New Directions in State Policy.

Over the past 25 years, the basic orientation of economic policy has shifted from attempting to direct or steer the market to supporting and expanding the market. What does this shift mean for the role of the state? The conventional debate tends to focus on the challenges that economic liberalization and other developments, including globalization and rapid technological change, pose to existing state policies, on whether state authorities can continue as before or must retreat. While valuable, this debate is incomplete. What is missing is a discussion of new state economic and social activities that may accompany economic liberalization and globalization. Seeking to fill the gap, this paper presents an overview of four new state missions related to the move to the market: 1) repairing the three main varieties of capitalism (liberal, corporatist, and statist); 2) making labor markets and systems of social protection more employment-friendly; 3) recasting regulatory frameworks to permit countries to cross major economic and technological divides (from Fordism to post-Fordism, from the mechanical era to the digital era, from managerial capitalism to shareholder or finance capitalism); 4) expanding market competition in industry and services, at home and abroad. The first two missions are of an essentially corrective nature, addressing dysfunctions that have emerged over the years, whereas the latter two are constructive in character, laying the foundations for future growth. All of these missions depend critically on the state's innovative capacity - on the forging of new state policies and regulations for a new competitive environment. Thus, even in an era of triumphant neo-liberalism, economic development and state development are -- and for the foreseeable future will continue to be -- inextricably intertwined. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]