This chapter aims to develop a theory of state intervention relating to the issue of large-scale economic change which involves substantial changes in technology and institutions. The author compares three alternative ways to understand the role of the state- welfare economics, neoliberalism, and institutionalism. He claims that the roles the state should play are entrepreneurship to provide a vision for the future and building new institutions, and the management of conflicts that arise during structural change. The chapter also shows how different market economies have managed the process of structural change.
