Beyond institutional fetishism: From the developmental to the regulatory state

Abstract

What became of that great debate between the revisionists or the ‘statists’ and neoclassical economists on the causes of the Asian miracle on which so much ink was spilt? Something curious happened. In the wake of the Asian economic crisis, neoclassical economists crossed the floor and discovered in what they had previously termed ‘market-conforming intervention’ the existence of malevolent political interference in the economy.1 But, if neoclassical economists had uncovered the effects of malign state intervention in the now distinctly tarnished Asian miracles, their erstwhile opponents underwent an equally remarkable conversion and discovered that the much vaunted policy capacities of East Asian developmental state had in fact been sapped by progressive financial liberalisation.2 East Asian political economies, after all, were much more market-oriented than claimed by the statists. All of this confirms the insight of Lakatos that declining research programmes will strive to protect their hard core – the key assumptions of their theory – from falsification through ad hoc hypotheses.3 And one of the things the Asian crisis produced was ad hoc hypotheses by the dozen...