Skip to main content

f6ba490446f86f380ef13b27_tb0281c.jpg Tim Brinton

Balancing the State and the Market

The financial and economic crisis that erupted in 2008 has dented faith in the market, while trust in government and regulation is increasing. But we must resist the temptation to believe that a meddling, paternalistic state is the way of the future.

BERLIN – The financial and economic crisis that erupted in 2008 will, in retrospect, be regarded as a transformative moment, because it raised fundamental questions about the future shape of our economic systems. These questions are not so much about the end of capitalism – as some perceive or even desire – but rather about the different ways in which capitalism is understood in different countries.

What we are witnessing today is a reversal of the debates of the 1980’s. Back then, Ronald Reagan used to joke: “The nine most terrifying words in the English language are: I’m from the government and I’m here to help!” Now that governments have spent trillions of dollars, euros, yen, and pounds on stabilizing financial markets and the economy in general, those words seem far less terrifying.

In fact, faith in the market has been dented, while trust in government and regulation is increasing. After decades of consensus that the state should set the rules and otherwise leave the private sector alone, the state is now widely seen as a beneficial force that should play an active role in the economy.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/AKKdNvG;
  1. mallochbrown10_ANDREW MILLIGANAFPGetty Images_boris johnson cow Andrew Milligan/AFP/Getty Images

    Brexit House of Cards

    Mark Malloch-Brown

    Following British Prime Minister Boris Johnson's suspension of Parliament, and an appeals court ruling declaring that act unlawful, the United Kingdom finds itself in a state of political frenzy. With rational decision-making having become all but impossible, any new political agreement that emerges is likely to be both temporary and deeply flawed.

    1
  2. sufi2_getty Images_graph Getty Images

    Could Ultra-Low Interest Rates Be Contractionary?

    Ernest Liu, et al.

    Although low interest rates have traditionally been viewed as positive for economic growth because they encourage businesses to invest in enhancing productivity, this may not be the case. Instead, Ernest Liu, Amir Sufi, and Atif Mian contend, extremely low rates may lead to slower growth by increasing market concentration and thus weakening firms' incentive to boost productivity.

    4

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions