The State, business and the restoration of the neoclassical paradigm

Abstract

The author describes the neoclassical restoration, which, from the 1970s onwards, took a radical approach to the search for a theory of development by attempting to fuse the particular characteristics of developing economies with the central ideas of economic theory. Intervention with the aim of furthering development was perceived not as a solution but as part of the problem, and adjustment programmes were oriented not so much towards correcting imbalances as towards establishing an economic structure close to neoclassical precepts. Several East Asian economies were chosen as examples of the application of correct policy, since they were seen as being market-driven, but closer analysis revealed that behind their export success lay the firm guiding hand of the State. Aside from the market-State dichotomy, however, the discussion has overlooked the main actors: the companies. The perception of companies as agents who simply react to a series of opportunities suffers from limitations, as it fails to analyse how companies learn and how they may change when faced with different situations. In this sense, it would be appropriate to reexamine the costs and benefits of industrial promotion in developing countries. It would also be appropriate to analyse in more detail the current process whereby companies are seeking a new identity, in the context of new conditions. The author concludes that it is necessary to study companies more closely: they have never been the puppets of public policy and will not be mere automata in the marketplace.