On the possibility of state neutrality∗

Abstract

The mainstream neoclassical theory of the state is based on the assertion that the state in market economies is neutral, in the sense of being a mere reflector of the collective will and a mechanism of conflict resolution/consensus building. Rival theories such as the ‘Marxist’, ‘Austrian’, ‘Chicago school’ and ‘public choice school’ reject this idea, without however providing and analysis of the very notion of the possibility of state neutrality. Rather than choosing between two assertions, this paper attempts to attack the notion of state neutrality per se. Based on the defences of the neutrality concept by pluralist political theorists and by economists, we identify three different types of state neutrality-weak neutrality, consensual neutrality and structurally induced neutrality. We argue that in the presence of distributional inequities none of these concepts is realistic or satisfactory.