The market shaping state: capacities and capabilities for a new generation of mission-oriented policies

This article sets out a market-shaping theory of the public sector to confront a longstanding tension in public administration: how governments can be stable and agile at the same time, while steering complex socio-technical transformations. Conventional approaches—preoccupied with fixing market failures, chasing efficiency, and reforming management—fall short as guides to transitions across climate, care, digital infrastructure, and industrial renewal. We reconceptualise the state as a proactive shaper of markets and a co-creator of public value, and develop a three-layered framework that distinguishes structural capacities, organizational routines, and dynamic capabilities. Public value emerges through the interaction of these elements, not from any single attribute. The article also introduces and contextualizes the special issue on the new generation of mission-oriented policies, organizations, and capacities, identifying five cross-cutting themes that emerge from the seven contributions.