State of the State: The state is dead! Long live the state!
The State is Dead! Long live the State! At the turn of the century, many commentators from the right and left seemed united in their analysis that the state as an economic player was dead or at least no longer relevant. The combined pressures of globalisation, liberalisation and marketisation unleashed by the market-driven dogmas of Thatcherism and Reaganomics had massively expanded the private sector and concurrently downsized the public sector. Corporate power was in the ascendancy and many state-owned companies had become little more than second-rate government departments, and the underlying assumption was that, as the economy evolved, the government would close or sell them to private investors.
Yet just over a decade later, the state is once again at the centre of heated political and academic debates. The crises of recent years have demonstrated that those who proclaimed the irrelevance of the state so vociferously were grossly misled. Conservative business analysts express growing concern that public enterprises “show no signs of relinquishing the commanding heights” and “are on the offensive”. 1 The failures of privatisation, evident in unequal access, unfulfilled promises and outrageous profit margins are prompting governments to take back control of essential public services, through processes of renationalisation and remunicipalisation.
State-owned or state-controlled enterprises (SOEs and SCEs, respectively) are also expanding in major industries: the world’s ten biggest firms in the oil and gas sector, in terms of reserves, are all in state hands. State-controlled sovereign wealth funds (SWFs) have become strong components of the changing international economy — as illustrated by the mounting power of the China Investment Corporation, the Norwegian Government Pension Fund Global, or the assets managed by several oil- and gas-rich Gulf states.
The nature and scope of state power and its potential either as an instrument for progressive change or as a catalyst for capitalist accumulation leading to further social exclusion and environmental degradation, need a much more critical examination. A greater or more influential public sector does not necessarily mean progressive change. Moreover, any discussion about the nature and roles of the state in the present global context requires a more detailed and unbiased analysis of its real economic weight around the world.