Governance, the State, and the Market: What Is Going On?

Analyses of the ‘shrinking state’ tend to focus on the pressures being felt by the welfare state. The ‘state’ is viewed as a provider of social benefits and as redistributing wealth. To the extent these functions are being challenged the state is perceived as being ‘rolled back’ by the forces of the market. Yet the state is also involved in ‘building’ markets. This function, overshadowed in the past, has now become an important state activity. Such activity, however, is carried out by state actors different from those involved in the provision of social benefits and the evolution of the welfare state. Majoritarian institutions are largely responsible for the latter while non‐majoritarian institutions oversee theformer. Although the balance of power among different types of state actors has shifted, the power of public authority has not necessarily been ‘rolled back’ by the market.