This thesis examines the way the state intervenes in the labour market for youth through an analysis of the implementation of the Youth Training Scheme. It adopts a dynamic model of policy formulation and delivery to explore the extent to which the state is able to compensate for the crises of contemporary capitalism. The first part of this thesis looks at the way in which theories of the state translate into theories of state intervention and the assumptions these make of the ability of the state to intervene. It argues that current theories do not adequately consider the way in which policy is continually renegotiated throughout its delivery. The failure to consider the institutional form of the state has lead to both normative and conspiratorial theories of state intervention. These have commonly considered the outputs of policy rather than its delivery. It is also maintained that policy analysis has not systematically related the evaluation of policy to a theory of the state. The second part analyses the implementation of the Youth Training Scheme as an example of an intervention by the state into the labour market. It shows, through an empirical analysis that policy objectives are renegotiated throughout the delivery of the programme. In particular the research looks at the way in which the Youth Training Scheme emerged in three constrasting labour markets. The research focusses on the recruitment to, and training within, schemes to illustrate the effects of labour market structure on the outcome of the programme. This analysis takes into account the structure into which policy is delivered as well as the institutional constraints on policy implementation. By using the dual focus of the state and the capital/labour relationship a framework for the analysis of policy in the sphere of production is developed.