chapter  4
30 Pages

State and economy

Masterminding Bill Clinton’s successful presidential campaign back in 1992 was George Stephanopoulos. Above his desk, as a constant reminder of the key issue of this (or any other) presidential contest, was a sign that read: ‘It’s the Economy, stupid!’ At the start of the twenty-first century, almost everyone realizes the importance of the economy not just in deciding elections but also in shaping the more general processes of government. Indeed, some commentators claim that we are now living in an age of ‘pocket-book politics’, in which, with the decline of traditional political ideologies, narrowly conceived economic selfinterest is the overwhelming driving force of the political process. Voters may have other concerns, such as health and education, but the anticipated competence of a government in economic management is seen to ‘trump’ all these other issues. Of course, state and government are about very much more than the winning and losing of elections. The day-to-day business of the state is, among other things, about the making and implementing of policy, the management of consent, the waging of wars, the processing of societal pressures, the provision of welfare services, the maintenance of law and order and so on. All of these activities have an economic dimension. They cost money, which the state has to raise (through user charges, taxes or the sale of public debt), and the ways in which these monies are raised will themselves have an effect upon the forms and levels of economic activity. The modern state is, as we have seen Schumpeter (1954) observe, a ‘tax state’. In the last instance, it is dependent upon the health of the wider economy to fund its own activity.