EMBEDDED AUTONOMY: STATES AND INDUSTRIAL TRANSFORMATION

[An Excerpt from The Concluding Chapter: "Predators and Midwives"]

This book began with a fantasy of bureaucrats as lion fodder. The rest of the analysis contested the story's premise. Contesting the premise meant contesting simplistic neo-utilitarian visions of the state and using a comparative institutionalist approach to demonstrate the value of seeing states in a different way. Analyzing societies and analyzing sectors produced the same message: industrial transformation is possible and states make a difference. The character of state institutions helps determine whether and how countries change their position in the international division of labor. State apparatuses are potential sites for agency. Sturdy structures make agency easier. Effective agency changes the structures that made it possible.

There are, of course, good reasons for sympathy with lion fantasies and neo-utilitarian theories. Predatory states justify cannibalistic dreams. Without coherent bureaucratic institutions, states do indeed reduce themselves to the horrifying caricature predicted by simplistic versions of the neo-utilitarian vision. Rules and decisions are commodities, to be sold like any other commodity to the highest bidder. Without a predictable environment of political rules and decisions, long term investment is foolish. State power, used for capricious extraction and wasteful consumption, diminishes private productive capacities rather than enhancing them. Distribution and growth both suffer.

Extracting a larger share from a shrinking pie is not the optimal way to maximize revenues, but it may be the only way consistent with the survival of predatory states. The disorganization of civil society is the sine qua non of political survival for predatory rulers. Generating an entrepreneurial class with an interest in industrial transformation would be almost as dangerous as promoting the political organization of civil society. For predatory states "low level equilibrium traps" are not something to be escaped; they are something to be cherished.

The predatory state is an ideal type, but empirical approximations like Zaire under Mobutu exist. Neo-utilitarians are not wrong in pointing out the existence of predation; they are wrong in their diagnosis of its roots. For neo-utilitarians, state power is the cause of predation. Diminishing state power is therefore its cure. Predatory states are not a perverse variation; they are the ideal-typical state. Actual states will approximate the predatory ideal unless their power is curtailed. The only good state is an eviscerated one.

The ideal type of the developmental state turns this logic on its head. Developmental states show that state capacity can be an antidote to predation. To deliver collective goods, states must act as coherent entities. Institutionalized bureaucratic power keeps individual incumbents from peddling rules and decisions to the highest bidder. Being a coherent actor involves more than just reining in the greed of individual officeholders. It involves entrepreneurship as well. Developmental states formulate projects that go beyond responding to the immediate demands of politically powerful constituents.

Autonomy is fundamental to the definition of the developmental state but not sufficient. The ability to effect transformation depends on state-society relations as well. Autonomous states completely insulated from society could be very effective predators. Developmental states must be immersed in a dense network of ties that bind them to groups or classes that can become allies in the pursuit of societal goals. Embedded autonomy, not just autonomy, gives the developmental state its efficacy.

The power of embedded autonomy arises from the fusion of what seem at first to be contradictory characteristics. Embeddedness provides sources of intelligence and channels of implementation that enhance the competence of the state. Autonomy complements embeddedness, protecting the state from piecemeal capture, which would destroy the cohesiveness of the state itself and eventually undermine the coherence of its social interlocutors. The state's corporate coherence enhances the cohesiveness of external networks and helps groups that share its vision overcome their own collective action problems. Just as predatory states deliberately disorganize society, developmental states help organize it.

Comparative analysis leads to a vision that stands in contrast to the old neo-utilitarian assumptions. A few of the general propositions that go with this perspective are worth reiterating:

First and most crucially, the fate of civil society is inextricably bound to the robustness of the state apparatus. Deterioration of state institutions is likely to go hand in hand with the disorganization of civil society. Sustaining or regaining the institutional integrity of state bureaucracies increases the possibility of mounting projects of social transformation.

The second proposition follows from the first. Predation is not a function of state capacity. The idea that eviscerating state bureaucracies will wipe out predators is misguided. To the contrary, constructing state apparatuses that are bureaucracies in Weber's positive sense should help prevent predation.

Finally, bureaucracy is not enough. Even the most bureaucratically coherent state cannot effect transformation without a network of ties to social groups and classes with which it shares a project. Connectedness is as important as coherence and cohesion.

The concept of embedded autonomy is useful because it concretizes the structural relations that lie behind the efficacy of the ideal typical developmental state, but it doesn't capture the variations in state involvement across sectors and circumstances. States play an array of roles that work or don't work depending on their fit with specific goals and contexts. Transformation depends on turning structural strengths into the effective execution of a well-selected blend of roles.

Exploring roles and strategies in the information technology sector helped put flesh on abstract ideas about how states affect industrial change. Looking at informatics reinforced general propositions about the consequences of bureaucratic capacity but it also led to a sharper focus on state-society relations.

The idea of the state as midwife came to the fore. States foster industry by changing social structures, by assisting in the emergence of new social groups and interests. The consequences of midwifery were remarkably robust across countries. From the impressive institutional constructions that went with embedded autonomy in Korea to the often inconsistent strategies of Brazil and India, state efforts to generate local entrepreneurial groups committed to a local information technology industry produced results.

The findings were encouraging for those who would like to see the state as an agent of transformation, but they were also sobering. Industries emerged, but they were not the industries that had been expected. In caricature, the outcome could be summarized in a paraphrase of an old aphorism: States can make industries but not as they choose. Nationalist initiatives ended up contributing to the emergence of internationalized industries that were, for at least some of the initiators, mirror images of what they had hoped for.

Results were sobering for a second reason. Social structural changes, even if they are partially put in motion by the state itself, supersede the organizations and policies that created them, forcing changes in the state itself. The reciprocal shaping of state and society is not always mutually reinforcing. Informatics agencies were transformed and sometimes marginalized by the industries they helped create. At a more general level, the social structural bases of the developmental state have been at least partially undercut by the new industrial society it helped create.

None of this negates the prospect that the state will continue to be an instrument for social transformation. New generations of barbudinhos undoubtably lie in wait. State apparatuses will provide launch sites for their projects. They will find niches within the bureaucracy and sometimes these niches will provide the leverage to make them midwives. The results of their work may well surprise them. Any successes will end up redefining the possibilities for future state action, and the cycle will begin again.