States, Markets and Governance for Emerging Market Economies: Private Interests, the Public Good and the Legitimacy of the Development Process

States, markets, and governance are among the pressing issues of our day. The global market exerts dynamic pressures on our societies, economic agents, and systems of government, especially in the developing world. Typically, most analysis begins with the idea that global markets have increasingly intruded upon the capacity of the institutions of government to manage the process of change. Our societies are seen as increasingly subject to the vagaries of market forces, to the delight of some and the regret of others. This article argues that much thinking about states and markets is flawed, making it highly likely that policy‐makers, among others, will commit mistakes in their responses to the undoubted pressures for change. If we alter the way we think about the state and the market, we will see opportunities to change what we do about them and how they evolve over time. The article argues that we should retreat from understandings of the market and governance that involve a clear distinction between states and markets, proposing a radical reformulation wherein states and markets are no longer seen as separate entities, but as a state‐market ‘ensemble of governance’, or ‘condominium’. Drawing on Adam Smith, this approach leads to a reinterpretation of the relationship between private interests in market processes and the wider public good. This model is used to interpret contemporary patters of global trade and finance, and the article concludes that this new way of thinking can help us to realise better our normative preferences about the sort of world in which we wish to live.