Greater State Capacity, Lesser Stateness:

• Author: Andreas E. Feldmann,Eduardo Dargent,Juan Pablo Luna
• Published date: 01 March 2017
• Date: 01 March 2017
• DOI: http://doi.org/10.1177/0032329216683164
• Subject Matter: Articles

Politics & Society

2017, Vol. 45(1) 3 –34

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DOI: 10.1177/0032329216683164

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Article

Greater State Capacity, Lesser

Stateness: Lessons from the

Peruvian Commodity Boom

Eduardo Dargent

Pontificia Universidad Católica del Perú

Andreas E. Feldmann

University of Illinois Chicago

Juan Pablo Luna

Pontificia Universidad Católica de Chile

Abstract

This article analyzes the evolution of state capacity in Peru during the recent commodity

boom. Peru’s economic growth happened in a context in which inclusive democratic

institutions were at play for the longest period ever registered in the country and at a

time when political elites decided to invest considerable resources in developing state

capacity (not the prototypical predatory elites usually identified in the literature). This

case illustrates how boom-led economic growth can lead to the (unilateral) institutional

strengthening of a weak state. However, (net) state capacity continues to be low in Peru.

The causal mechanism that yields such continuity differs from those entertained in classic

path-dependent explanations of state capacity in Latin America. The article identifies a

novel mechanism that helped reproduce the Peruvian path intertemporally. This relational

mechanism suggests that state capacity remains low because of the relatively enhanced

capacities of state challengers to locally fend off and contest an otherwise much stronger

state apparatus. The article argues, on that basis, the need to employ a relational analysis

that gauges net state strength with respect to the power acquired by relevant non-

state actors who might challenge state authority across different local arenas. Classic

conceptualizations of state capacity are indeed relational, but conventional applications are

predominantly unilateral and, thus, misleading. Unilateral notions of state capacity are those

that focus on either state efforts and investments to assert state capacity or, alternatively,

on the presence of challenges that curtail the levels of actually observed state capacity.

Keywords

state capacity, challengers, development failure, commodity boom, Peru

Corresponding Author:

Juan Pablo Luna, Instituto de Ciencia Política, Pontifica Universidad Católica de Chile, Avda, Vicuña

Mackena 4860, Macul, Santiago de Chile, Chile.

Email: jp_luna@me.com

683164PASXXX10.1177/0032329216683164Politics & SocietyDargent et al.

research-article2017

4 Politics & Society 45(1)

Picture a country that during twelve years grows at an annual rate of 7 percent. Assume

that governing elites in that country are fiscally responsible, and allocate windfall rev-

enue to develop state capacity. As a result of those efforts, in less than a decade the

country markedly increases the supply of public schools, health clinics, prosecutor

offices, and police stations throughout its territory. Likewise, it more than doubles its

paved road network and also nearly universalizes access to potable water. One might

view this trajectory as a successful instance of state capacity building during boom

times. Yet if we look closer, particularly in economically booming localities, a very dif-

ferent picture emerges. In these areas, criminality exhibits distressing peaks while the

number of registered social conflicts more than doubles that observed before the boom.

In other words, when analyzed from a stateness perspective, our generic example points

in contradictory directions. The narrative thus resembles the trajectory of several devel-

oping nations in which commodity booms contributed to an important overhaul of the

state and the development of the state’s capacity, but in which this newfound power and

prosperity have not necessarily translated into greater levels of stateness (i.e., state suc-

cess in asserting sovereignty and governing capacity at the local level).

Contemporary Peru, the case we analyze in this article, neatly illustrates the counter-

intuitive dynamic described above. This country constitutes a case in which astonishing

economic growth rates greatly boosted state capacity on several fronts. During the last

fifteen years, state elites sought to—and did—invest the massive financial resources

yielded by the boom in developing state capacity. Intriguingly, however, the strengthen-

ing of the state was met by an equally strong growth of state challengers that benefited

from the very same boom that buttressed state capacity. The Peruvian booming econ-

omy provided incentives for the unlawful practices of legal businesses seeking to assert

control over lucrative economic sectors. Similarly, a thriving economy and the con-

comitant resources it created has enabled the emergence or strengthening of informal or

illegal agents. These social forces, which include peasants, miners, companies, and

organized crime rackets, have successfully challenged or escaped state power even

against the backdrop of growing levels of state coercive capacity. The tensions created

by rapid economic growth thus have prompted or rekindled violent social unrest.

Contradictory outcomes such as those currently observed in Peru can only be

explained by eschewing unilateral interpretations of state capacity (i.e., capabilities

approaches and those solely focused on coercive capacity). Instead, we must employ a

relational analysis that gauges net state strength with respect to the power acquired by

relevant non-state actors who might challenge state authority across different local are-

nas. Net state strength shapes the levels of stateness observed in different local arenas.1

Henceforth, we advocate the adoption of an explicit relational perspective on state

capacity. To be sure, classic conceptualizations of state capacity are indeed relational,

but conventional applications of the concept are predominantly unilateral. Unilateral

notions of state capacity are those that focus on either state efforts and investments to

assert state capacity or, alternatively, on the presence of challenges that curtail the lev-

els of actually observed state capacity. Our work thus outlines our relational approach

to state capacity and explores its lineage in the theoretical literature on the topic.

Dargent et al. 5

The relational account of state capacity that we defend in this article offers a causal

narrative that is at odds with the extant literatures that deal with developmental trajec-

tories and state building. We propose a new causal mechanism that explains the persis-

tence of weak state institutions in the context of commodity booms, a mechanism that

defies conventional explanations (e.g., the resource curse). Before arguing the analyti-

cal leverage and empirical plausibility of a relational framework in the Peruvian con-

text, we explore below the implications of our argument for a set of causal mechanisms

that figure prominently in classic and new political economy approaches to the role that

state elites and institutions play in fostering development.

The case and general argument we present in this piece posits that the combination

of institutionally fragile states and positive external shocks prompted by regional and

global forces yield counterintuitive results, whereby economic growth and prosperity

might lead to decreasing levels of (net) state capacity and stateness.2 From a political-

economy perspective, Evans distinguishes “developmental” states from “predatory”

states, with the former promoting successful industrialization in the global periphery.3

In this respect, the Peruvian state we discuss in this article is neither predatory nor

developmental. Rather, it is a state challenged and evaded by competing agents that at

the local level are better able to capture the rents created by a booming economy.

Since at least 1997, the development community has embraced the motto “institu-

tions matter.” In this literature, strong state institutions play a key role in providing

incentives for economic investment and development.4 Different authors conceptual-

ize these incentives in different ways.5 For instance, in a recent and widely acclaimed

work, Acemoglu and Robinson6 focus on regime institutions. Where democratic and

pluralistic institutions were present, societies prospered. Where rent-seeking autocrats

or oligarchies ruled, development simply failed to materialize.7 Relatedly, rent seeking

is often theorized as a pivotal mechanism in the so-called resource-curse literature,

which advances the hypothesis that resource extraction may have a negative impact

for state capacity, economic development, and democracy.8 Rent seeking associated

with natural resource booms is also linked to a greater likelihood of internal conflicts.9

However, Saylor has recently argued that the effect of commodity-boom rents on

state-making outcomes is not constant, but, rather, contingent on the social roots of

political coalitions that rule during the boom. In certain contexts, the boom might lead

to substantial gains in state capacity.10

Against this backdrop, we introduce a novel narrative about the institutional

underpinnings of developmental failures. As predicted by the resource-curse litera-

ture, Peru’s vertiginous economic growth has coincided with renewed corruption, an

increase in criminal activity (particularly of extortion rackets), and rising political

and social tensions—which often turn violent—that arise from disagreements over

the distribution of rents. Yet, the causal mechanisms driving these outcomes differ

from those theorized by the above mentioned literatures. Peru’s economic growth

happened in a context in which inclusive democratic institutions were at play for the

longest period ever registered in the country and at a time when political elites

decided to invest considerable resources in developing state capacity (not the proto-

typical predatory elites identified in the literature). This is a case that illustrates how