ABSTRACT
Fascination with out-of-control globalization, a combination of new and volatile international finance and Keynesian macroeconomic levers that no longer work for governments as they did during the Golden Age of the Bretton Woods era when growth came with equity, can easily lead to the conclusion that states no longer have power and that “now it is the markets which…are the masters over the governments” (Strange 1996:4). Neoliberals on the right celebrate the change; social democrats on the left decry it. The Asian financial turmoil at the end of the twentieth century may seem to prove that Asia’s post-Second World War state-leveraged growth with equity is no longer possible. Yet the continuing rise of China in the last third of the twentieth century, even after Richard Nixon ended the Bretton Woods fixed link of the dollar to gold on August 15, 1971, suggests that it is important not to ignore how much governments can still do to facilitate wealth with equity (Evans 1995; Friedman 1996:413-17). Structural adjustment programs (SAPs), which overly weaken a state, can hurt a nation’s capacity to grow (Haggard and Kaufman 1995). Governments are needed to build institutions that respond to international challenges, to facilitate the rise of sunrise industries, to manage the currency, and to build needed infrastructure, including suitable support for education and research.
