4/2/2010

theoretical parameters of vivek's book are a bit askew from what we've been looking in, in this course.

two enduring forms of the State

1. welfare State
2. developmental State

wanted to show that the developmental State could be understood in the same frame as the developmental State. it used to be thought of as a 'third-world State'. and when the 'developmental State' came around as a theoretical category, it was understood a-theoretically. vivek looking at it as a 'capitalist State'.

the terms of this debate, though, were different.

the key concept that was developed came from the debate about the Welfare State, which was 'state capacity' – when Marxists say that the welfare State functions to perpetuate capitalism, they assume both a willingness and a capacity to administer to capitalist interests. this cannot be taken for granted; it has to be built.

because it has to be built, facts about the State itself are going to have a large bearing on whether and how State capacity is built. in the developmental State literature, this had a large impact. it came out of the context of neoliberalism, where the argument was that State's will necessarily muck it up (rent-seeking, or crowd out, or whatever). in every case, the State will harm development. this came out of Latin American stagnation—they squelched private intiative.

BUT: by the late 80's/early 90's you had a growth miracle in E. Asia. and you had extensive State intervention. what the developmental State literature argued was that what distinguished these States was 'State capacity'--they had the capacity to intervene successfully. the question was not State intervention, but the quality of State intervention.

the question that was not asked, however, is how State capacity gets built. the argument, when it was made, was as simple as, well, politicans built it (Peter Evans' book is a partial answer—you need good bureaucracy and good ties to the private sector. But even here the answer is not given as to the origins).

in vivek's book, there were two cases: India and Korea. in the former, it was a failure; in the latter, a success. difference was capacity. why?

easy answer: gift of long historical process. determined at the outset, in a sense.

but neither country had much of a developmental apparatus, when it started out. that means that there was a punctuated period of State building. in Korea, this was successful. in India, not.

the answer that vivek gives is that it has to do with the reaction of the capitalist class to State-building. this was novel because it was assumed, prior to this, that capitalists don't matter, because these were poor countries. but in fact, vivek shows that the opposite was true.

what it shows, then, is that the developmental State was constrained by bourgeois power because the caiptalist class was able to forestall State-building. the attempt, then, was to bring

why did the Indian capitalist class rebel?

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remember, the two theoretical arguments re: the State

1. instrumentalist accounts
2. structuralist account, the most important of which has to do with 'business confidence'

theda skocpol offers an account of 'full autonomy' – that the State can ride roughshod over the capitalists, if it will.

in dev. state literature, the notion of State-centeredness was at its height in the late 1980's, mid-1990's. it was a counter to the neoliberal arguments that had been dominant, at this time, after the Latin American collapse in the 1980's (those countries where States had intervened, in the past). the only way, it was said, to accelerate the pace of Capitalist development was for it to become a 'nightwatchman State'.

Amsden and Wade upset this apple-cart. it was not the fact of State intervention that determines the outcome, but rather the quality.

well, what conduces high-quality State-intervention? the answer that emerged was: States with adequate capacity. if the State has this ability, then, it can overcome the obstacles people pointed to (obstacles were rent-seeking on the part of private agents, and State predation).

KEY--one argument could have been about the 'social setting'--a kind of Marxist account, about the history of the two countries, etc. in Left literature, there had been this notion that in the Third World, classes are underdeveloped (Hamza Alavi). the idea, here, being that States are much more powerful, viz-a-viz social classes. the only actor that was seen as being capable of upsetting the State's agenda was the landed class. this literature in Latin America, and elsewhere, always points to the absence of land reform. as an economic fact, certainly, but as a political fact (the power of landlords). this, however, was an inference; it wasn't an argument. nowhere was the industrial bourgeoisie seen as being capable of blocking the State's agenda. [a subsidiary argument was that, even if industrialists do matter, why would they care? it's going to be a State, for them—capitalists were thought to be natural allies of the developmental State.]

a very powerful argument at the time was that Korea succeeded, at the time, because it was an authoritarian State. vivek's argument is that the opposite was the case, in fact (to be developed, later) – in an authoritarian state, a class that you should find that is unable to impose its will on the political process, in fact, is labor, not capital. it's true, maybe, that your control over labor might make capitalists more amenable to a partnership. four countries: taiwan, korea, france (45-68), japan (54-mid 1980's)--'successful capitalist planning'. the latter two were democratic states].

the argument in the Korean State is that, even when the State controls finance, it is subservient to capital. example being given is the switch to heavy industry in Korea in 1973. control of finance is only a weapon when capitalists have a high demand for finance, which presupposes 'business confidence'.

[if military takes on capital, workers may lose jobs. if workers take on capital, capital loses its power of the 'investment strike,' because work is already stopped]. think through this.

in both India and China, Nehru and Park have political hegemony. Nehru could have pursued his agenda, but political elite pointed to the go-slow. In Park the political rivals didn't have the support of the capitalist class. this is key, clarifies the impotency of a 'within-state' argument.

the question of land reform—if the book had been about growth, then land reform would have had to be in the book. what vivek is looking at is one part of what explains growth, which is State capacity. [key--absence of land reform increases the incentives for capitalists to ignore plan directives. planning, remember, is premised on the notion that capitalists pursue industries that have high private returns but low social returns (luxury good sectors, niche sectors, etc.). highly unequal income distributions, which follow from failed land reform, give rise to these kinds of sectors. so land reform does matter, in this sense.]

[thinking about brazil, chile, etc., and the transition of the 1920's/1930's/1940's] what about the landed class? it wipes out the dominant, landlord class. the immediate reason is because the evidence didn't show any landlord influence (found one petition from landlords). all of the two-dozen business organizations expressed their opposition to this legislation. what that said was that they're just not a factor. why? what about latin america, and the supposition that landlords didn't like developmental state (remember, this is not about economic growth)? the commitment to build developmental states is really a phenomenon of the post-1930s; the commitment to industrialization starts in the Great Depression, mostly as a necessity (because third world countries are cut off from their markets). when you compare the two threats, is it not the switch to rapid industrialization, rather than the switch to the developmental state that threatens them? industrialization, remember, threatens to wipe out the landed class. the supposition is that industrialization rendered them politically helpless—how do you get the onset of developmental states/industrialization without land reform? the explanatory task, here, would be to understand how the power bloc shifted in the 1930's and the 1940's.

from 1960-1975, India was far less corrupt than Korea. today, the most corrupt state in the world is also the world's fastest growing economy. [cf. Mushtaq Khan]

Japanese multinationals in Korea were using the country as an export platform; European and American multinationals used India as a home market, blocking Indian access to the American market.

size of the domestic market (domestic demand) does not produce an export-led strategy (China, DR/PR). export markets are not more attractive because they're highly competitive (they're used as places to dispose of excess inventory at firesale prices, sometimes).

two counterfactuals

1. you use the labor movement, as in France, to push a developmental State, then you push them out. labor has a role in state installation, but nothing in State reproduction.
2. you would have had a social-democratic developmental State. so it's important not to think of ISI as mal-development, ISI is a world-historical success. but, of course, pound for pound, India could not have matched Korea. [yes, ISI carries internal contradictions—but so does ELI. this happens in the mid-90's in Korea, they cease to be interested in a developmental state.]

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KEY, the question of the 'flying geese'--what Japan did with Korea, remember, is give them low-value niches, so that they themselves would have room for capital good exports. Korea and Taiwan do the same thing, later, with South East Asia (and this helps the book's argument—Indonesia and Malaysia don't have developmental States, so they're not nearly as successful as Korea and Taiwan).

also, let's remember that Japan's strategy, re: Korea, is greased by the executive branch in the US (Congress is more ambivalent).

Two contingencies, in this book:

1. Opening created by the arrival of the Japanese
2. Park Chung-Hee's taking advantage of opportunities granted him by the Japanese.