State Power Beyond the ‘Territorial Trap’: The Internationalization of the State

Abstract

The 1980s were marked by two seemingly antithetical tendencies in theorizing about states. On the one hand, a strong neo-liberal current connected with the rise of Thatcherism–Reaganism—which was deeply imbued with neo-classical economic assumptions—called into question the power or competence of states, suggesting that the states which governed best were those which governed least. Advocates of this position who attended to Third World development issues were particularly convinced that the rise of East Asian newly industrialized countries (NICs), such as South Korea and Taiwan, constituted evidence that states could best facilitate economic growth and development by maintaining open, export-oriented regimes in which markets were allowed to work unhindered (Balassa 1981; Little 1981; Bhagwati 1988). On the other hand, by the late 1980s, a school of neo-Weberian scholarship developed in direct response to this neo-liberal approach. Taking issue with the neo-liberals’ characterizations of East Asian economic growth, a series of these neo-Weberian scholars showed that state intervention in the economy was far more extensive than the neo-liberals had allowed, and that moreover such interventions seemed to have been successful in fomenting industrial transformation (Evans 1989; 1995; Amsden 1989; 1990; Wade 1990). The neo-Weberians raised telling arguments and evidence against the neo-liberal position, and it is perhaps a small but significant sign of their success that the World Bank grudgingly acknowledged not only the heavy presence of the state in East Asian industrialization but also some limited efficacy to that presence, especially in the financial sector (World Bank 1993; Amsden 1994; Wade 1996b). If this was a victory for the neo-Weberians, however, it may well prove pyrrhic now that the powerful East Asian growth dynamic has been slowed by forces that few states in the region appear willing or able to control. Indeed, and paradoxically perhaps, the more neoclassically inclined now seem to acknowledge the existence of ‘strong states’ in East Asia and use their existence not to explain economic success but rather to explain the economic crisis that spread through the region during 1997–8.