ECONOMY

chapter 35
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COMPARATIVE
PERSPECTIVES ON
THEROLEOFTHE
STATE IN THE
ECONOMY
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anne wren
In his influential work on “Political Control of the Economy,” Tufte (1978, 104)
concludes that:
The single most important determinant of variations in macroeconomic performance from
one industrialized democracy to another is the location on the left-right spectrum of the
governing party...the governing political party is very much responsible for major macroeconomic
outcomes—unemployment rates, inflation rates, income equalization, and the size
and rate of expansion of the government budget.
This statement is significant in two respects. First, in its assignment of a high level of
control over important economic outcomes to the state. Second, in its identification
of governing parties as the most powerful political actors in the economic policymaking
process. Reviewed nearly three decades later, the strength of these conclusions
appears surprising. In the period since Tufte wrote, both the instrumental capacity of
the state to shape economic activity and outcomes, and the extent of the influence
of elected governments in the policy-making process, have been the subject of debate
in the comparative political economy literature. In this chapter we will review these
debates, outline how they have influenced current thinking about the role of the state
in the economy, and suggest several important avenues for future research.