Political Resources and Direct State Intervention: The Adoption of Public Venture Capital Programs in the American States, 1974–1990

• Published in: Social forces 1998-06, Vol.76 (4), p.1323-1345
• Main Authors: Leicht, Kevin T., Jenkins, J. Craig
• Format: Article
• Language: English
• Subjects: Capital formation; CAPITALISM; Community Development; Corporatism; Deindustrialization; Democracy; Economic development; Economic Policy; Economic resources; Energy resources; Entrepreneurship; Federal intervention; Federal states; Globalization; Government; Government intervention; Industrialization; Intervention; Intervention (Federal government); INTERVENTIONISM (MILITARY, POLITICAL, AND/OR ECONOMIC INTERFERENCE BY A SOVEREIGN STATE OR AN INTERNATIONAL AGENCY IN THE AFFAIRS OF ANOTHER SOVEREIGN STATE); Investment; Legislatures; Manufacturing Industry; Policy Formation; Policy making; Political aspects; Political theory; Politics; Public Finance; Public investment; Public Sector Private Sector Relations; Sociology; Sociology of organizations and enterprises. Bureaucracy and administration; Sociology of work and sociology of organizations; State Government; State Intervention; States (Political Subdivisions); Treaties; U.S.A; United States; United States of America; UNITED STATES, 1945 TO PRESENT; USA; Venture capital
• ISSN: 0037-7732; 1534-7605
• DOI: 10.1093/sf/76.4.1323

Discussions of policy formation have reached an impasse with accumulating support for rival theories. We address this impasse by advancing a "political resource" theory that synthesizes class-, state-centered, neocorporatist and institutional ideas to explain policy formation in advanced capitalist democracies. Political institutions constitute infrastructural resources that condition the instrumental resources of class actors and channel the effects of class mobilization. Capitalists have systemic power by virtue of the state's dependence on private capital accumulation. We use this theory to explain the direct economic intervention of state governments in the U.S. in creating public venture capital programs in the 1970s and 1980s. An event history analysis shows that the adoption of these programs was shaped by a mesocorporatist "pact" combining capital/labor peak association bargaining with administrative capacities, structural dependence on corporate profits and manufacturing industry, professionalized state legislatures pressured by deindustrialization and the loss of instrumental resources due to declining Federal transfers to state governments. In an era of globalization and economic restructuring, the subnational state has become a centerpoint for industrial policy innovations in pluralistic states like the U.S.