PRIVATIZATION Privatization in Malaysia, Regulation, rent-seeking and policy failure

30 Privatization, rents and rent-seekingautonomous bureaucracy (i.e. ‘Weberian bureaucratic insulation’) and thickexternal ties to the economy’s organized agents (Evans 1994: 96). That isto say, the state needs to be insulated enough to be able to independentlyformulate and implement policy, but also connected to productive groups insociety.Bureaucratic capacity, coherence and autonomy from societal forces aresaid to provide the ability to devise long-term economic policies withoutinterference from private interests. This ‘coherent meritocratic bureaucracy’is said to have strong internal networks based on a strict selection processrequiring formal competence rather than clientelistic ties or traditionalloyalties (Johnson 1982; Evans 1994). It is the implementation of strategiesby a comparatively autonomous technocratic elite and the institutionalizingof close relationships between business leaders and state officials in theformation of a dynamic export-oriented regime of capital accumulation thatis seen to characterize the developmental state (Johnson 1982). As capitalaccumulation demands close connections to private capital, such connectionshave to be with industrial capital, enabling state elites to incorporate thesepowerful groups in the state’s economic project (Evans 1995).The nature of this state–capital relationship is seen as one of ‘strategicinterdependence’ between both parties, where there is a mutually dependentrelationship between government and big business (Barzelay 1986, cited inChoi 1993: 23–24) and in which both must feel that their own success dependson the fortunes of the other partner (Vartiainen 1999). The concept of thedevelopmental state means that ‘each side uses the other in a mutually beneficialrelationship to achieve developmental goals and enterprise viability’(Johnson 1999: 60). The state’s embedded autonomy is seen to provide itwith the ‘infrastructural power’ or ‘transformative capacity’ to coordinateindustrial change by ‘penetrating’ and ‘extracting’ resources from societyand allocating them to desired ends, shaping incentives through coordinateddecision-making to ‘elicit desired behaviours’ (Mann 1991, cited in Felker1998: 87; Weiss and Hobson 1995; Weiss 1998; also see Rodrik 1995 andBardhan 2000). Here, state capacity is not about strong or authoritarianstates or coercive power to forestall political challenges, but rather ‘negotiativepower’ to negotiate rudimentary reciprocity between political and economicactors (Weiss and Hobson 1995). The diversity in state structures,state-economic linkages and interstate relations inform the autonomy,strategies and capacities of modern states to facilitate industrial change(Weiss and Hobson 1995).However, the relationship between the state’s autonomy and its capacityis ambiguous (e.g. see Crone 1995; Fine 2003), where state capacity is oftenequated with autonomy or insulation (e.g. see Mackie 1995; Gomez 2002b),and state autonomy linked with efficiency (e.g. see Rowthorn and Chang1993). It is also unclear whether a developmental state is autonomous orresponsive to capitalist interests. On the one hand, this positive state–capitalrelationship is seen to allow the state to implement policies in favour of