To a greater or lesser extent, the institution of the state plays an important role in society as a whole. In this sense, it acts directly in every kind of aspect: the justice , the security , the system education in public health programs in media communication , etc. State Interventionism
It is usually used to refer to the active role of the state in a nation’s economy. As in other matters, for some interventionism is totally necessary and legitimate, while others consider it unnecessary and a source of conflict.
In favor of the economy plan
For some analysts, the state has an obligation to actively participate in a nation’s economy. In this sense, it is argued that the recent financial crises occurred as a consequence of insufficient state regulation. When the state does not control the financial system, it can generate economic bubbles with very negative effects on society as a whole. State Interventionism
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;
4) public spending.
This type of tool used by the state has obvious effects on consumption, economy, productivity, product prices and inflation. In some cases, intervention paradoxically consists of not intervening (this occurs when the state decides that the consumption of certain products is tax free). State Interventionism
Proponents of interventionism consider that the state must act as a fair arbiter that imposes useful rules on different actors in the economy.
Liberal economists are the main opponents of state interventionism in the economy. In this sense, they consider the free market and unrestricted capitalism to be the best recipe for economic development.
Liberalism emphasizes the importance of freedom in all areas of economics: the freedom to undertake a business , to negotiate or enter into contracts between individuals. Obviously, any freedom-inspired approach opposes the idea of interventionism.
Liberals consider that the active role of the state in the economy is associated with increased public spending. This expense becomes a drag on the economy, as it inevitably causes an increase in taxes paid by citizens.
From a liberal point of view, the citizen’s money stays in his pocket and from there he decides what to do with it. When the main decisions are taken by the state, the economic forces of a country weaken and there is a general impoverishment of its inhabitants. State Interventionism