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

Vito Tanzi
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Vito Tanzi: International Institute of Public Finance, Munich, Germany

Economia Internazionale / International Economics, 2022, vol. 75, issue 4, 623-642

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.

Keywords: Laissez Faire; Use of Economic Resources; Income Distribution; Harmony; Ideological Changes (search for similar items in EconPapers)
JEL-codes: B10 B20 D60 H10 I30 P10 (search for similar items in EconPapers)
Date: 2022
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