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Developmental State: A Theoretical and Methodological Critique

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DOI: 10.25229/beta.265156

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 BULLETIN
OF
ECONOMIC THEORY AND ANALYSIS

Journal homepage: http://www.betajournals.org

Developmental State: A Theoretical and Methodological

Critique

Ömer Mollaer

To cite this article: Mollaer, Ö. (2016). Developmental State: A Theoretical and Methodological
Critique. Bulletin of Economic Theory and Analysis, 1(1), 1-12.

Received: 09 Nov 2016

Accepted: 18 Dec 2016

Published online: 27 Dec 2016

©All right reserved

 βετα

Bulletin of Economic Theory and Analysis

Volume I, Issue 1, pp. 1-12, 2016
http://www.betajournals.org

Developmental State: A Theoretical and Methodological Critique

Ömer Mollaera
aResearch Assistant, Hitit University, FEAS, Political Science and Public Administration,
Corum, TURKEY

ABSTRACT
This article aims to critically assess the theoretical and methodological premises of the
developmental state. It is argued that developmental state as a theoretical framework is Keywords
misleading in terms of grasping the nature of the state by regarding it existing above the Developmental state,
social relations, particularly class conflicts, and separating it from the international Class conflict,
context within which it flourished. Moreover, in an attempt to explain the inherent Statism,
contradictions of the developmental state, which have largely been obscured within the Methodological
nationalism
statist theoretical framework, I argue that the concept of the developmental state
mystifies the exploitative nature of the capitalist state on the one hand, while JEL Classification
overlooking the contradictions intrinsic to capitalist development on the other. O100, P110, B410

CONTACT Ömer MOLLAER,  [email protected]  Hitit University, FEAS, Political Science

and Public Administration, Corum, TURKEY
2 Developmental State: A Theoretical and Methodological Critique

Kalkınmacı Devlet: Teorik ve Metodolojik Bir Eleştiri

ÖZ
Bu makale kalkınmacı devletin temel teorik ve metodolojik öncüllerini eleştirel bir Anahtar Kelimeler
biçimde yeniden değerlendirmeyi amaçlamaktadır. Kalkınmacı devletin, bir teorik Kalkınmacı Devlet,
çerçeve olarak devleti toplumsal ilişkilerden, sınıf çelişkilerinden ve kalkınmacı Sınıf Çatışması,
Devletçilik,
devletlerin ortaya çıkmasına ve gelişmesine imkan veren toplumsal koşullardan
Metodolojik
yalıtarak devletin doğasına ilişkin yanıltıcı bir perspektif sunduğu iddia edilmektedir. Milliyetçilik
Bu bağlamda, kalkınmacı devletin, devletçi teorik çerçeve içinde ihmal edilen içsel
çelişkilerini açıklamak amacıyla, bir taraftan kapitalist devletin sömürücü doğasını, JEL Kodu
diğer taraftan kapitalist kalkınmaya içkin çelişkileri gözden kaçırdığını öne sürüyorum. O100, P110, B410

1. Introduction

This article aims to critically assess the relevance of the concept of the developmental
state as a theoretical framework. To do so, utilising the distinction made by Ben Fine (2006,
2011), two schools within the literature, the political and the economic, will be introduced,
highlighting the key defining features of the developmental state, with particular emphasis on the
concept of “state autonomy”, and how the developmental state has been conceptualised by its
proponents. Subsequently, I will seek to criticise the statist underpinnings of the developmental
state, arguing that the way in which the developmental state is conceptualised is misleading in
terms of grasping the nature of the state, as it has been characterized as separate from class
conflicts by developmental state theorists; therefore the conflicts that have taken place during the
process of a state’s development have been obscured to the extent that the state is neutralised in
terms of class relations. As such, developmental state theorists treat the state as a technocratic
body separate from class relations, which obscures the contradictory nature of state-led
development. Moreover, I argue that the conceptualisation of the developmental state is marked
by methodological nationalism which leads to its proponents obscuring the global context of the
developmental process, thereby reproducing a superficial external-internal contradiction; this
therefore means theorising the international context as an external factor, which affects the state
from the outside. Finally, in an attempt to explain the inherent contradictions of the
developmental state, which have largely been obscured within the statist theoretical framework, I
Ömer MOLLAER 3

argue that the concept of the developmental state mystifies the exploitative nature of the capitalist
state on the one hand, while overlooking the contradictions intrinsic to capitalist development on
the other.

2. Conceptualisation of the Developmental State

The concept of the developmental state is used to identify a specific form of state that is
said to enjoy high levels of autonomy from different segments of the capitalist class as well as
labour unions, and have strong institutional capacity, both of which allow this specific form of
state to implement a set of successful state-interventionist policies in pursuit of developmental
goals. The concept was first coined by Chalmers Johnson (1982) with reference to the Japanese
state. In his seminal work, Johnson makes a distinction between two forms of state:
developmental and regulatory. According to this, the Western states that were first to industrialize
hardly intervened in the markets and since the late nineteenth century, these states have
undertaken regulatory functions; whereas “[i]n states that were late to industrialize, the state itself
led the industrialization drive, that is, it took on developmental functions” (Johnson, 1982).
Johnson, therefore, describes the United States as an exemplar of a “regulatory state”, while the
Japanese state is depicted as a “developmental state”. The key difference between these two
different forms of state lies in their divergent rationales with regard to state-market relations. The
rapid industrialization of the Japanese economy was rendered possible through a “planned
rational” strategy of the Japanese state. Contrary to the neo-classical view that free market
mechanism is the only way to development economically, the Japanese case demonstrates that a
state-led development strategy could lead to rapid industrialization and high levels of economic
growth for late developing countries. In this reading of development, a pilot agency planning
long-term developmental goals autonomously from political pressures - which was the MITI
(Ministry of Trade and Industry) in the case of Japan - is of central importance.

Ben Fine (2006, 2011) identifies two variants within the theory of the developmental
state: the political school and the economic school. While the political school focuses on the
nature of the state itself in an attempt to comprehend the necessary features of the state, thus
allowing it to be developmental, the economic school is concerned with the policies enacted by
the state that produce state-led industrialisation and economic growth. Accordingly, the political
school, whose members generally come from political science, are more interested in the
4 Developmental State: A Theoretical and Methodological Critique

conceptualisation of state-society relations, in which a productive collaboration between state

elites and the capitalist class takes places, allowing the state to intervene in the market
successfully, whereas the economic school focuses on what policies to adopt in order to achieve
developmental goals. Although their focuses are directed on different aspects of the concept of
the developmental state, their understanding of such is informed by similar institutionalist-statist
accounts of state-society relations in general (Song, 2011).

Following Johnson’s core assumptions, the institutionalist authors, coming from either
political science or economics, have made substantive contributions to the theory of the
developmental state. Seeking an answer to the question why the state failed in its pivotal role in
the development process in some cases, with regard to the states such as India and Brazil while
proving to be successful in South Korea, Peter Evans (1995), by drawing on historical-
institutionalist understandings of state-society relations, put forward the concept of “embedded
autonomy” in explaining the distinctive features of a successful developmental state. According
to Evans, who is regarded as a leading figure in the political school, developmental states consist
of rational and meritocratic bureaucracies in the Weberian sense, that is, autonomous from the
demands and pressures of various sections of society. Members of the bureaucracy are tied to one
another through informal networks, which ensure an internal coherence to the bureaucracy. One
further feature of the developmental state is its “external network connecting the state and
private” (Evans, 1992), which the collaborative links between the state and private sector,
together with the internal coherence of the rational and meritocratic bureaucracy, forms the
necessary conditions of the “embeddedness” of state autonomy. Therefore, “embeddedness”, in
Evans’s formulation, “implies a concrete set of connections that link the state intimately and
aggressively to particular social groups with whom the state shared a joint project of
transformation” (Evans, 1995). Without being embedded in society, an interventionist state
would be a predatory state “in which the preoccupation of the political the political class with
rent-seeking has turned society into its prey” (Evans, 1992). Thus, embeddedness is regarded as
being just as important as autonomy in determining the necessary conditions of the
developmental state.

According to Evans, South Korea, where traditionally its state bureaucrats are selected
through meritocratic national examination and having effectively cooperated with the chaebols,
Ömer MOLLAER 5

exemplifies the developmental state; whereas the state of Zaire was characterised as an archetypal
case of a predatory state due to its weak internal coherence amongst political elites and
individualized external ties with the private sector. Brazil and India form intermediary cases
between these two forms of classifications. Evans’s emphasises the essential role of coexistence
between state autonomy and the tight external networks of state bureaucrats with business being a
distinctive feature of a successful developmental state. Similar to Evans, Ziya Öniş (1991) sees
developmental states as demonstrating “the coexistence of two conditions: the autonomous
bureaucracy and co-operation between private sectors and the state”. In a similar vein, Linda
Weiss (2003) characterises the developmental state as “a political system which supports a shared
project of economic transformation, where there is elite cohesion over core national goals, and
where the economic bureaucracy is given sufficient scope to take initiatives and act effectively”.
In this understanding, the success of the state of South Korea in term of the developmental
trajectory and the failure of the states of India and Brazil are explained through the level of
institutional capacities that allow effective alliances to form between the political elite and the
capitalist class, and the level of state autonomy that ensures that the state plays a pivotal role in
planning and implementing long-term developmental goals.

The proponents of the developmental state from the discipline of economics, also relying
on the institutionalist framework of state-society relations (Song, 2011), mainly focus on the
developmental policies adopted by the state that in turn lead to rapid industrialisation and
economic growth. Drawing on German economist Friedrich List’s theory of late development,
Erik S. Reinert (2007) argues that the protectionist policies of the first industrialised countries
were then emulated by the late developing countries, such as Germany in the seventeenth
century, Japan in the nineteenth century and South Korea in the twentieth century. All developed
countries adopted import-substitution industrialisation (ISI) strategies throughout the
development process. The set of policies adopted by the developmental state in seeking rapid
industrialisation and economic growth might vary depending on historical contingencies;
however, according to Ha-Joon Chang (2002) “the general pattern has remained remarkably true
to type”. Therefore, the developmental state, in this understanding, becomes more or less a
universal paradigm in the sense that a “correct” set of policies adopted by the developmental state
can be applied by other states in pursuit of developmental goals without regard to contextual
6 Developmental State: A Theoretical and Methodological Critique

realities.

3. Statism, Mystification of the State and Methodological Nationalism

The conceptualisation of the developmental state is based on statist accounts on the nature
of state-society relations and the developmental process itself. The statist understanding of state-
society relations draws on the assumption that the state and society exist separately. The theory of
state autonomy, which is as Dae-oup Chang (2009) points out, “the basis of developmental state
theory”, reflects the statist underpinnings of the concept of developmental theory. As a result, the
state is ultimately seen as “inherently coherent and externally insulated from other social groups”
(Chang, 2009). This conceptualisation tends to neutralise the state in terms of class interests
through theorising the state as autonomous from the dominant class and pursuing developmental
goals that represent the general interests of society as a whole.

Dae-oup Chang (2009) convincingly argues that the theoretical neutralisation of the
developmental state in terms of class interests and separation of the state from society have been
rendered possible through a two-fold process, both reinforcing the other. Firstly, labour, in its
relation to capital and to the state, has been largely excluded from theoretical review in this
regard. As Song (2011) observes “the question of labour is either absent or posed externally to
capital relation” within statist accounts on the developmental state. This exclusion has been
theoretically justified through basing the argument on the idea that the developmental state is
characterized by “weak labour” as a condition of its effective intervention in the market
(Amsden, 1989). Thus, labour is taken only with regard to its subordination to the state, ignoring
the state’s intervention between capital and labour in a way that significantly favours capital.
Obscuring state-labour and capital-labour relations have enabled theorists to translate state-
business relations to relations between state and society in general (Chang, 2009). Secondly, both
the state and businesses are conceptualised according to their organisational features; that is to
say, the relation between the state and capital is reduced to the relation between a set of
individual state bureaucrats and individual capital owners. Accordingly, the “developmental
autonomy” of the state is derived from the organisational relations between the state and
business, which can demonstrate no more than a superficial autonomy derived from the
Ömer MOLLAER 7

organisational relations between the state and capital. As a result, the state is depicted as isolated
from social relations and existing above class interests.

Although the historical-institutionalist authors rigorously elaborated upon the nature of

the state in an attempt to grasp “state autonomy”, taking into account the social context in which
the state is allowed to be autonomous from society in pursuing the developmental goals; insofar
as the state is conceptualised as a separate entity existing above class interests, in the statist
understanding of the developmental state, the nature of the capitalist state and national
development becomes a mystification, with the contradictory nature of the capitalist state
remaining as yet unresolved. At this point, the conceptualisation of development as “common
good” without questioning its contradictory nature, and the theoretical neutralisation of the state
in terms of class relations through depicting it as being autonomous from different fractions of
the capitalist class, constitute complementary aspects of the conceptualisation of the
developmental state. The autonomy of the state, according to this account, allows the state to
“sacrifice the interest of certain segments of capital in the pursuit of policies that maintain the
viability of the socio-economic system and preserve the general rate of return” (Rueschemeyer &
Evans, 1985). Furthermore, the distinction made by Evans between the developmental state and
the predatory state reproduces this argument by positing that the difference between the two lies
in the fact that the developmental state represents the general interest, while the predatory state is
characterised by rent-seeking (Evans, 1995). Thus, the concept of “embedded autonomy” leads to
obscure the exploitative nature of capital relations as a whole in the process of capital
accumulation. In sum, the proponents of the developmental state do not problematize neither the
nature of the state nor the national development process, through treating the state as a
technocratic body separate from contradictory class relations, overlooking the exploitative
relations between state-labour and capital-labour which are intrinsic to the capitalist development
process.

Applying a statist theoretical framework to the concept of developmental theory is

problematic not only in treating the state as autonomous from domestic class relations, but also in
that it draws upon methodological nationalism, which characterises the new developmentalism
(Pradella, 2014). The central characteristic of methodological nationalism, which underpins most
of the literature on the developmental state, is “the isolation and separation of internal and
8 Developmental State: A Theoretical and Methodological Critique

external factors as determinants of national economic factors, with primacy being giving to the
former” (Gore, 1996). The theorists of the developmental state focused on either policies adopted
by the state at the national level, which is the case particularly for the economic school, or
analysed the nature of state-society relations almost exclusively within the boundaries of a
nation-state, which characterises the political school. Therefore, the success of the developmental
states of East Asia is attributed mainly to the internal characteristics of these states, without any
serious attempt to analyse the global context of capital accumulation in which late development
process had been realised.

4. Inherent Contradictions of the Developmental State

As a result of the statist underpinnings inherent in the conceptualisation of the

developmental state, the state is theorised without showing much contradiction, which enables
the theorists to propose the developmental state as a viable alternative to neo-liberal policy
prescriptions. In order to assess the viability of the developmental state as an alternative political-
orientation, it seems appropriate to consider the demise of developmental states with the Asian
financial crisis of 1997-98. Within the policy-centred theoretical framework of the developmental
state literature, particularly within the works of the authors from the economic school, the causes
of the crisis have typically been attributed to policy mistakes and the dismantling of state-
controlled financial systems. Therefore, in this explanation, the causes of the financial crisis
leading to the demise of the developmental states did not emanate from the developmental state
itself; rather, the crisis was caused by the dismantling of the old institutional settlement. Wade
(2000) argues that the deregulation of the financial markets as a result of external pressures
imposed by the Wall Street-Treasury complex led to the crisis. Attributing the demise of the
developmental state either to policy mistakes or to external pressures, these theorists tend to
obscure the contradictions inherent to the developmental state. As a result, this conceptualisation
cannot capture the internal necessity of deregulation and therefore the demise of the
developmental state.

Contrary to the proponents of the developmental state, regarding to the case of South
Korean, Eun Mee Kim (1999) argues that “contradictions inherent in the developmental state are
enough to instigate its own decline”. Therefore, according to her “external actors, institutions and
conditions merely hasten the decline” (Ibid). For Kim, there are two main contradictions inherent
Ömer MOLLAER 9

to the developmental state. The first, insofar as the developmental state successfully provides
economic services, is that it inevitably undermines its own developmental role as the big South
Korean chaebols become capable of providing these services by themselves. Therefore, the
state’s exclusive support for large conglomerates through subsidies (including tax exemptions,
reduced tariffs and low-interest loans) produces contradictory results, undermining the
developmental state’s role as provider of public goods. In this context, it is necessary to note that
economic growth and rapid industrialisation achieved in the era of developmentalism was made
possible at the expense of public costs. Vivek Chibber (2005) states that “even when the
economy grew at an impressive clip, it was in a race with the fiscal deficit, which often grew
even faster. The fiscal drain was paralleled by an increasing imbalance on the external account.”
In this process, support for large conglomerates through subsidies went hand in hand with the
brutal suppression of labour movements by authoritarian regimes (Cammack, 2007). However,
rapid industrialisation tends to strengthen the working class, therefore civil society, which reveals
the second contradiction of the developmental state. As mentioned above, the conceptualisation
of the developmental state relies on the assumption that those East Asian countries are
characterised by a weakness of labour, which in turn leads to them largely ignoring labour-capital
and labour-state relations. However, if the developmental state succeeds in its supposed mission
in the developmental trajectory, paradoxically it undermines its own basis; namely state
autonomy through empowering both the working class and the capitalist class. Thus, the
developmental state becomes self-limiting in the sense that insofar as it facilitates the
development of societal forces, the rising social classes tend to undermine its supposed autonomy
from the society.

This is not to say that deregulation policies imposed by the international financial
institutions have not played a role in the demise of the developmental states. However, what
these contradictions mentioned above indicate is that the developmental state is far more
contradictory in nature than it has been conceptualised within the statist theoretical framework by
its proponents. As a result, the way in which the developmental state is conceptualised is
problematic in two aspects. First, at the theoretical level, it wrongly associates the developmental
state with political stability and economic prosperity to the detriment of its inherent
contradictions. Second, this theorisation leads to a normative defence of the developmental state
10 Developmental State: A Theoretical and Methodological Critique

particularly against deregulation policies imposed on developing countries, offering the

developmental state as a viable and progressive alternative to neo-liberal policies. In so doing, the
proponents of the developmental state tend to overlook the contradictions intrinsic to the
developmental state on the one hand, and the repressive policies of the state, which particularly
target the labour movement on the other. In sum, the concept of the developmental state tends to
become a theoretical mystification, obscuring its inherent contradictions and exploitative
characteristics, which therefore ultimately lead to a distorted picture of the previous
developmental experience of East Asia.

5. Conclusion

I have offered a critique of the concept of the developmental state on theoretical and
historical grounds. In doing so, I have briefly introduced different conceptualisations of the
developmental state with an emphasis on the concept of state autonomy as the basis of the
developmental state. Thereafter, I have discussed the theoretical relevance of the concept,
questioning its underlying assumptions, characterised by statism, which is intrinsic to the
conceptualisation of the developmental state. I argue that the statist accounts of state-society
relations, which underpin most of the literature on the developmental state, tend to mystify the
nature of the capitalist state through depicting the state as a separate entity isolated from society,
therefore neutralising the state in terms of class interests. This theoretical mystification has been
made possible largely through the exclusion of labour from theoretical concerns, which in turn
leads to the translation of the state-business relations into state-society relations. In sum, the state
is theoretically separated from social classes, with state policies largely ignored with regards
labour in a way that favours the capitalist class.

Thereafter, I have attempted to shed light on the inherent contradictions of the

developmental state, which have largely been overlooked by its proponents. As long as the
developmental state proves to be successful in the developmental process, it strengthens both the
capitalist class and working class. Therefore, the capitalist class becomes capable of providing
the economic services that have previously provided by the state. At the same time, the labour
movement, which either has been excluded from the theoretical concerns or theorised as
subordinated to the state, becomes more powerful as a result of the rapid industrialisation. With
the proliferation of the societal forces, the autonomy of the state, conceptualised as the basis of
Ömer MOLLAER 11

the developmental state, tends to its own demise.

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