Definition of State Interventionism

To a greater or lesser extent the institution The state plays a relevant role in society as a whole. In this sense, it intervenes directly in all kinds of aspects: in justice, in the safety, in the education system, in public health programs, in the media, etc.

It is normally used to refer to the active role of the state in the economy of a nation. As in other matters, for some, interventionism is totally necessary and legitimate, while others consider it unnecessary and a source of conflict.

In favor from the level of the economy

For some analysts, the state has the obligation to actively participate in a nation's economy. In this sense, they argue that recent financial crises have occurred as a consequence of insufficient state regulation. If the state does not control the financial system, it can generate financial bubbles with very negative effects on society as a whole.

State intervention can be carried out using all kinds of strategies and tools:

1) a tax system,

2) subsidy and aid programs,

3) price control or

4) public spending.

These types of tools used by the state have obvious effects on consumption, savings, productivity, product prices or inflation. In some cases, the intervention consists paradoxically in not intervening (this occurs when the state decides that the consumption of certain products is exempt from taxes).

Defenders of interventionism consider that the state should act as a fair arbiter imposing useful rules on the different actors in the economy.

Counterarguments

Liberal economists are the main opponents of state interventionism in the economy. In this sense, they consider that the free market and the capitalism without restrictions are the best recipe for the economy to develop.

The liberalism emphasizes the importance of freedom in all areas of the economy: the freedom to start a business, to trade or to establish contracts between individuals. Naturally, any approach inspired by freedom is opposed to the idea of ​​interventionism.

Liberals consider that the active role of the state in the economy is associated with increased public spending. Such spending becomes a drag on the economy, as it inevitably causes an increase in taxes paid by citizens.

From the liberal perspective, the citizens' money where it should be is in their pockets and from there decide what to do with their money. If the main economic decisions are made by the state, the economic forces of a country weaken and there is a general impoverishment of its inhabitants.

Photos: Fotolia - anggar3ind / popaye

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