Should the Gorging Leviathan Become Anorexic?

The uncontrolled growth of government in the past 15 years in most of the OECD countries has revived a debate which used to be purely ideological: What is the proper role of the state in a modem economy? The traditional answers used to gravitate along a conventional “left‐right” axis and were based on a priori notions of how society should function. Now however the question has transcended ideology and has spilled over into a management question: given increasing social complexity, how should government relate to the private sector? As “referee” to ensure the proper functioning of sovereign markets? As antidote to social injustice? As direct entrepreneur? As captain of the national competitive team pursuing world markets, as catalyst for change‐or merely as cleanser of the streets, a function which itself is being increasingly privatised. The phenomenal expansion of government activities in the recent past has led to intractable deficits and debt problems, and given this question an urgency which it is likely to retain to the end of this century. Yet it appears that the contemporary responses to this challenge deepen the problem rather than resolve it. No satisfactory model exists to describe optimum state participation in our modern economy, once you get away from ideological a‐priorism. The two principal attempts of the last two decades to deal with the problem of the proper role of government have been the “maximum state” experiment of the 1970s and its “minimum state” negation which is currently fashionable. The “maximum state” approach has led to what the British periodical The Economist has aptly called a “Gorging Leviathan” with an insatiable appetite and disruptive behaviour. Its putative successor the “minimum state” model attempts to starve Leviathan into submission. In the process however, it is in danger of trapping governments into a disease similar to anorexia nervosalean and compulsive austerity, loss of creative energy, the shedding of muscle in addition to fat, the whole based on the almost religious belief that the state, by definition can do no right and is a congenital bungler. There is evidence that neither public sector gorging nor a starvation diet are appropriate to the challenges of the contemporary world and that there will be an increasing demand for other intermediate models. An outline of a range of some such models, based on the idea of an organic partnership between the public and the private sectors will be briefly presented at the end of the paper although a full exposition of what it would entail would require the broader context of a full‐length book. Résumé La croissanee effrenée du gouvernment an cours des quinze dernières années dans la majorité des pays de l'OCDE a ramené à la surface une discussion qui était auparavant d'ordre purement idéologique: Quel est le véritable rôle de l'Etat dans une économic nioderne? Les réponses traditionnelles se situaient généralement sur un axe gauche‐droite classique et étaient fondées sur dcs notions préconçues de comment devrait fonctionner la société. Aujourd'hui, cependant, cette question transcende l'idéologie et devient une question de gestion: compte tenu de la complexité sociale croissante, quelle devrait être la nature des rapports entre le gouvemement et le secteur privé? Devrait‐il agir à titre d'arbitre afm d'assurer le bon fonctionnement des marchés souvcrains? Devrait‐il agir comme antidote à l'injustice sociale? A titre d'entrepreneur? A tite de capitaine d'une équipe de compétition nationale à la conquête des marches mondiaux, à titre de catalyste du changement, on simplement comme entrepreneur responsable de l'entretien des rues, une fonction qui elle même est de plus en plus privatisée? L'expansion phenomenale récente des activités gouvernementales a mené a certains problèmes insolubles de déficit et de dette et ont conféré à ccttc question un caractère urgent qui sera probablement présent jusqu'à la fin du sièele. Il semble toutefois que les réponses actuelles à ce défi aggravent le problème plutôt que de le résoudre. Il n'existe aucun modèlc satisfaisant pour décrire la participation optimale de l'Etat dans notre économie moderne, si l'on s'éloigne des préconceptions idéologiques.