Development Strategies for the Twenty-First Century

The mixed economy is possibly the most valuable heritage that the twentieth century has bequeathed to the twenty-first in the realm of economic policy. The nineteenth century discovered capitalism. The twentieth century learned how to tame it and render it more productive by supplying the institutional ingredients needed for a self-sustaining market economy: central banking, stabilizing fiscal policy, antitrust legislation and regulation, social insurance and political democracy. It was during the twentieth century that these elements of the mixed economy took root in today’s advanced industrial countries. The simple idea that markets and the state are complements — recognized in practice if not always in principle — enabled the unprecedented prosperity experienced by the United States, Western Europe and parts of East Asia during the second half of the century.