Table Of ContentFundamentals of Pure and Applied Economics 
THE STATE AND THE 
ECONOMY UNDER 
CAPITALISM
FUNDAMENTALS OF PURE AND 
APPLIED ECONOMICS 
EDITORS IN CHIEF 
J. LESOURNE, Conservatoire National des Arts et 
Metiers, Paris, France 
H. SONNENSCHEIN, University of Pennsylvania, 
Philadelphia, PA, USA 
ADVISORY BOARD 
K. ARROW, Stanford, CA, USA 
W. BAUMOL, Princeton, NJ, USA 
W. A. LEWIS, Princeton, NJ, USA 
S. TSURU, Tokyo, Japan 
MARXIAN ECONOMICS II 
In 3 Volumes 
Marxism and "Really Existing Socialism"  Nove 
II  Development and Modes of Production in Marxian Economics 
Richards 
III  The State and the Economy under Capitalism  Przeworski
THE STATE AND THE 
ECONOMY UNDER 
CAPITALISM 
ADAM PRZEWORSKI
First published in 1990 by 
Routledge 
Reprinted in 2001 by 
Routledge 
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN 
Transferred to Digital Printing 2007 
Routledge is an imprint 0/ the Taylor & Francis Group 
© 1990 Routledge 
All rights reserved. No part of this book may be reprinted or reproduced 
or utilized in any form or by any electronic, mechanical, 
or other means, now known or hereafter invented, including photocopying 
and recording, or in any information storage or retrieval system, without 
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The publishers have made every effort to contact authors!copyright holders 
of the works reprinted in Fundamentals o/Pure & Applied Economics. 
This has not been possible in every case, however, and we would welcome 
correspondence from those individuals!companies we have been unable to 
trace. 
These reprints are taken from original copies of each book. in many cases 
the condition of these originals is not perfect. the publisher has gone to 
great lengths to ensure the quality of these reprints, but wishes to point 
out that certain characteristics of the original copies will, of necessity, be 
apparent in reprints thereof. 
British Library Cataloguing in Publication Data 
A CIP catalogue record for this book 
is available from the British Library 
The State and the Economy under Capitalism 
ISBN 0-415-26990-3 
Marxian Economics II: 3 Volumes 
ISBN 0-415-·26987-3
Contents 
Introduction to the Series  vii 
Introduction  1
Part I.  The Rule ojt he People  4 
1.  Introduction  4 
2.  Majority Rule  6 
2.1.  Homogeneous citizens  6 
2.2.  Median voter models  7 
2.3.  The instability of democratic outcomes  12 
3.  Democracy and Efficiency  15 
3.1.  The neo-liberal critique  15 
3.2.  Is democracy inefficient?  20 
4.  Open Issues  23 
4.1.  Preferences  23 
4.2.  Political competition  26 
4.3.  Representation of interests  27 
4.4.  State autonomy  29 
Part II.  The Rule ojthe State  30 
I.  Introduction  30 
2.  Terminological Preliminaries  31 
3.  The Origins of State Autonomy  34 
3.1.  The "relative autonomy" approach  34 
3.2.  The origins of autonomy  36 
3.3.  State autonomy and class balance  41 
3.4.  State and society  44 
3.5.  The "state-centric" approach  47 
3.6.  State autonomy as a contingent outcome of conflicts  50 
4.  Consequences of State Autonomy  53 
v
vi 
5.  State Autonomy under Democracy  57 
5.1.  Autonomous bureaus  57 
5.2.  Constraints  59 
5.3.  Unresolved issues  63 
6.  Conclusion  64 
Part III.  The Rule ofC apital  65 
1.  Introduction  65 
2.  The State and Reproduction of Capitalism  67 
2.1.  Marx's theory of reproduction of capitalism  69 
2.2.  Offe and Habermas  73 
2.3.  Poulantzas  79 
2.4.  State theories of reproduction: a critique  83 
3.  Class Conflict and the State  89 
3.1.  Power elite theory  89 
3.2.  Structural dependence theory  92 
4.  Conclusions  96 
Part IV,  Conclusions  100 
Notes  103 
Bibliography  112 
Index  125
Introduction to the Series 
Drawing on a personal network, an economist can stilI relatively easily 
stay well informed in the narrow field in which he works, but to keep up 
with the development of economics as a whole is a much more formid 
able challenge. Economists are confronted with difficulties associated 
with the rapid development of their discipline.  There is a risk of 
"balkanization" in economics, which may not be favorable to its 
development. 
FundaYQentals  of Pure and Applied Economics  has  been  created to 
meet this problem. The discipline of economics has been subdivided 
into sections (listed at the back of this volume). These sections comprise 
short books, each surveying the state of the art in a given area. 
Each book starts with the basic elements and goes as far as the most 
advanced results. Each should be useful to professors needing material 
for lectures, to graduate students looking for a global view of a parti 
cular subject, to professional economists wishing to keep up with the 
development of their science, and to researchers seeking convenient 
information on questions that incidentally appear in their work. 
Each book is thus a presentation of the state of the art in a particular 
field rather than a step-by-step analysis of the development of the litera 
ture. Each is a high-level presentation but accessible to anyone with a 
solid background in economics, whether engaged in business, govern 
ment,  international organizations, teaching,  or research in related 
fields. 
Three aspects of Fundamentals ofP ure and Applied Economics should 
be emphasized: 
-First, the project covers the whole field of economics, not only 
theoretical or mathematical economics. 
-Second, the project is open-ended and the number of books is not 
predetermined. If new interesting areas appear, they will generate 
additional books. 
vii
viii 
-Last, all the books making up each section will later be grouped to 
constitute one or several volumes of an Encyclopedia of Economics. 
The editors of the sections are outstanding economists who  have 
selected as authors for the series some of the finest specialists in the 
world. 
J. Lesourne  H. Sonnenschein
The State and the Economy under 
Capitalism * 
ADAM PRZEWORSKI 
University of Chicago 
INTRODUCTION 
Capitalism is a system in which scarce resources are owned privately. 
Yet  under  capitalism  property  is  institutionally  separated  from 
authority. As a result, there are two mechanisms by which resources 
are allocated to uses and distributed to households: the market and the 
state.  In the market,  productive resources - capital, land,  labor 
capacities - are allocated by their owners and the distribution of 
consumption results from decentralized interactions. Yet the state can 
also allocate and distribute and it can act on those same resources that 
constitute private property. Not only can states tax and transfer but 
they can regulate the relative costs and benefits associated with private 
decisions. Thus, inherent in capitalism is a permanent tension between 
the market and the state. 
Democracy in  the  political  realm  exacerbates  this tension.  The 
market is  a  mechanism in which individual agents  cast votes  for 
allocations with the resources they own and these resources are always 
distributed unequally; democracy is a system through which people as 
citizens may express preferences about allocating resources that they 
do not own, with rights distributed more equally.  Hence the two 
mechanisms can lead to the same outcome only by a fluke. Indeed, 
distributions of consumption caused by the market and those collec 
tively  preferred  by  citizens  must  be  systematically different  since 
democracy offers those who are poor, oppressed or otherwise miser 
able as a consequence of the private ownership of productive resources 
an apportunity to find redress via the state. 
·This work has been supported in part by grants from the National Science Foundation 
and a Fellowship from the German Marshall Fund.