1990, 438 pp
Despite its rather modest ambition, Robert Wade's Governing the Market is a triumph of scholarship. Wade is a stalwart of the interdisciplinary anti-neoclassical school of thought which roughly encompasses sociology, economic history, development economics, and the much-marginalized field of political economy and which includes Alice Amsden, Peter Evans, and the late Susan Strange. There is at present only one major success story in the field of development economics: the rapid rise of East Asia from largely rural, agrarian, feudal, low-capital
Upon picking up the book, the reader will immediately notice that, quite contrary to most recent scholars of the subject, Wade knows how to logically organize a cogent argument. After introducing the problem, he gives a quick overview of the history of development economics from Smith's emphasis on capital accumulation, through the early 20th century fixation on efficient allocation which began with A.C. Pigou, past the brief (and exciting) flirtation with structuralism, to the reigning neoclassical orthodoxy. He then proceeds not only to explain the neoclassical theory, but also to provide five indicators by which to judge its success or failure. They are: the presence of neoclassical growth factors over time (low protectionism, floating exchange rates, etc), a history of little government intrusion in industrial development, few instruments for government leadership, few institutions to exercise and organize government leadership, and the degree of unity of political power.
In brief, the orthodox explanation for
Wade's case study is
Indeed, Wade's explanation of
It is in his discussion of
In the midst of Wade's tremendous outpouring of knowledge about
Wade's prose is as lively and arresting as it is possible to be while discussing the organization of a chemical industry. He gets in several memorable zingers, and is remarkably open about indicating where the evidence for his theory is weak, or where there are gaps in his understanding and experience. His argument is authoritative enough and his organization clear enough that the reader is propelled through the thickets of organizational minutia with the least discomfort possible. His concrete material analysis and thoroughly delineated policy prescriptions rescue him from either being fruitlessly descriptive (as much modern social science insists on being) or rhapsodically self-referential and theoretical. At the end of the book, I felt like if I were suddenly appointed Zambia's Minster of Finance, I'd have some idea of what to do, rather than a vague notion about modifying "conceptions of control" to change a "field" (or is it the other way around? I can never remember).
Finally, Wade offers some conclusions and policy prescriptions for states interested in attempting to repeat
Though Wade effectively demolishes neoclassical theory, he does not come across as a radical. Governing the Market is not a defense of Raul Prebisch-style import substitution industrialization and protectionism, or an attack on free trade. He does not rail against the Washington Consensus or the Bretton Woods agencies, and he fully recognizes the happy confluence of American benevolence, cultural respect for authority, absence of opposing elites, and lack of class consciousness which have made East Asian industrialization a shallower hill to climb than that of many other places. But still, his is an argument that development is not only possible but quite feasible, and it is a major theoretical and empirical contribution to an otherwise impoverished field. Unequivocally recommended for any serious student of development, political economy, or economic history, and well worth repeated study and consideration.