Markets and States: Against Minimalism

The optimal size of government, the adequate quantity of state intervention is a core issue in modern economics. Besides economic reasoning, the debate has an ideological side. Some people argue for the general superiority of market, while others claim that the presence of a strong government is unavoidable in modern economic systems. Nevertheless, besides ideological beliefs, there are economic rationales for both views. In this paper I overview these arguments and attempt to provide a theoretical framework to analyze the necessity of state intervention. I claim that the presence of market failures can ‘legitimize’ state intervention. However, the government also often tends to fail and its failures might make the situation worse. Return to the market could be an answer for that, but nevertheless, there may be other alternatives. In this paper, I argue that informal institutions (culture, norms) are also able to correct certain imperfections of free market without a claim for an authority.

World Development, 1993

Time and again we are reminded that capitalism is more about competiveness and its advantages than ownership. Critics say that what we find today is not planning for people but planning for capital. Does this auger well for India " s faster and more inclusive growth? That way even in the classical capitalist growth theory does not preclude petering of growth. State activity then is necessary to make " stationary state " a state of activity if not of growth. There is entry for " state in the market " .The " State " has evolved, so has its functions, the latter often overlapping. The changes have been more in " domain " than in " direction " in general. From the era of laissez faire to state socialism and then to neo-liberalism, in every phase and every reform, " market " has been the crux of the matter. Again from non-interventionist, free market policy to public distribution and to the present privatisation bogey and further to the need for market/globalisation management, the debate goes on.While some pay eulogy to the market pointing out state failure, others hail the government (state) pointing out the market failure. That means the solutions lie in finding the right balance between the state and the market which is precisely what China and India are trying to do now. Although the debate " state versus market " per se is an old one, the recent changes in the international political economy have deepened the debate. More generally, the trends of the past decade have generated considerable debate about the role of knowledge, transnational corporations (TNCs), and multilateral institutions as vehicles for promoting growth and development. While the virtues of economic globalisation and the liberal market-oriented ideology continue to reign, evidence abounds of an increasing unease with the effects of unbridled market forces. In India for instance, besides the visible ills of globalisation (and/or marketization) including ecological imbalance, the perceived ones also have made the both the central and state governments to go in for more and more safety nets and public programmes like food security, job guarantee, direct cash transfer etc., in the name of market regulation.The present paper while considering some theoretical insights to the debate, tries to make a conscious decision to seek modern expressions of the major perspectives, viz., liberalism, economic nationalism, and structuralism. We also try to examine how – as Geoffrey Underhill feels – state and market make up a matrix or a " condominium " , i.e. " an integrated ensemble of governance " in order to move in a more welfare-oriented and redistributive direction. The limitations of the study: need to consider the complex situations in the functions of all the layers of the government in a federal setup , and the viewpoints of all the stakeholders, citizens, corporates etc., to focus upon the new trends in citizen centric governance.

Public Administration Review, 2012

The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.-JOHN MAYNARD KEYNES, "The End of Laissez-Faire" The agenda for reform that has emerged in the course of this Report calls for governments to intervene less in certain areas and more in others for the state to let markets work where they can, and to step in promptly and effectively where they cannot. In many countries this calls for a stronger orientation toward the market and a more focused and efficient public sector role. History suggests that this is the surest path to faster growth in productivity, rising incomes, and sustained economic development. Judging by their recent activities, many governments in industrial and developing countries have come around to this view. But economic policy

International Affairs and Global Strategy Vol.20, 2014

Contradictory views persist among neoliberals, social democrats and social liberals regarding relationships between free market and the nation State. In one hand, neoliberals suggest that the development of the free market puts constraints on the role of the state. Yet empirical evidence to support this view is lacking and range of commentators show not only resilience but even the expansion of state spending. Moreover, the article highlights that the State has welcomed globalization for the betterment of the society and subsequently it is restructuring itself to accommodate the changes to be effective on a desired way.

2000

The Oxford Handbook of Transformations of the State, 2015

This chapter is about the role of the state in the economy and how it has changed over the past seven decades in the liberal market economies of the developed world, which are marked by high levels of market competition. In the terminology of this Handbook, these are the "liberal states" of Britain (UK), Canada, the United States (US) and Ireland-the cases considered here. The analysis begins by considering (in Section 1) how these states have been portrayed in the literature. Although the timing of shifts in the role of the state varies across countries, the focus of this analysis is on changes and continuities across two broad periods: a Keynesian era (Section 2), running from World War II to the end of the 1970s, often described as a golden age of high rates of economic growth: and a subsequent neoliberal era (Section 3), marked by slower rates of growth and efforts to increase the role of markets vis-à-vis states in the allocation of resources. Alongside commonalities, Section 4 considers diversity in national responses, and Section 5 considers the future trajectories of the liberal state.

The article offers a critique of the prevailing understanding of the relationship between neoliberalism and classic nineteenth-century liberalism in contemporary international political economy (IPE) and offers a redefinition inspired by Polanyi and Gramsci. Within critical IPE studies, a consensus has emerged that neoliberalism cannot be reduced to a simple attempt to roll back the economy and let loose free-market forces. However, this insight relies on contrasting neoliberalism with a classic liberalism, that is, a simple attempt to implement just this naïve laissez-faire ideology. In contrast, this article argues that nineteenth-century liberalism is also characterised by an active use of state and legislative power. Through a historical study of two cases from nineteenth-century Britain, Poor Law reform and the Gold Standard, the paper will argue that state action played a central role even during the heyday of laissez-faire liberalism. With a starting point in Polanyi’s dictum that ‘laissez-faire was planned’, this reinvestigation will point towards a need to develop a more nuanced understanding of the distinctions between economic theory, ideology, and practical policy, as well as pointing towards a general reinterpretation of the role of the state in liberal economic ideology. KEYWORDS: Neoliberalism, classical liberalism, economic governance, state theory, history of economic thought, critical political economy

Problems of Economic Transition, 1994

The Journal of Philosophical Economics, 2012