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Author:
Vito Tanzi, International Institute of Public Finance, Munich, Germany

The Elusive Search for Harmony between the Role of the State and that of the Market

Volume 75 - Issue 4 - Papers in memoriam of Amedeo Amato, November 2022
(pp. 623-642)
JEL classification: B10; B20; D60; H10; I30; P10
Keywords: Laissez Faire; Use of Economic Resources; Income Distribution; Harmony; Ideological Changes

Abstract

Since the creation of modern states, states that were democratic and used market economies, there has been the question of what should be the economic role of governments. During the many years when the prevailing ideology was “laissez faire”, the answer was that governments had very few basic responsibilities and available economic resourced should be directed exclusively toward increasing output, without any attention to the distribution of income. After the years of the Great Depression and the Second World War, views started to change and welfare states that paid attention to income distribution and to the well being of all the populations came into existence. After the decade off the 1970s there was a tentative return of policies to more laissez faire. The result was uneven income distributions in many countries. The paper stresses the difficulty in reaching harmony between the role of the state and that of the market.


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Institute for International Economics
of the Genoa Chamber of Commerce


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