State and the Market – Debate and Developments

12 Pages Posted: 2 Jan 2014

Date Written: January 2, 2014

Abstract

Time and again we are reminded that capitalism is more about competiveness and its advantages than ownership. Critics say that what we find today is not planning for people but planning for capital. Does this auger well for India’s faster and more inclusive growth? That way even in the classical capitalist growth theory does not preclude petering of growth. State activity then is necessary to make 'stationary state' a state of activity if not of growth. There is entry for 'state in the market.'

The 'State' has evolved, so has its functions, the latter often overlapping. The changes have been more in 'domain' than in 'direction' in general. From the era of laissez faire to state socialism and then to neo-liberalism, in every phase and every reform, 'market' has been the crux of the matter. Again from non-interventionist, free market policy to public distribution and to the present privatisation bogey and further to the need for market/globalisation management, the debate goes on.

While some pay eulogy to the market pointing out state failure, others hail the government (state) pointing out the market failure. That means the solutions lie in finding the right balance between the state and the market which is precisely what China and India are trying to do now. Although the debate 'state versus market' per se is an old one, the recent changes in the international political economy have deepened the debate. More generally, the trends of the past decade have generated considerable debate about the role of knowledge, transnational corporations (TNCs), and multilateral institutions as vehicles for promoting growth and development. While the virtues of economic globalisation and the liberal market-oriented ideology continue to reign, evidence abounds of an increasing unease with the effects of unbridled market forces. In India for instance, besides the visible ills of globalisation (and/or marketisation) including ecological imbalance, the perceived ones also have made the both the central and state governments to go in for more and more safety nets and public programmes like food security, job guarantee, direct cash transfer etc, in the name of market regulation.

The present paper while considering some theoretical insights to the debate, tries to make a conscious decision to seek modern expressions of the major perspectives, viz., liberalism, economic nationalism, and structuralism. We also try to examine how – as Geoffrey Underhill feels – state and market make up a matrix or a 'condominium,' i.e. “an integrated ensemble of governance” in order to move in a more welfare-oriented and redistributive direction.

Keywords: Globalisation, governance, India, market, security, state

JEL Classification: D60, D63, E02, E61, H1, O20

Suggested Citation

Hans, V. Basil, State and the Market – Debate and Developments (January 2, 2014). Available at SSRN: https://ssrn.com/abstract=2373827 or http://dx.doi.org/10.2139/ssrn.2373827

V. Basil Hans (Contact Author)

St. Aloysius Evening College ( email )

PB. No 720, St Aloysius Evening College
Light House Hill
Mangalore, Karnataka 575 003
India
0824-2449714 (Phone)

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