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

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  • Tanzi, Vito

    (International Institute of Public Finance, Munich, Germany)

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. La difficile armonia tra funzione dello stato e funzione del mercato Dalla creazione degli stati moderni, stati con carattere democratico, che funzionavano con economie di mercato, c’è stata la questione della responsabilità economica che avevano i governi di questi stati. Durante gli anni quando l’ideologia del “laissez faire” era dominante, fino agli anni Venti, la risposta era che i governi avevano poche responsabilità e le risorse disponibili ad un paese dovevano essere usate efficientemente, senza preoccupazione per la distribuzione dei redditi. Con la Grande Depressione degli anni Trenta l’ideologia cominciò a cambiare e gli stati sociali, che davano molta importanza alla distribuzione del reddito, furono creati. Negli anni Ottanta ci fu un tentativo di ritorno all’ideologia di laissez faire. L’articolo conclude che solo in pochi anni, e per poco tempo, c’è stata armonia su quello che doveva fare il mercato e quello che doveva fare lo stato nell’economia dei paesi.

Suggested Citation

  • Tanzi, Vito, 2022. "The Elusive Search for Harmony between the Role of the State and that of the Market," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(4), pages 623-642.
  • Handle: RePEc:ris:ecoint:0936
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    References listed on IDEAS

    as
    1. Fogel, Robert William, 2000. "The Fourth Great Awakening and the Future of Egalitarianism," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226256627, April.
    2. Vito Tanzi, 2018. "The Ecology of Tax Systems," Books, Edward Elgar Publishing, number 18199.
    3. Vito Tanzi, 2016. "Pleasant Dreams or Nightmares in Public Debt Scenarios?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(1), pages 40-43, June.
    4. Tanzi,Vito & Schuknecht,Ludger, 2000. "Public Spending in the 20th Century," Cambridge Books, Cambridge University Press, number 9780521662918, September.
    5. Vito Tanzi, 2016. "Pleasant Dreams or Nightmares, in the Public Debts Scenarios?," Working Papers Department of Economics 2016/10, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    6. Sinn, Hans-Werner, 2012. "Casino Capitalism: How the Financial Crisis Came About and What Needs to be Done Now," OUP Catalogue, Oxford University Press, number 9780199659883.
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    9. Tanzi,Vito, 2011. "Government versus Markets," Cambridge Books, Cambridge University Press, number 9781107096530, September.
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    More about this item

    Keywords

    Laissez Faire; Use of Economic Resources; Income Distribution; Harmony; Ideological Changes;
    All these keywords.

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General

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