In recent years there has been a return to the idea of an ‘authoritarian advantage’ in economic development for states with limited political competition and relatively centralized political order. Underlying the authoritarian advantage argument are two competing ideas about economic dynamics that frequently go unexamined. The first set of arguments draws on a neoclassical economic axioms and focuses on the role of the state in ensuring secure and stable property rights for investors while the second argument draws on the East Asian developmental state literature and focuses on the ability of the state to incentivize and discipline capitalists. The problem with both of these approaches is that the structural features of the economic sphere, its characteristics of production, questions of income distribution, the dynamic interdependencies between supply, demand and the search for profits, that are all vitally important in understanding paths of economic transformation, are largely overlooked. This paper explores the problems and limits of the ‘authoritarian advantage’ argument by examining the changing role of the state in the economy in Tanzania since independence.