economics (although it ultimately aimed to abolish politics; e ction 3.4.). And more importantly, its explicit engagement in “political economy” discussions opened the door for the subquent ri of "institutionalists” criticisms (e.g., e Evans et al. (eds.) 1985; Hall (ed.), 1989; Toye, 1991; Evans, 1995; Chang & Rowthorn, 1995b).1 And following the institutionalist criticisms, even some proponents of Neo-Liberal doctrine have recently come to admit (but without necessarily recognising the contributions from their critics) the importance of institutional factors in understanding the role of the state (North, 1994, and World Bank, 1997, are good examples of such change).
Having achieved that important, if unfairly unacknowledged, victory over the Neo-Liberals, however, I think it is fair to say that the institutionalists still lack a full-blown political economy that can replace the Neo-Liberal political economy. In this paper, I will make some suggestions as to what I think should be the building blocks of what may be called an institutionalist political economy. For this purp
o, I will disct the Neo-Liberal rearch agenda on the role of the state from an explicitly institutionalist perspective and identify what I think are the fundamental flaws in it, and in that process suggest what should be the elements in the institutionalist theory of state intervention that can overcome the flaws.注重细节的名言
1 A Spanish translation of Chang & Rowthorn (1995b) appears in Chang (1996).
小学生讲故事2. Dintangling the Neo-Liberal Agenda
The Messianic convictions with which many proponents of Neo-Liberalism have delivered their messages have created the impression that it is a very coherent doctrine with clear conclusions. However, contrary to this popular belief, the Neo-Liberal doctrine is in fact a very heterogeneous and internally inconsistent intellectual edifice. So before going into the detailed criticisms of this doctrine, it will be uful to delineate the basic fault lines in the Neo-Liberal intellectual agenda and reveal some of its obvious weakness.
2.1. The Unholy Alliance: Neoclassicism and the Austrian-Libertarian Tradition
The biggest contradiction in the Neo-Liberal rearch programme comes from the fact that it was bor
n out of a marriage of convenience between Neoclassical economics as the source of intellectual legitimacy (given its dominance in the academia) and what may be broadly called the Austrian-Libertarian tradition as the source of political rhetoric. The gap between the two intellectual traditions is not a minor one, as tho who are familiar with, for example, Hayek's scathing criticism of Neoclassical economics would know (e.g., e essays in Hayek, 1949). However, the marriage of convenience goes on, becau the Austrian-Libertarian tradition supplies the popular appeal that Neoclassical economics can never dream of supplying itlf (who's going to risk their lives for "Pareto Optimality"? - but many have been willing to for "liberty" and "entrepreneurship"), while
the Austrian-Libertarian tradition, given its lack of intellectual legitimacy in "respectable" circles, needs the aura of "science" that Neoclassical economics carries around.2
But in return for the incread power of persuasion that they acquired by allying with the Austrian-Libertarian tradition, Neoclassical economics had to pay a heavy price. In order to maintain the alliance with the Austrian-Libertarian tradition, it has had to suppress its interventionist streak, given the strong anti-statism of the latter. So how is this done?
One such method of suppression is to accept the logic of "market failure" behind welfare economics
but then not to extend it beyond the t of "politically acceptable" areas. So, for example, the externality argument is often applied to politically less controversial areas such as the environment or education, but is rarely applied to such politically more controversial areas as "lective" industrial policy a la East Asia, which can be justified by the same logic equally well. Given that there is no theoretical way in Neoclassical economics to determine what is the "correct" boundary for state intervention, it becomes necessary to argue that market failures exist as logical possibilities, but rarely occur in reality - naturally without providing much evidence (Friedman, 1962, is a good example).3
2This point is best illustrated by the experiences during the early days of "reform" in the former Communist countries. W hat captured people's imagination in tho days was the Austrian-Libertarian languages of freedom and entrepreneurship, and not the arid Neoclassical languages of Pareto Optimality and General Equilibrium. However, when the post-Communist governments in the countries cho their foreign economic advirs, it was according, largely, to how high a standing they had in the Western academic "hierarchy", which was determined by how good they were in handling the concepts and the tools of Neoclassical economics.
3 Friedman's list of legitimate functions of the state is as follows: maintenance of law and order; defin
ition of property rights; rvice as a means whereby people modify property rights and other rules of the economic game; adjudication of disputes about the
The cond method of suppressing the interventionist instinct of Neoclassical economics is to parate, partly deliberately and partly subconsciously, the "rious" academic discour from the "popular" policy discour and compartmentali them. So Neoclassical economists in universities may be doing rearches justifying stringent anti-trust policy, but the "lax" anti-trust policy by the government may be justified in terms of some other logic which has no place in Neoclassical economics - say, by citing the need "not to discourage entrepreneurship", etc.. The recent "reform" experiences in the former Communist countries that we just talked about is a most poignant example of such practice.
解方程步骤
The last method of suppression is to fully accept the logic of market failure and build models that may have strong interventionist conclusions, but later dismiss them on the ground that "real life" states cannot possibly be entrusted with such policies that are technically difficult (due to informational asymmetry) and politically dangerous (due to the possibility of bureaucratic abu and/or interest group capture). Various writings by the American trade economist Krugman provide the best example, where frequently a few paragraphs, at the end of an article, of "pop political econo
my" analysis dismissing the integrity of the state would be ud to discredit his own elaborate "strategic trade theory" model endorsing state intervention that went on in the rest of the article.4 To put it bluntly, the name of the game is that, a Neoclassical economist may build a model that
interpretation of the rules; enforcement of contracts; promotion of competition; provision of a monetary framework; engagement in activities to counter technical monopolies and to overcome "neighbourhood effects" [his term for externality] widely regarded as sufficiently important to justify government intervention; supplementation of private charity and the private family in protecting the irresponsible, whether madman or child (Friedman, 1962, p. 34).
4 A well-known Neo-Liberal economist, Robert Lucas, reviewing Krugman's book with Helpmann, asked why they had written the book in the first place if they were going to say in the end that the interventionist policies that follow from their models cannot be recommended becau of the political dangers that they carry. See Lucas (1990).
