Not Yet Ready for Prime Time Entrepreneurial State
Be prepared! The cards are reshuffled; the tectonic plates of policy-making shifted. Our history is repositioning to state government—away from sub-state. The increased role/importance of state government—and, by the 1970’s, it can’t be ignored–is a major league shift in our professional and policy history. New strategies, goals, programs, relationships, actors/EDOs and modifications of past observations. A quite different policy system/process appeared on the stage after 1980.
In this chapter, the “story of the State” appears but does not assume final form. Part of the reason for this is that states do not magically, “enter stage right on que”—but instead speak their lines loudly, softly, dribble and stumble through the 1990’s. State leadership of the sub-state system is not unequivocal until after the turn of the century. Even then, it is a question of degree—many states allow substantial ED/CD decentralization. In any case, the “state-sub-state system (“SSS”) is a tension-filled network of EDOs, competing strategies, programs and tools, an ever-shifting locus of decision-making, and, a sorting out of responsibilities/goals by level of government.
What is clear is states asserted themselves, thrust by their increased capacity, bad times, Big City implosion, recession and deindustrialization and population loss, into leadership roles, starting in the Seventies and pick up steam thereafter. In retrospect, today we blame Reagan, but the shift began more than a half-decade before his election. States, at least in these years did not crowd out the heretofore dominant sub-state; they created their own agendas, strategies and defined new goals which were existed alongside those of sub-state jurisdictions. States responses vary, because of their history, political cultures, state of jurisdictional economic bases, and their region. Indeed, the rise of states reflected our two cultural ships, while clearly showing how culture was “updated’ to respond to new conditions, environments and tasks.
State governments originally settled by the Yankee Diaspora, most of which were former Big City hegemony states seem most affected. Southern states had already “rose” a half-century or more earlier. Municipalities still exerted considerable leadership in most western states. This time around it was the northern hegemonic states; they were the ones under pressure. Growth was their explicit goal—a growth that was clearly threatened by decline. That’s why the economic debate that accompanied and fueled the rise of states was called at the time, the Great Reindustrialization Debate. This history cannot hope to cover the varied timing and content of every State government in these transition years; we will try instead to use detailed case studies of states to describe their definition and process of dealing with the Transition Years changes.
David Osborne captured a behind the scene tapestry that linked many of the “new wave” governors and state-level “entrepreneurial” economic developers of this period. Today Osborne (Laboratories of Democracy) probably ranks last among three books on the rise of state governments that appeared in 1988. R. Scott Fosler’s “the New Economic Role of States” is next and the king is Peter Eisinger’s the Rise of the Entrepreneurial State. Each offers much in accordance with their different “takes” on the rise of state phenomena.
Amazingly, the three talk about the rise of American states, but in fact they all focus on a subset of states—mostly the same states. Osborne and Fosler describe the same states (Massachusetts, Michigan, California and Arizona) while the former adds Arkansas, Pennsylvania, and New York while the latter Tennessee, Indiana and Minnesota. Eisinger, the most theoretical and conceptual, portrays the rise of a “demand-side” entrepreneurial states as not only recent (1980’s) but national in scope with most states to some degree getting on board with a “new” and increasingly pervasive form of economic development. If one, however, looks at the book’s index, it is easy to quantify that those states that exceed three index lines (usually by multiples) are: California, Connecticut, Illinois, Massachusetts, Michigan, New York, Ohio, Pennsylvania, Wisconsin and North Carolina. Alabama and Mississippi exceed three lines because they describe their earlier “bad boy” status. Most of these states are certified former hegemonic industrial states, and of the commonly-shared core states nearly all were significantly settled by Yankee immigrants. There is a behind-the-scenes-tale underneath the rise of 1980’s entrepreneurial states.
That tale was best captured by Osborne—and, in fact, it could be considered his predominant theme. Among other characteristics, those behind the changes, the rise of the entrepreneurial state, were mostly Democrats (or Rockefeller-style liberals– like Milliken, Thornburg and Rockefeller himself–and Sixties-style “neo-liberals” (like Blanchard, Dukakis, Babbitt, Brown, Clinton, and Mario Cuomo] precluded from national power who turned instead to state office Their key economic developers were professionally seasoned in political backgrounds (Lee Webb, William Schweke, Robert Friedman, Michael Barker, Walt Plosila, Peter Plastrik, Doug Ross, Peter Hansen), drawn from diverse liberals as RFK staffers and a host of McGovernites. Liberal/Progressive NGO network (including National Governor’s Association, Corporation for Enterprise Development), foundations (Mott, Ford)/think tanks, and large Democrat-leaning corporate funders are visible (and sometimes major) participants in the policy systems that launched the new innovative, demand side strategies in the late seventies and early eighties[i].
Where were the Republican-Conservatives? They were doing their own thing—to be discussed elsewhere when we talk of Reagan and devolution, block grants, limited federal government, EDZ, EIC and Section 8, and Texas State ED—but wherever they were, they were not behind the rise of the entrepreneurial states. Most states, notably those subsequently labeled as “Red States”, relied on old-style (first and second wave) goals/strategies, not the politically correct post-industrial, information age, demand side goals. They did, however, embrace new directions and strategies of their own construction which do not fit into this section.
But entrepreneurial state did capture, in my opinion correctly, the rise of states in ED, and an increased involvement in local ED. The activist state was real. What states did, how they did it, and why—is another matter entirely. If so, there may be reason to think of the new direction of state government as yet another aspect of a generational cohort entering into policy-making systems. Here lies one root of our Contemporary System’s politicization and Red State/Blue State polarization.
New Role of American States in ED
Since the New Deal, but especially after 1950, states modernized, upgraded structural and policy capacity, and developed sufficient resources “to play ball”. Most re-jiggered New Deal state planning entities into postwar ED-relevant state EDOs. These entities, typically focused on attraction and retention; they were aggressive IRB/BAWI participants in 1950’s and 1960’s. States were dragged into Sixties/Seventies economic/social disruption: inflation, stagflation, energy disruptions, unemployment, deindustrialization, regional change and shifting sectors—global opportunities and competition were commonplace. States were hard hit, expenditures went up, revenues down, taxes up and taxpayer revolts followed. Disruptions elevated economic development to a top priority in political/policy agendas.
Called into economic development action, states experimented. State ED during the Seventies and Eighties ventured haphazardly along their own individualized paths–pulled in directions that politics, political culture and economic/political pressures shoved them. Lacking an instruction manual some states tried to write one (a plan), most, however, jotted down a few notes, issued reports, hired experts, and mostly improvised strategies, EDOs, programs and tools as they went along. There was no single paradigm that emerged. There were huge regional and state variations. Former hegemonic Big City States, however, tended to what we call in the 21st Century “Blue State” ED/CD. Massachusetts is one these. Blue States picked and choose from many of the various strategies developed out of the Great Reindustrialization Debate—and they were affected by the rising community development approach. That some of these strategies competed with each other was a reality that usually was not appreciated—in many cases it still is not. The thrust of the 21st Century Blue State, however, was its reliance on an activist state government assumed responsibility to promote entrepreneurialism and rejigger local economic bases to foster innovation and knowledge-based ED, new “clusters” or agglomerations (the concepts differ widely). The forerunner to this was Eisinger’s late 20th Century Entrepreneurial State.
The entrepreneurial state focused on the “entrepreneurial function”, moving away from “supply side incentives” (direct assistance to firms and industries) toward “demand side” market/product, industry/sector/firm creation—led by, indeed created by, an activist state (and local) government (Eisinger 7-12). The entrepreneurial state was fuzzy at its edges, more coherent in the classroom than the streets. In this era, ED reinvention meant turning away from improper and ineffective business subsidies, but it did not mean turning away from capitalism itself. The 1980’s entrepreneurial State is firmly within the capitalist orbit—they referred to themselves as neo-liberals and their adherents were vital participants in much of the Great Reindustrialization Debate.
They were about Growth more than anything, creating a new economy that could compete in a resurgent global hierarchy, reverse city and neighborhood decline, and creating an entirely new set of industry gazelles—they called it innovation–that would spur depressed deindustrialized jurisdictional economic bases. In these years they embraced both universities and workers, setting the stage for a later knowledge-based economy and workforce. They were not against using government to provide incentives and foster a “business climate” to develop these gazelles. Venture capital and small business were prime targets, as well as displaced worker retraining and new skills enhancement. They were willing to work with large corporations and included many large corporation executives as supporters. Most, however, added a need for special attention to “bringing the poor into the Growth process” (Osborne, p. 11-13) so they worked on housing, health, illiteracy, education and attacked the social pathologies linked to the poor. A not-insignificant element of this rise of the entrepreneurial state involved targeting both “places” and “people”.
Linking the state with neighborhood community development corporations to provide resources and create a sufficient mass to create change in people was critical in many states. Individual economic growth was a goal, implicitly so was assimilation. The old urban renewal resistance against sprawl and Big City decentralization was alive and well in these years—neo liberals had not given up on their Big Cities. They were against welfare systems that produced dependency, and were not adverse to use welfare as a path to employment. The new governors were not adverse to use their powers to help neighborhoods, people, and CDCs. They embraced a new form of “place-based comprehensiveness” by attacking targeted depressed areas on at least three fronts: individual people transformation, restoring jobs through new industries, and rebuilding physically deteriorated landscapes. Make no mistake, the rise of the entrepreneurial states was inherently, from the get-go, a hybrid community development mainstream ED set of policies.
But there was one common unifying thread in their hybrid set of policies: the aggressive use of government. A government so rational and determined that it could screw with the “mother nature” flow of populations, profit life cycle, and three competitive hierarchies. When they looked at states they saw governors as potential “presidents” who could lead administrations bringing about change, and whose stewardship to the people permitted them to use executive powers and leadership to bring about that change. Injecting into gubernatorial powers Teddy Roosevelt’s definition of executive presidential power as “the steward of the public welfare” [with] not only the right, but his duty to do anything that the needs of the [state] demanded unless such action was forbidden by the Constitution or by the law”[ii]. The rise of the new entrepreneurial state carried with it the rise of governors, and elevated as a primary instrument and goal of their leadership an economic and community development agenda delivered by a new brand of economic developers: state-level political economic change agents and their expert administrative cadre. To assist them a new professional network, chiefly lodged in Washington, sprang into place.
In regards to state ED/CD agendas, Massachusetts was a leader. Massachusetts was not the only state to do so—by no means—but it was among the very first to develop a reasonably-formed “model”—built around more Progressive and Privatist values. Massachusetts case study begins a series of extensive case studies that document the rise of state government in these transition years. Massachusetts was a pioneer in trying to figure out how to deal with the issues raised by the Great Reindustrialization Debate—and home to Bluestone and Harrison. Massachusetts, in many ways the “bluest of the blue” found a way to permit mainstream ED to join with progressive ED at the state-level. They were a pioneer in developing a “hybrid” ED policy system. The extended description provides to the reader a sense of the complexity, experimentation, and two-step forward, one back that nearly all states exhibited in these years. The detail is our counter to the “smush” and fog of history sadly pervasive in our Contemporary ED/CD World.
[i] This we get primarily from Osborne who provides us with insight and frankness of a key dimension in the making of ED/CD policy: the people, the individuals, who made that policy. Rather than being concepts or strategies or dehumanized into numbers they are recognized as people with values and ideas, and personalities. If one wants a single reason why Osborne ranks least on today’s value list, this is it.
[ii] Roosevelt delivered in his famous ”New Nationalism” Osawatomie Kansas speech confirmed in his 1913 published biography; Jeffrey Rosen, “the Over-Inflated Presidency”, Wall Street Journal, Dec 17-18, 2016,C1-2.
Ron W. Coan 