ROLE OF GOVERNMENT

The Role of Government in the History of Economic Thought

Role of Government in the History of Economic Thought

INTRODUCTION

The intervention of state is the fundamental requirement of state, irrespective of whether the economy of market has the same distribution. At the intersection, economy is simple, the state has all the rights and duties for the production and distribution of goods and services. In other words, the regulation does not have any right to speak and the state has no body to be regulated by. In this situation we take about replacing the range of types of ownership and the way to answer the question “ What, how and whome to produce”- a single type of ownership of state , and the answer to the fundamental economic question of strict centralization and distribution. However, this system actually proved to be ineffective. It remains the market development. However, in a market economy the state has to constantly adjust the depth of influence. (Maunder, 1995).

The state does not stand such problems as the direct production and distribution of resources, goods and services. However, it does not have the right to freely dispose of, and resources, capital and manufactured goods, as is done in the distribution economy. In my opinion, the state must constantly balance, than increasing or decreasing the degree of intervention. The market system is particularly flexible and dynamic decision-making on the part of both consumers and from producers. Public policy simply has no right to keep up with changes in the market system; otherwise it will become effective from the stabilizer and regulator in the bureaucratic superstructure, retarding economic development. State regulation of the economy has a long history. The practice is ahead of theory (Olsen, 2005).

DISCUSSION

The Views of the Mercantilists and Kameralistov- The State's Role in the Economy

During the period of early capitalism in Europe, there was centralized control over prices, quality products and services, interest rates and foreign trade. In 1615 the Frenchman, A. De Montchretien introduced significant new term “political economy”. In his paper the author gave advice to the King of France for the best economic policy that would amass wealth for the state (Johnson, 2009).

The work of A. de Montchretien was a prerequisite to the emergence in the early 17th century in France, England and Spain such economic trends such as "mercantilism". The most striking representatives of the mercantilists were T. Man in England and Jean-Baptiste Colbert in France. Mercantilists, sought to answer the question of what should be public policy to the country's wealth increased. In their view, the wealth created in the sphere of circulation, i.e., through trade. The core principle of norm during that time was calculated by the presence of silver and gold, therefore, the state should restrict the export of precious metal out side the country, as well as the importation of goods to be traded for precious metals. At the same time the state was to encourage the production and exportation abroad for the sale of as many goods, which ...