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Explaining Energy Adjustment Policy

The difference between international politics as it actually is and a rational theory derived from it is like the difference between a photograph and a painted portrait. The photograph shows everything that can be seen by the naked eye; the painted portrait does not show everything that can be seen by the eye, but it shows, or at least seeks to show, one thing that the naked eye cannot see: the human essence of the person portrayed.

Hans J. Morgenthau, 1960

Disruptions in international oil markets and rapidly escalating prices during the 1970s generated a wide range of socioeconomic challenges to which government leaders in the industrial world were forced to respond. The unfolding events of that decade prompt two questions. First, why did the United States campaign for a concerted international response while officials in the other major nations were emphasizing narrower, national programs? Differences in policy reflected both distinctive conceptions of what was at stake and divergent capacities for solving energy and related problems. They also had fateful implications for the inclination of states to join in cooperative actions that would foster mutual gains. Second, why did American officials move from international to domestic and from interventionist to market policies? A process of trial and error was at work. What motivated executive officials to move through a sequence of proposals, and why did some ideas fail and others succeed?

These questions, and the larger issue of the capacity of states to cope with international political and economic change, require a theoretical appreciation of the bases of state action. Various literatures address the explanation of policy outcomes. Building upon several promising lines of analysis, I present an institutional approach to understanding adjustment policy.


In seeking to explain the actions of states, analysts make a basic distinction between sources of state behavior that emanate from the international system and those that come from the domestic system.1 “Systemic” explanations trace state actions to the structure of incentives and constraints created by the international system as a whole. Societal explanations trace state actions to pressures and constraints generated within the domestic political system, where theorists have attempted to explain foreign economic policy by focusing on the play of private group or class interests (“society-centered” explanations) or by focusing on the shaping and constraining influence of government institutions and the officials within them (“state-centered” explanations).

Systemic Explanations

The international system, according to systemic theorists, generates enduring and powerful pressures on nation-states and, consequently, on foreign economic policy. The basic features of the international system of concern to these theorists are found within three arguments about the international system central to the Realist tradition of analysis. First, the international system is dominated by sovereign states, each beholden to no higher authority than itself nor to any purpose higher than the protection of the nation’s territorial integrity and material well-being. Second, the primacy of states and their substantive interests stem from the anarchy of the international system. Cooperative agreements and mutual restraint may flourish at various historical moments, but behind international cooperation is the enduring absence of authority to enforce agreement. Finally, in a system so constituted, states tend to behave purposively and pursue what their representatives perceive to be national or state interests.2

The structure of the international system has a basic and relentless impact on state action. It should be understood, according to Kenneth Waltz, in terms of an ordering principle (e.g., anarchy) and a particular distribution of power. The international system is similar in structure to the market in that both are systems created by self-regarding actors. The system, Waltz argues, is the unintended yet inevitable and spontaneously generated outgrowth of activities by nation-states concerned fundamentally with their own survival. Different types of systems generate different international outcomes; multipolar systems, for example, tend to be less stable than bipolar ones. Recurring patterns of international behavior are explained in terms of the enduring organizational structure of the international system.

Other systemic theorists address more proximate international outcomes, such as policy coordination and the creation and maintenance of regimes. The theory of hegemonic stability, for example, attempts to account for such outcomes as international economic openness and regime strength in terms of the distribution of economic capabilities among the major powers of the system. Because of the power and interests of dominant states, it is hypothesized, hegemony will lead to openness and stable regimes.3 Some systemic theorists have gone beyond general incentives and attempt to specify more precise sets of state goals. In developing a theory of “international economic structure,” for example, David A. Lake constructs a deductive framework that specifies variations in expected national trade strategies based on the relative international economic position of nations. The relative size and productivity of national economies provide the crucial situational variables that weigh on the likely trade strategy chosen by particular nations.4

Changes in the behavior of nation-states, and in system outcomes, are explained by systemic theorists in terms of changes not in the internal characteristics of nation-states but in the system itself or in the relative position of particular nation-states. Waltz argues that “it is not possible to understand world politics simply by looking inside of states,” but systemic theory is constructed at such a level that it does not require the analyst to look inside the nation-state at all. This level of analysis provides the situational context for state action, by setting the outer boundaries within which policy must be constructed and sustained.5

Systemic theory does not intend to explain foreign policy. The international system generates incentives and constraints; it rewards and punishes the actions of states.6 But it does not provide a theory of state action as such. More differentiated systemic theories, such as Lake’s, do provide specific sets of national preferences that self-interested states are likely to follow. Once again, however, the ability of states to perceive and act upon those interests hinges on domestic circumstances. The virtue of the international-centered approach is that it provides the situational context for foreign economic policy. Explanation of actual policy outcomes requires additional conceptual variables that reside within nation-states.

Society-Centered Explanations

Societal explanations trace outcomes back to the domestic forces or political groups that lay claim to foreign economic policy. Societal interests and groups, and their impact on policy outcomes, are conceptualized in various ways. Two prominent society-centered approaches stress different elements within society that influence or shape policy outcomes.

Drawing on pluralist theory, the interest-group approach focuses on the play of organized groups within the policy process. Policy is the outcome of the competitive struggle among groups for influence over specific policy decisions. Government institutions provide an arena for the competition among groups and do not decisively bias the decisions that emerge. In its simplest formulation, this approach anticipates a spontaneity and fluidity in the involvement of interest groups in policy making. Various types of groups—industry associations, unions, consumer groups—are activated and form coalitions on the basis of the particular issues at stake. As issues change, so do the groups involved and their coalitions. This pluralist formulation does not directly relate interests and the involvement of groups in policy making to broader social structures. Explanations for policy outcomes emerge from the societal interests at stake and the groups that effectively organize to get involved in decision making.7

This approach has been used widely in the analysis of foreign economic policy. Various scholars have explained American trade policy, for example, in terms of the domination of private groups.8 Government is understood to be primarily passive, either providing a neutral arena or acting as a disinterested referee. Societal groups make demands, government supplies policy; policy is the outcome of shifting group coalitions. If the character of societal interests is understood, the explanation of policy follows easily.

A second approach, developed to explain policy outcomes in comparative perspective, employs a larger-scale and more structured conception of societal interests and groupings. Most prominently, Peter Gourevitch has traced distinctive national economic policies during the Depression of the 1930s to systemic differences in the position of (broadly drawn) social and industrial groups. The major social groups he identifies—agriculture, industry, and labor—are further divided in terms of international competitive position, and resulting model of societal or sectoral interests provides the basis to explore cross-national variations in coalitional limits and possibilities. Shifts in policy are traced back to shifts in sectoral preferences (understood as a function of the sector’s changing “situation” within the international economy) and the emergence of cross-sectoral coalitions. When societal interests and groupings are understood, an explanation of policy follows.9

Society-centered explanations locate the domestic groups and coalitions that gain advantage from particular policy outcomes and that may support or sustain those policies. Yet they do not help us when the interests and capacities of groups are themselves influenced or shaped by larger domestic institutional structures. The organizational structure of the state, and the preference of administrators and politicians who occupy positions within that structure, may weigh heavily in policy outcomes. State structures, by shaping the institutional terrain where policy struggles are played out, can have an important if indirect influence on access to decision making and the resources that bear on decision making. State officials also may blunt, shape, or ignore the activities of social groups. An approach that focuses exclusively on social groups, in sum, captures only the demand for policy, not its supply.

To understand how policy responds to societal demands, we need a more explicit understanding of the “black box” of the state. In trade policy, for example, the responsibility for decision making was gradually transferred from the Congress to the executive branch in the decades following the disastrous Smoot-Hawley tariff of 1930. Interest-group demands for protection did not abate, but executive institutions were less responsive to those demands.10

State-Centered Explanations

A substantial literature incorporates the state into societal understandings of foreign economic policy, developing state-centered explanations in two ways. First, unlike the interest-group approach, it finds the state able to develop and implement autonomous preferences, even in the face of pressure from private interests. Foreign economic policy is not simply the hostage of societal groups; the state may be able to resist or blunt interest-group or class demands in favor of its own independent set of policies. Attention focuses on state officials who, pursuing their own agenda, develop and seek to implement an autonomous set of preferences. Second, the organizational structure of the state may have broader and often unintended effects on the interests and capacities of individuals and groups—private groups and public officials alike—and, consequently, on policy outcomes. The state, in this view, is a set of well-entrenched institutions that undergird the policy process and influence the outcomes.

The first line of inquiry focuses on the autonomy of goals embraced by state officials and their impact on policy. In American policy on raw materials, for example, Stephen Krasner identified a set of peculiarly “state” goals that systematically triumphed over the competing interests of private corporations.11 The autonomous actions of the state came from decision makers in the executive who, by virtue of their insulated position, were able to conduct foreign policy in accordance with a stable set of goals. Government institutions are not simply an arena of policy conflict from this perspective; they also provide platforms from which executive officials can pursue distinctive goals that are not easily traceable to the interests or activities of private groups and may in fact provoke powerful societal opposition.

The autonomy of state officials may also stem from the role that policy experts and bureaucrats play in the policy process. In the emergence of welfare policy in Britain and Sweden, for example, Hugh Heclo argues, civil servants were instrumental in developing and implementing breakthroughs in social policy. Many forces influenced policy—stages of economic development, struggles of interest groups and political parties, leadership of government administrators—but Heclo concludes that the bureaucracies in both countries were the leading agents of policy innovation.12

If state officials have some degree of autonomy, what are the origins of state interests?13 One response stresses the importance of bureaucratic or narrow organizational interests. The maintenance or expansion of bureaucratic missions and control over budgetary resources, according to this perspective, lead to systematic and autonomous government actions.14 Another response suggests the importance of bureaucratic problem solving and social learning. Government officials, Heclo argues, are as much engaged with “puzzling” as they are with “powering.” Policy innovations may emerge as straightforward efforts by officials to anticipate or react to a variety of socioeconomic crises and dilemmas.15 A third response focuses on the unique foreign policy mandate of executive officials.16 Organizational position within government is decisive; it is why these officials tend to hold policy views that differ from those of other officials within government and from those of societal groups. None of these three approaches gives clear-cut, a priori predictions as to when and in what ways government officials will pursue autonomous goals. In each case the question remains empirical, a matter of reconstructing the actual behavior of government officials.

The broader organizational structures of the state, within which bureaucratic and executive officials operate, form the focus of a second state-centered literature. It is concerned with the origins and dynamics of state structures and with the impact of these organizational structures on policy outcomes. This state-centered literature is rooted in Max Weber’s political sociology of the state. Weber understood the modern state to be a compulsory association claiming sovereign and coercive control over a specific territory and population.17 It is distinguished from other social organizations by its monopoly claim on the legitimate use of violence. Force is not the only means available to the state, and in most countries it is rarely exercised, but it is the only means specific to the state. All other instrumentalities are built around it. Within a defined territory, the state’s monopoly on force is the precondition for the sanctioning of law and property rights and, ultimately, for resolving political conflict. Everything else follows from this circumstance.18

Weber grants the state a significance unto itself as a set of relatively differentiated organizations that are not reducible to or merely reflect socioeconomic setting. Built around legal and bureaucratic institutions, the state both is distinct from and interacts with other economic and social structures.19 The independence of the modern state from society and economic classes is bound up with the search for legitimate forms of political domination and the resulting emergence of legal-rational authority. Comprehensive legal rules, manifest in formal government organizations, provide legitimacy to the stable set of expectations rulers and ruled alike attach to the exercise of political power.20

The Weberian perspective leads to the identification of the general characteristics of states, but recent theorists explore variations in the institutional characteristics of states and their interrelationships with larger political, economic, and social structures. They are concerned with specifying the nature of and variations in state capacities. The goals state officials develop and their ability to carry them out depend on existing institutional tools and resources.21 In addition, the interests and capacities of social groups and classes are shaped and influenced by prevailing organizational structures of the state.22

Fundamental to the state-centered perspective is the belief that government activities and public policy are not simply expressions of societal demands or straightforward responses to international political and economic conditions. The organizational structures of the state and the administrators and politicians within them exert powerful influences on the circumstances and activities of policy making. Organizational structures influence the types of policies likely to be generated and successfully implemented by influencing the access groups and individuals have to policy making and the resources they are able to wield. State structures thus affect the capacity of various individuals and groups to pursue their goals. Moreover, politicians and executive officials are positioned to pursue policy goals that do not merely reflect social interests. These state officials, enabled and constrained by organizational structures, may blunt, reshape, or ignore social demands on policy. At the same time, they are well placed to interpret and act upon the pressures and opportunities that arise from the nation’s changing international position.

The strength of this structural, state-centered approach is its focus on enduring institutions within which government officials and private groups and individuals are situated. For those interested in explaining policy outcomes, however, the approach has weaknesses as well. An exclusive focus on state structures may obscure important interactions between public and private actors. The organizational characteristics of societal groups and classes may be as important as the formal characteristics of the state to the ability of state officials to implement policy. Moreover, the structural orientation of the approach may obscure the importance of individual behavior and of political process in shaping specific outcomes.23 The organizational structures of the state may constrain individuals and groups, but they do not exclude individual action. At particular historical junctures those organizational structures may in fact be altered or transformed.

I find the state-centered line of inquiry promising because of the questions it asks. A focus on foreign economic policy (or, more specifically, energy adjustment) leads to questions about state capacity, about the ability of government officials to develop and implement effective policy in order to deal with large-scale international political and economic problems. State capacity must, however, be formulated in such a way as to allow societal and international variables to be integrated into explanations of policy outcomes.


The perspective I am developing is an institutional approach. As I argued earlier, the most promising analysis does not simply replace societal and systemic explanations with state-centered explanations. Rather, the task is to appreciate the interaction of these variables and the manner in which the organizational features of the state and the activities of executive officials and politicians mediate larger societal and international forces. This approach is “institutional” because it conceives of mediation and interaction as grounded in institutional relationships that persist over time and that are relatively resilient against the idiosyncratic actions of groups and individuals.24

I follow three lines of this institutional approach as they relate to the politics of energy adjustment. First, I focus on the manner in which political and economic crises reveal the forces that sustain and reshape the organizational structures of the state. Second, I examine the types of state actions that are likely to follow from variations in the larger domestic and international setting of the state. Finally, I examine variations in the capacities of state officials and in their organizational underpinnings.

State Formation and U.S. Intervention in the Energy Sector

All states have core organizations that carry out fiscal, coercive, judicial, and administrative activities within their domain. Variations abound, however, in the activities and organizational structures of states, both between states and within states over time. The role of representative or parliamentary bodies, the centralization and coherence of bureaucratic organizations, and the political resources and access to decision making of executive officials are all aspects of the prevailing organizational structures of the state. At this general level, therefore, we are looking at the “architecture” of the state and its interlocking parts.

State structures are important because they tend to persist over long periods of time and because they serve to shape and constrain the actions of groups and individuals struggling over public policy. Politicians and bureaucrats at any given moment are not in a position to create state capacities to meet specific challenges. The institutions within which these individuals operate and the legacies of previous policy constrain the possibilities for current policy action. Because institutions are neither fluid nor able to respond to the immediate needs of state officials, they exert a powerful influence on what officials can actually accomplish.25

A variety of historical forces has shaped the origins and trajectories of modern states and given them distinctive organizational characteristics. Variations in the sequence and timing of political and economic development and the state-building responses to economic depressions and wars have had powerful effects on representative and bureaucratic organizations. In advance of the spread of democratic institutions, for example, many European nations constructed powerful administrative organizations that strengthened the role executive officials could play in subsequent periods of economic and political development.26 War and geopolitical conflicts in the nineteenth and twentieth centuries also helped centralize European state bureaucracies, creating incentives for the development of extensive capacities for economic intervention and extraction.

In the United States the constitutional mandate of the nation’s founding preserved a loose federal system that dispersed sovereignty across national, state, and local levels and among judicial, congressional, and executive branches. In the nineteenth century, when European state bureaucracies were expanding, the United States remained a government of courts and parties. Highly competitive political parties and patronage-oriented democratic politics strengthened the role of congressional-centered government. The spread of a mass-based, democratic political system in the United States preceded the establishment of centralized administrative institutions, unlike in Europe, and this sequence of political development served to constrain bureaucratic centralization throughout the nineteenth century.27

The relatively isolated economic and geopolitical position of the United States in the decades prior to World War I also reinforced a congressionally dominated political system. Large internal markets and the absence of a large, capable government bureaucracy permitted hierarchical and integrated business enterprises to grow in the late nineteenth century. Whereas European nations developed extensive institutional relationships between business and the state in this formative industrial period, American public officialdom played a subsidiary role in economic development.28

The basic organizational features of the American state were built upon but largely unchanged during the world wars and Depression of the twentieth century. Involvement in the world wars did not have the same effect on state building in the United States as it did in Continental Europe. America mobilized for war with a variety of temporary administrative programs that brought private business directly into the offices of the state. These state-sponsored, but privately run, emergency programs were easily disassembled in the postwar years, largely preserving the decentralized organizational features of the state.29

This preservation of the state’s decentralized and fragmented organizational structure is striking in comparative perspective, but some islands of bureaucratic capacity did emerge. In the 1930s the Depression and a changing international economic environment provided an impetus for executive centralization in trade policy. Passage of the Reciprocal Trade Agreements Act of 1934 (RTAA) signaled a longterm transfer of responsibility for trade policy from Congress to the executive. The result was a decline in the direct influence that societal groups could wield over trade policy. Later, World War II put the United States in a position to act upon the new set of international demands and opportunities, and the crisis of war and the subsequent emergence of Soviet-American hostilities had catalytic effects on foreign and economic policy institutions and the power of the executive. Franz Schurmann argues that there were systematic interactions between war, ideology, and executive power. The crisis of war acted to “increase the power of the executive levels of organization.” At the same time the unrivaled international position of the United States in the later stages of the war and its aftermath gave Presidents Franklin Roosevelt and Harry Truman extraordinary opportunities to articulate a broad “ideological vision” that also strengthened the role of the executive.30

Conceptions of organizational structure are useful in situating the role and capacities of groups and state officials as they struggle over policy at particular historical periods. Left at this architectural level, however, they assume that groups and individuals are automatically channeled into courses of action that conform to the overarching organizational structure of state and society. We need also to focus on moments when groups and individuals seek to change or overcome institutional constraints, and in particular on efforts by executive officials and other individuals to build new state capacities. An understanding of the dominance of a private system of petroleum production and distribution in the United States and the “weak” position of executive officials must take into account the timing and phases of industrial and bureaucratic development in the decades spanning the turn of the century. Several critical periods of American political and economic history shaped for decades the structure of relations between the private petroleum industry and public officials.

State involvement in the petroleum industry was fixed in organizational structures that were not easily altered. Government-industry relations in the industry conformed to a more general pattern in which the state’s regulatory involvement in industrial activities was highly circumscribed. This pattern, striking in comparative perspective, is part of the broad historical development of business and state organization in the decades spanning the turn of this century. Distinctive are the rise of big business organization, conflict between large and small firms, and the limited techniques available to the state in its efforts to get involved in industrial affairs. Government-business relations were also fixed in ways specific to the petroleum industry, because of the international and domestic evolution of the industry, the state’s involvement in mediating industrial conflicts, and the periodic concern of state officials with issues of energy supply and energy security.

Attempts to extend state capacities in the energy sector were sporadic and fragmentary, an exercise that left executive officials with few planning capacities and mechanisms for involvement. At moments of crisis for national security, executive officials made efforts either to become more directly involved in energy production or to develop added planning capacity. Such initiatives were generally blocked or dismantled after the crisis had passed. Institution building did not survive the crises that provoked it.

The Janus-Faced State and Strategies of Adjustment

States participate in both domestic and international political systems. Made up of different organizational capacities and modes of operation, states occupy a unique position to mediate internal and external change—J. P. Nettl’s image of a gatekeeper is apt.31 The international and domestic activities and capacities of states are inextricably linked. Untangling the logic of the state’s Janus-faced relationship with its international and domestic settings provides an initial understanding of the bases of state action.

Although states vary widely, all are composed of organizations that make exclusive claims to the sovereign and coercive control of a territory and its population. These monopoly claims legitimate a variety of core activities: the raising and disbursement of revenue, the promulgation and enforcement of rules and property rights, and the maintenance of political order. States also claim to define and represent broad national interests and seek to protect and advance those interests in the face of international competition.32

States are thus separate from but enmeshed in a complex set of relationships with society. It is a conception of the state captured most effectively in historical analyses of states at their moments of birth. Charles Tilly has sketched a series of relationships between war making, capital accumulation, extraction, and European state making. He notes that leaders of nascent states, engaged in war with adjacent powerholders, needed to extract resources from local producers and traders: “The quest inevitably involved them in establishing regular access to capitalists who could supply and arrange credit, and to imposing one form of regular taxation or another on the people and activities in their sphere of control.” But capitalists were capable of movement (they had what Albert Hirschman calls “movable property”), and therefore state officials had to form alliances with various social classes and to foster capital accumulation. At the earliest moments in the building of European states, state leaders were confronted with a double-edged imperative: to harness domestic wealth so as to strengthen the state’s foreign position, and to do so in a way that would not scare off capitalists or diminish economic growth.33

State intervention can stifle economic growth and diminish revenues even when mobility of productive resources is low. International competition, and the resulting need of the state to extract societal resources for military and foreign policy purposes, may constrain states even in relatively closed national economies. Indeed, the logic of a state’s bargaining relationship with a society extends beyond considerations of economic growth. As Tilly notes, “the processes of bargaining with ordinary people for their acquiescence and their surrender of resources—money, goods, labor power—engaged the civilian managers of the state in establishing limits to state control, perimeters to state violence, and mechanisms for eliciting the consent of the subject population.”34 This underlying dilemma—the continuing need for the state to extract resources and impose costs on the society and economy while maintaining the confidence of economic actors and the consent of the population—is no less acute for the contemporary state. All states share these core features and face these basic domestic dilemmas, but they differ widely in the manner in which they are organized and the extent to which they can draw resources from and impose costs on the society and economy.

The domestic activities of the state cannot be separated from its participation in the larger system of states. International geopolitical and economic pressures and opportunities, for example, can prompt states officials to attempt internal socioeconomic reforms or to direct the course of national economic development—activities that may or may not conflict with domestic social and economic interests. The ability of the state to protect or enhance the nation’s international position hinges in important respects on the internal political and material resources of the nation and the state’s access to them.35

Likewise, the state’s international activities are intimately tied to its domestic position. The international system can provide an arena for state officials attempting to solve domestic problems, typically as states try to extract resources and political support from other states. Leaders of developing countries, for example, often find foreign aid and diplomatic recognition vital to the maintenance or enhancement of their domestic political standing.36 Equally important, state officials may seek international agreements to redistribute or mitigate the economic and political costs of international economic change, thereby reducing the political and economic burdens those state officials would otherwise shoulder.37

A state’s international position depends on its relative military and economic capabilities. These international capabilities refer to its access to and influence over the international system—access to and influence over the behavior of other actors. Similarly, the state’s domestic position depends on its ability to perform a range of activities such as the reallocation of productive resources and the imposition of costs on the economy and society. Variations in these domestic and international capacities have implications for the manner in which states pursue adjustment policy.

The international position of a state influences its policy of adjustment. The more powerful the state is, the more it will emphasize international strategies. States that are strong internationally will attempt to solve adjustment problems within the international arena, thereby distributing the costs of adjustment among nations and re-during individual burdens. International strategies of adjustment usually require cooperation among nations. All states might benefit from an international strategy, but only powerful states can wield the political and economic resources necessary to gain agreement on their own terms and to induce others to accede to their wishes. In principle, combinations of weak states can agree to an international offensive strategy but, at the very least, they will find it difficult to do so. As a result, less powerful states are likely to emphasize domestic strategies.

Table 2. Distribution of gross economic resources among the five major market-economy countries, 1960–1980

The international position of a state can be gauged by a variety of measures. Indicators particularly relevant to the position of industrial countries relative to international petroleum markets are provided in Tables 2 and 3. The distribution of gross economic resources indicates that, despite a decline in relative position, the U.S. economy remained a clear international leader throughout the 1970s.

More revealing are measures of relative capability in the energy area. Although U.S. import dependence grew in the years following the 1973–74 crisis, imports remained a far smaller percentage of total energy consumption than in Europe and Japan. Aggregate imports were approximately half the size of European imports and roughly similar to those of Japan. The relative share of oil imports in domestic energy consumption was low, but the absolute share of imports in total imports by industrial countries was high, giving the United States greater opportunities than other consuming countries to exercise influence over international oil markets. Its large absolute share of imports gave the United States the ability to alter international supply and prices; the small place of those imports in domestic energy consumption meant that the costs of curtailing imports would be smaller for the United States, everything else being equal, than for other industrial importing countries.

These indicators suggest that in 1973, the United States was in a favorable international position to influence the course of the oil crisis. However, the United States did not have surplus domestic production, a resource that had proved important in responding to earlier disruptions in international markets. To exercise its potential market power, therefore, the United States had to cut domestic consumption of imports. Unlike in previous supply disruptions, it could not simply release excess domestic production onto world markets. The substantial international capabilities of the American state thus hinged on its domestic capabilities; in this case, its ability to cut imports and adjust to higher oil prices.

Table 3. Petroleum imports of major Western countries, 1971–1979

b) Oil imports (thousand barrels daily)

c) U.S. oil balance

The domestic position of the state influences the strategy of adjustment. The more constrained a state is by its relations with its economy and society, the more it will emphasize international strategies of adjustment. States that find it difficult to impose costs on their domestic societies will be more inclined to seek international solutions. Conversely, states that have the capabilities to redeploy domestic resources and impose the costs of change on society will emphasize domestic offensive strategies.

These relationships between the domestic and international capacities of states and adjustment strategies combine to provide a fuller set of propositions about state action. States that are internationally powerful but domestically constrained will have a dominant interest in an international strategy of adjustment; such was the position of the United States as it entered the oil crisis of 1973–74. U.S. executive officials pursued an international offensive strategy after 1973, although the nation’s international power was insufficient for the strategy to succeed. States that are less powerful internationally, but that can redeploy domestic resources and impose costs on society, will emphasize domestic strategies of adjustment. The Europeans (the French most prominently) and the Japanese were in this position in 1973. None of these states was powerful internationally in the energy area, but each had various means to influence the course of domestic energy adjustment.

Disparities in international and domestic positions led the advanced industrial states to adopt initially divergent strategies of adjustment. I am not proposing a theory about the determinants of international collaboration. Rather, the advanced industrial states were confronted with divergent international and domestic constraints and opportunities, which influenced national preferences for specific forms of international agreements. In the American case, domestic constraints on adjustment (particularly oil price controls) made international options more attractive. At a later point those constraints made it difficult for the United States to play the international leadership role it envisaged. In contrast, the European and Japanese states had a wider array of options to pursue energy adjustment on a national or regional basis, and so to then the American proposals seemed less necessary.

The divergent positions of various states did not preclude international cooperation—indeed, some forms of cooperation emerged during the second oil shock. But the availability or absence of other options clearly influenced the value that states attached to cooperation. The failure of cooperative schemes forced U.S. officials to confront domestic capacities for adjustment, and in particular the organizational foundations of state capacities.

State Capacities and Alternative Adjustment Strategies

The role and capacities of executive officials are influenced by the organizational structures of the state in which they are situated. In the United States these structures are characterized by a fragmentation of political sovereignty across levels and branches of government and have left executive officials with a relatively modest bureaucratic planning capacity and few mechanisms for direct intervention in specific sectors. Organizational structures, however, are not immutable. At moments of national crisis, politicians and administrative officials have sought with varying degrees of success to expand their capacities to respond to economic crisis and change. Moreover, the capacities of executive officials should not be measured simply in terms of the mechanisms at their disposal. The ability to abstain from intervention or withdraw from specific sectors of the economy can also be crucial to the successful pursuit of policy objectives.

From conceptions of the capacity of executive officials that focus on the policy process and situate its characteristics within broader structures of state and society have emerged general propositions about the ability of leaders to accomplish state goals and about the weakness and strength of advanced industrial states.38 A variety of organizational structures differentiate states according to their capacities. John Zysman, who is interested in the abilities of advanced capitalist states to become involved as coherent and weighty actors in industrial adjustment, focuses on mechanisms of recruitment in the national civil service, degree of centralization within government civil service, and independence of the civil service from legislative oversight. These characteristics of government structure, he argues, can be combined into a single measure of a state’s capacity for intervention.39

The character of specific “policy networks” and “policy instruments,” Peter Katzenstein argues, are shaped by the larger structures of state and society. The manner and effectiveness with which states can intervene in their economies are directly related to the character of their policy networks and the range of policy tools available to government officials: “The number and range of policy instruments emerge from the differentiation of state and society and the centralization of each.” Each advanced industrial country represents a different balance between state and society.40 Zysman is more concerned with the capacity of specific bureaucractic institutions, but both writers have notions of broad differences in the capabilities of states—differences derived from the historical play of political and economic development. State strength, they suggest, is fundamentally reflected in the organization and resources of bureaucratic government and its insulation from competing actors.

The most prominent strong state in these formulations is France, where permanent organizations of government officials have access to numerous policy tools and resources they can legitimately deploy in the regulation of a wide range of social and economic activities. There is every reason to place the state at the center of political analysis. Direct and indirect policy instruments can be used selectively to influence private economic decisions and practices. Moreover, networks of officials from private firms, state enterprises, and administrative bureaus reinforce the state’s influence over the economy. French policy networks for trade, finance, and energy policy, Katzenstein finds, are state-centered, and American policy networks are society-centered.41

The United States is the exemplary weak state. The American state is fragmented and decentralized, possessing few of the instruments and resources necessary for strategic intervention in the economy and society. In no single issue-area is there a comprehensive, effective policy planning agency, much less for government as a whole, despite repeated presidential attempts to construct one. Frequent turnover among high-level executive officials and narrow divisions of bureaucratic authority create a “government of strangers” and severely hinder the emergence of effective bases of power.42 The United States is not simply a late bloomer, but its political institutions are fundamentally malformed for the emergence of a strong state.

Useful in identifying variations in policy instruments and resources available to state officials, this approach helps us understand why U.S. officials had trouble with direct production of energy in the 1970s and soon turned to subsidies. However, strong and weak characterizations do not capture the nuances and variations in the capacities of states. The strong state of France has been challenged by descriptions of the role of intrest groups and clientilistic relationships more extensive than earlier depictions of a centralized, autonomous state recognized.43 Recent studies of Japanese state-society relations also reveal a state bureaucracy severely constrained by interest groups and political parties.44 Clearly state strength is more complex than a strong-weak distinction can capture.45

Likewise, the simple image of a weak American state, able to do little more than register interest group demands, is misleading. We need a more differentiated conception of state capacity, one that probes more deeply the fit between particular policy instruments and particular crises. It is precisely the search for such a fit that involved American executive officials in a sequence of adjustment proposals during the oil shocks of the seventies. In this sense, the capacity of the state must be discovered by the officials who seek to exercise it.

Moreover, state capacity is more than the expansion of state controls or activities. The withdrawal of direct regulatory controls or the abstension from intervention may also provide evidence of state capacity. Such considerations frustrate simple distinctions between strong and weak states and lead to an exploration of variations in state capacities within a single nation across time and issue-areas.

In the course of American energy adjustment, politicians and executive officials attempted to build additional state capacities for coping with the problems of energy adjustment. These efforts came on the heels of the failure of international cooperation. The early efforts at state building sought to increase the information about energy available to policy makers—this was the rationale of Project Independence. Later, a small group of officials proposed to create capacities for the direct financing of energy exploration and production, as in earlier crises seeking to enlarge the direct management ability of the state. These proposals failed, opposed by a wide array of interest groups and public officials within Congress and the executive branch. Some opponents feared the encroachment of the state on the private operation of energy finance and production. Others were skeptical about the purposes to which new state capacities would be put or about the possibility of their being subverted by private interests. At the same time the institutional legacy of the past weighed heavily on proposals for change. In particular, the scarcity and fragmentation of bureaucratic expertise and operational capability provided few bases from which to build new government powers and responsibilities. What state builders in the 1970s needed were organizational toeholds. Without them, state-building proposals were easily defeated.

Executive officials fell back on capacities or mechanisms that the American state has always favored. An enormous upsurge in spending made use of a traditional instrument of public policy, and a modest administrative organization was created to channel energy R & D funds into private hands. The spending option was attractive both to Congress and to the executive, particularly when financed from the proceeds of a tax on windfall oil profits. Senators and representatives could use the funds to nourish a wide assortment of constituencies; executive officials could use the programs to influence larger patterns of energy research and development. Nonetheless, research funding could not address immediate energy problems. Indeed, as these spending programs grew in size, they made the problems posed by price and allocation controls all the more apparent.

In the end executive officials discovered that the reconstruction of market pricing for petroleum was the most effective approach to energy adjustment. They faced formidable domestic obstacles. Petroleum price controls, enacted prior to the 1973–74 shock, partially shielded consumers and also advanced the commercial position of segments of the petroleum industry. These interests, represented in Congress, pushed successfully to preserve and extend price and allocation controls. Consequently, the move toward market pricing itself required vigorous state action.

The notion that the capacities of the state may be exercised in the withdrawl and not merely the extension of government controls is not appreciated by those who associate strength with direct state involvement in the economy and society. The analytical confusion lies in the dichotomy of state and market. The state (or authority) and the market (or exchange) are separate and distinctive modes of organization or social control, and, as Charles Lindblom argues, nations differ in the degree to which “market replaces government or government replaces market.”46 But differences in the balance of market and government activity are not in themselves indications of the strength or weakness of the state or of private enterprise. The political and economic ends that markets serve and the forces that organize and sustain those markets are empirical matters.

The state may organize or extend markets in the service of national and geopolitical objectives, of course, and the seminal statement of this view is Karl Polanyi’s study of the nineteenth-century rise of English capitalism. Polanyi argues that the emergence of national markets was the result not of the “natural” and gradual expansion of nascent local and transnational trading relationships but rather of deliberate state policy. The construction of markets in England was the product of actions by a mercantilist state that saw national economic development as vital to strengthening the nation’s international position.47

States also make more limited and sometimes very sophisticated efforts to enforce or extend market relations for a variety of political objectives. Japanese industrial policy, for example, occasionally uses as its central instrument the selective opening of domestic markets to international competitive pressures. State officials have used such market openings to encourage the rationalization of a domestic industrial sector; at other times they may wield the threat of market opening to encourage businesses to comply with other industrial policy goals. At the very least, the use of market mechanisms is likely to serve a mixture of private interests and state policy goals.48

In the United States the decision taken in 1979 to decontrol oil prices was not simply or primarily a ratification of private commercial interests. The policy itself was politically costly to the Carter administration and engaged executive officials in an elaborate set of moves to ensure its success. In preceding years, officials had pursued a variety of adjustment policies, involving efforts to transform the state’s role in the energy sector as well as programs to distribute massive amounts of funds through existing government mechanisms. In the end, however, executive officials found that their most powerful tool was a return to the market.


My purpose is to explain why the industrial nations traveled divergent paths in their pursuit of energy adjustment and to explore the implications of these divergent strategies for international cooperation among nations. I also seek to account for the evolution of energy adjustment in the United States, which began with an international strategy and ended with a decision to decontrol oil prices. A proper understanding of American energy policy requires that we pay attention to the activity of executive officials as they are influenced and constrained by larger international and domestic structures. In exploring the contours of energy adjustment, therefore, we are examining the larger logic of national adjustment to international change.

In this book I develop an institutional approach that advances several lines of analysis. First, I situate the organizational position of executive officials in the 1970s in the larger historical trajectory of state formation. Politicians and bureaucrats labor under the weight of prior state building. The institutions in which these officials operate and the legacies of previous policy inhibit opportunities for policy action.

Second, I relate adjustment strategies to the broad international and domestic position of states. Energy adjustment is part of a larger set of challenges that arise in the course of international economic change. The challenge of adjustment can be met through the pursuit of either domestic or international policies, and in both domains policy can entail restructuring or protecting the existing order. At this general level, the strategic choices made by executive officials depend on state capacity; officials in a state that finds it difficult to impose change on its own domestic system will emphasize international strategies. This logic of domestic and international strategies played itself out in the early years of the 1973–74 crisis and helps explain the failure of international cooperation on energy adjustment.

Finally, I develop my institutional approach by paying attention to the manner in which the organization structures of the state shaped the domestic sequence of American adjustment policies. Organizational structures of the state are crucial not only in which executive officials seek to accomplish but also in how they articulate what is at stake. They limited the types of policies executive officials could successfully pursue and help explain the sequence of energy adjustment strategies. This focus on executive officials shaping strategy but being constrained by the organizations they occupy orients my analysis.

1See Kenneth Waltz, Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979).

2See Robert O. Keohane, “Theory of World Politics: Structural Realism and Beyond,” in Ada W. Finifter, ed., Political Science: The State of the Discipline (Washington, D.C.: American Political Science Association, 1983); John A. Vasquez, The Power of Power Politics (New Brunswick: Rutgers University Press, 1983); and Robert G. Gilpin, “The Richness of the Tradition of Political Realism,” International Organization 38 (Spring 1984), 287–304.

3See Robert O. Keohane, “The Theory of Hegemonic Stability and Changes in International Economic Regimes, 1967–1977,” in Ole Holsti et al., Change in the International System (Boulder, Colo.: Westview, 1980), pp. 131–62; Stephen Krasner, “State Power and the Structure of International Trade,” World Politics 28 (April 1976), 317–43; and Krasner, ed., International Regimes (Ithaca: Cornell University Press, 1983).

4David Lake, “Beneath the Commerce of Nations: A Theory of International Economic Structures,” International Studies Quarterly 28 (1984), 143–70; “International Economic Structures and American Foreign Economic Policy, 1887–1934,” World Politics 35 (July 1985), 517–43; and Power, Protection, and Free Trade: International Sources of U.S. Commercial Strategy, 1887–1939 (Ithaca: Cornell University Press, 1988).

5Waltz, Theory, p. 65. See the critique of systemic theory in Robert O. Keohane, After Hegemony (Princeton: Princeton University Press, 1985), pp. 25–29.

6The impact of international structure on state action is described in this literature in terms of constraints. Waltz argues that “actors may perceive the structure that constrains them and understand how it serves to reward some kinds of behavior and to penalize others. But then again they either may not see it or, seeing it, may for any of many reasons fail to conform their actions to the patterns that are most often rewarded and least often punished. . . . The game one has to win is defined by the structure that determines the kind of player that is likely to prosper.” Waltz, Theory, p. 92.

7The seminal statements of the pluralist perspective are Arthur F. Bentley, The Process of Government (Chicago: University of Chicago Press, 1980); David B. Truman, The Governmental Process: Political Interests and Public Opinion (New York: Knopf, 1951); and Robert A. Dahl, Who Governs? (New Haven: Yale University Press, 1963). Subsequent revisions of the pluralist model of policy making dispute many of its elements but retain the basic society-centered focus. See Theodore J. Lowi, The End of Liberalism (New York: Norton, 1969), and Charles E. Lindblom, Politics and Markets (New York: Basic Books, 1977).

8See, for example, E. E. Schattschneider, Politics, Pressures, and the Tariff (New York: Prentice-Hall, 1935); Raymond A. Bauer, Ithiel de Sola Pool, and Lewis Anthony Dexter, American Business and Public Policy: The Politics of Foreign Trade, 2d ed. (Chicago: Aldine-Atherton, 1972); and Peter F. Cowhey and Gary C. Jacobson, “The Political Organization of Domestic Markets and U.S. Foreign Economic Policy,” University of California, San Diego, unpublished paper, 1984.

9Peter Gourevitch, Politics in Hard Times: Comparative Responses to International Economic Crises (Ithaca: Cornell University Press, 1986). For a similar approach see Tom Ferguson, “From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression,” International Organization 38 (Winter 1984), pp. 41–94. This societal approach is compatible with an instrumental neo-Marxist orientation. See Jeff Frieden, “From Economic Nationalism to Hegemony: Social Forces and the Emergence of Modern U.S. Foreign Economic Policy, 1914–1940,” International Organization 42 (Winter 1988).

10See Robert Pastor, Congress and the Politics of U.S. Foreign Economic Policy, 1929–1976 (Berkeley: University of California Press, 1980); Judith Goldstein, “Ideas, Institutions, and Trade Policy,” and Stephan Haggard, “The Institutional Foundations of ‘Hegemony’: Explain ing the Reciprocal Trade Agreements Act of 1934,” both in International Organization 42 (Winter 1988); and I. M. Destler, American Trade Politics: System under Stress (Washington, D.C.: Institute for International Economics, 1986).

11Stephen D. Krasner, Defending the National Interest (Princeton: Princeton University Press, 1978).

12Hugh Heclo, Social Policy in Britain and Sweden (New Haven: Yale University Press, 1974), p. 301.

13Peter Gourevitch, for example, argues that “the basic problem with this line of reasoning is that it provides no explanation for the orientation of state policy in the supposedly state-dominated countries.” See “The Second Image Reversed: The International Sources of Domestic Politics,” International Organization 32 (Autumn 1978), 903; see also Philippe Schmitter, “Neo-corporatism and the State,” in Wyn Grant, ed., The Political Economy of Corporatism (New York: St. Martin’s, 1985).

14See, e.g., Graham Allison, Essence of Decision: Explaining the Cuban Missile Crisis (Boston: Little, Brown, 1971), and Morton H. Halperin, Bureaucratic Politics and Foreign Policy (Washington, D.C.: Brookings, 1974).

15Hedo, Modern Social Policy, p. 305.

16See especially Krasner, Defending the National Interest.

17See Max Weber, Economy and Society, ed. Guenther Roth and Claus Wittich (Berkeley: University of California Press, 1978), p. 56.

18Max Weber, “Politics as a Vocation,” in From Max Weber: Essays in Sociology (New York: Oxford University Press, 1946), p. 78. For an elaboration of this view see Peter P. Nicholson, “Politics and Force,” in Adrian Leftwich, ed., What Is Politics? The Activity and Its Study (Oxford: Blackwell, 1984), pp. 33–45. The point is captured by Samuel E. Finer: “Tell a man today to go build a state; and he will try to establish a definite and defensible territorial boundary and compel those who live inside it to obey him. Having done this he will have founded his State” Finer, “State-building, State Boundaries and Border Control,” Social Science Information 13 (1974), 79.

19The Weberian distinction between state and society is noted by Randall Collins: “Individuals or groups are coordinated on two analytically distinct principles, which correspond to the spheres of ‘society’ and ‘state.’ In the sphere of ‘society,’ groups are formed as ‘constellations of interests,’ in which the parties act together voluntarily for what they feel is their mutual benefit. Such groups are formed on two bases: coincidence of interests in the economic market, and feelings of identity with others who hold a common culture or ideal. In the sphere of the ‘state,’ coordination is based on domination, in which one individual or group is placed in a position to enforce his will on the others. Such coordination is based on an organizational apparatus of domination and on some kind of principles of legitimacy. In both spheres of action, there is a struggle for advantage. . . . Individuals struggle for advantage within organizations, and organizations struggle with each other.” Collins, “A Comparative Approach to Political Sociology,” in Reinhard Bendix, ed., State and Society: A Reader in Comparative Political Sociology (Berkeley: University of California Press, 1968), pp. 48–49.

20Weber, Economy and Society, 1:212–26.

21See Peter J. Katzenstein, ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978), and John Zysman, Governments, Markets, and Growth (Ithaca: Cornell University Press, 1983).

22E.g., Theda Skocpol and Kenneth Finegold, “State Capacity and Economic Intervention in the Early New Deal,” Political Science Quarterly 97 (1982), 255–78; Margaret Weir and Skocpol, “State Structures and the Possibilities for ‘Keynesian’ Responses to the Great Depression in Sweden, Britain, and the United States,” in Peter Evans, Dietrich Rueschemeyer, and Skocpol, eds., Bringing the State Back In (New York: Cambridge University Press, 1985), pp. 107–63.

23This argument is made by Peter Hall, Governing the Economy: The Politics of State Intervention in Britain and France (New York: Oxford University Press, 1986). For a critique of “state-centered structuralism” see Margaret Levi, Of Rule and Revenue (Berkeley: University of California Press, 1988).

24See the discussion of this approach in James March and Johan P. Olsen, “The New Institutionalism: Organizational Factors in Political Life,” American Political Science Review 78 (September 1984), 735; Stephen D. Krasner, “Approaches to the State: Alternative Conceptions and Historical Dynamics,” Comparative Politics 16 (January 1984), 223–45. Peter Hall also describes his enterprise as an institutional approach, in Governing the Economy.

25The inertial characteristics of institutions are discussed in the Conclusion. See also G. John Ikenberry, “Conclusion: An Institutional Approach to American Foreign Economic Policy,” International Organization 42 (Winter 1988).

26See Charles Tilly, ed., The Formation of National States in Western Europe (Princeton: Princeton University Press, 1975); Gianfranco Poggi, The Development of the Modern State (Stanford: Stanford University Press, 1978); Reinhard Bendix, Kings and People: Power and the Mandate to Rule (Berkeley: University of California Press, 1978); and Michael Mann, “The Autonomous Power of the State: Its Origins, Mechanisms and Results,” Archives europeennes de sociologie 24 (1984), 185–213.

27See Stephen Skowronek, Building a New American State: The Expansion of National Administrative Capacities, 1877–1920 (New York: Cambridge University Press, 1982), and J. Rogers Hollingsworth, “The United States,” in Raymond Grew, ed., Crises of Political Development in Europe and the United States (Princeton: Princeton University Press, 1978).

28See David Vogel, “Why Businessmen Distrust Their State: The Political Consciousness of American Corporate Executives,” British Journal of Political Science 8 (1978), 45–78. See also Andrew Shonfield, Modern Capitalism: The Changing Balance of Public and Private Power (New York: Oxford University Press, 1965), pp. 298–329.

29For a discussion of wartime mobilization, see Robert A. Dahl and Charles E. Lindblom, Politics, Economics, and Welfare (New York: Harper, 1953), pp. 402–12.

30Franz Schurmann, The Logic of World Order (New York: Pant heon, 1974), pp. 8, 21‒22.

31J. P. Nettl, “The State as a Conceptual Variable,” World Politics 20 (July 1968), 559–92.

32This definition of the state is drawn from Weber, Economy and Society, 1:56, and Otto Hintze, “The State in Historical Perspective,” in Reinhard Bendix, ed., State and Society (Berkeley: University of California Press, 1968), pp. 154–69. See also Theda Skocpol, States and Social Revolutions (New York: Cambridge University Press, 1979), esp. pp. 30–32.

33Charles Tilly, “Warmaking and Statemaking as Organized Crime,” in Evans, Rueschemeyer, and Skocpol, Bringing the State Back In, p. 172, and Albert Hirschman, “Exit, Voice, and the State,” World Politics 31 (October 1978), 90–107. Douglas C. North spells out this fundamentally double-edged relationship between state and capital, presenting a more elaborate utility-maximizing model, in Structure and Change in Economic History (New York: Norton, 1981). See also Margaret Levi, “The Predatory Theory of Rule,” Politics and Society 10 (1981), 431–65, and John A. C. Conybeare, “The Rent-Seeking State and Revenue Diversification,” World Politics 35 (October 1982), 25–42. The state exchanges the provision of particular services (e.g., the maintenance of property rights) for privately generated revenue. It attempts to structure these services so as to maximize revenue. The state is constrained, however, since there is always the possibility that rivals can provide the same services. North argues: “Where there are no close substitutes, the existing ruler characteristically is a despot, a dictator, or an absolute monarch. The closer the substitutes, the fewer degrees of freedom the ruler possesses, and the greater the percentage of incremental income that will be retained by the constituents” (Structure and Change, p. 27).

34Charles Tilly, Big Structures, Large Processes, Huge Comparisons (New York: Russell Sage Foundation, 1985).

35This observation is emphasized by classical Realists. See Hans J. Morgenthau, Power among Nations, 6th ed. (New York: Knopf, 1985), and E. H. Carr, The Twenty Years Crisis, 1919–1939; An Introduction to the Study of International Relations, 2d ed. (London: Macmillan, 1962), chap. 8.

36See W. Howard Wriggins, The Rulers Imperative: Strategies for Political Survival in Asia and Africa (New York: Columbia University Press, 1969).

37For a general discussion of international-domestic linkages see G. John Ikenberry, “The State and International Strategies of Adjustment,” World Politics 39 (October 1986). See also Ikenberry, David A. Lake, and Michael Mastanduno, “Toward a Realist Theory of State Action,” unpublished paper, 1986.

38See Peter J. Katzenstein, “International Relations and Domestic Structures: Foreign Economic Policies of Advanced Industrial States,” International Organization 30 (Winter 1976), 1–45; Katzenstein, Between Power and Plenty; Krasner, Defending the National Interest, esp. chap. 3; and Zysman, Governments, Markets and Growth.

39Zysman, Governments, Markets and Growth, p. 300. For discussions of the higher civil service see Ezra Suleiman, Politics, Power and Bureaucracy: The Administrative Elite (Princeton: Princeton University Press, 1974); John A. Armstrong, The European Administrative Elite (Princeton: Princeton University Press, 1973); Hugh Heclo, A Government of Strangers (Washington, D.C.: Brookings, 1977); and Suleiman, ed., Bureaucrats and Policy Making (New York: Holmes & Meier, 1984).

40Peter J. Katzenstein, “Conclusion: Domestic Structures and Strategies of Foreign Economic Policy,” in Katzenstein, Between Power and Plenty, and Katzenstein, “International Relations and Domestic Structures,” International Organization 30 (Winter 1976), 15.

41See Andrew Shonfield, Modern Capitalism: The Changing Balance of Public and Private Power (London: Oxford University Press, 1965), pp. 121–50; Suleiman, Politics, Power and Bureaucracy; and Katzenstein, “International Relations and Domestic Structures,” P. 43.

42Heclo, A Government of Strangers.

43In a new study of the French state and the notarial profession, Ezra Suleiman takes issue with the conventional, strong state image. Suleiman argues that the capacities of the French state are best understood in historically cyclical terms, where the interventionist efforts of a strong state to reshape societal groups result in transformations of relations with society and, utimately, in a diminution of state capabilities. See Private Power and Centralization in France: The Notaires and the State (Princeton: Princeton University Press, 1988). See also Jack Hayward, The State and the Market: Industrial Patriotism and Economic Intervention in France (Brighton: Wheatsheaf, 1986); Harvey B. Feigenbaum, The Politics of Public Enterprise: Oil and the French State (Princeton: Princeton University Press, 1985); and Helen Milner, “Resisting the Protectionist Temptation: Industry and the Making of Trade Policy in France and the United States during the 1970s,” International Organization 41 (Autumn 1987), 639–65.

44See the new interpretations of Japanese state capacities in Richard J. Samuels, The Business of the Japanese State: Energy Markets in Comparative and Historical Perspective (Ithaca: Cornell University Press, 1987), and David Friedman, The Misunderstood Miracle: Industrial Development and Political Change in Japan (Ithaca: Cornell University Press, 1988). The distinctive symbiotic relations between Japanese state and economy—what he calls “organized capitalism”—are also discussed by Ronald Dore in Flexible Rigidities: Industrial Policy and Structural Adjustment in the Japanese Economy, 1970–80 (Stanford: Stanford University Press, 1986).

45See also G. John Ikenberry, “The Irony of State Strength: Comparative Responses to the Oil Shocks in the 1970s,” International Organization 40 (Winter 1986), 105–37.

46Lindblom, Politics and Markets.

47Karl Polanyi, The Great Transformation (New York: Farrar & Rinehart, 1944).

48Daniel Okimoto, Between MITI and the Market (Stanford: Stanford University Press, forthcoming), and John Zysman and Stephen S. Cohen, “The Mercantilist Challenge to the Liberal International Trade Order,” paper prepared for the Joint Economic Committee of the U.S. Congress, 1982, p. 12. For a recent analysis of these relationships and processes of “mutual adjustment,” see Michael Barzelay, The Politicized Market Economy: Alcohol in Brazil’s Energy Strategy (Berkeley: University of California Press, 1986).

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