The Origin of Economic ‘Miracles’: The Role of the State

Abstract

Arguments concerning the role of the state in economic development have been at the centre of economic debate since the eighteenth century. Yet, if anything, they are probably even further from producing a consensus now than they were more than 200 years ago when two eminent Scots championed the familiar, diametrically opposed views: Sir James Steuart ([1767] 1966), that the state had a critical role to play in economic development; and Adam Smith ([1776] 1976), that the role would be performed much more effectively by ‘markets’ guided by the invisible hand of self-interest.

This chapter was first published under a different heading in H. J. Chang and R. Rowthorn (eds), The Role of the State in Economic Change (Oxford: Clarendon Press, 1995), pp. 51–78.