448 Globalization and the Changing Logic of Collective Action
between the structure of the state and the structure of industrial and financial
markets in the complex, globalizing world of the third industrial revolution. There
is a new disjuncture between institutional capacity to provide public goods and
the structural characteristics of a much larger-scale, global economy. I suggest
here that today’s “residual state” faces crises of both organizational efficiency
and institutional legitimacy....
GOODS, ASSETS, AND POLITICAL ECONOMIES OF SCALE
The development of the modern state and the growth of capitalism involve a complex
process of interaction,...first, between politics and economics, and, second, between
market and hierarchy. Central to such developments are “political economies of
scale,” in which specific political structures...appear to be more or less efficient
in stabilizing, regulating, controlling, or facilitating particular economic activities.
Different economic processes are said to be characterized by different minimum
efficient scales, given existing technology and size of market demand. Some optimal
plant sizes remain small; others exhibit increasing returns to scale—that is, greater
efficiency the bigger the factory or distribution system. Thus, in some cases, big
is economically the most efficient, whereas in other cases small is beautiful. In
the case of political economies of scale, the concept is expanded to include the
scale of state structures, institutions, and processes and the economic tasks, roles,
and activities they perform. Optimal political economies of scale therefore
continually shift, adjusting to technological, socio-logical, and political change.
Indeed, they have been shifting dramatically in the late twentieth century, both
upward to the transnational and global levels and downward to the local level. In
this more fluid environment, actors’ choices have significant consequences for
the changing structure of the state and, indeed, for the wider evolution of politics
and society.
It is mistaken to assume that state structures are overwhelmingly hierarchical
and bureaucratic in some inherent way, while economic structures are based
essentially on market exchange. On the contrary, both state and economy are
complex compounds of market and hierarchy as well as the outcome of the
interaction between politics and economics. Evolution of political-economic
structures results from the interaction of independent changes along each dimension
(market/ hierarchy and politics/economics) and from complex feedback effects
that occur as the consequence of that interaction. For a state to approximate an
overarching public role of the classical type would require it to have real and
effective organizational capacity to shape, influence, and/or control designated
economic activities (that is, those perceived to be the most socially significant
such activities). In other words, it must stabilize, regulate, promote, and facilitate
economic activity generally as well as exercise other forms of politically desired
and/or structurally feasible control over more-specific targeted processes of
production and exchange. The core of this [problem] lies in the character of the
different kinds of...resources and values that are needed and/or desired by
individuals and by society.... Identifying the structural characteristics of different