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The role of state in the welfare of its citizens by intervention in all sectors in a country as against in a free market economy focus of the state is only on few pivotal sectors while the rest grows automatically.

A simple example for the above is that once when the economies are less privatized, the governments take care of every sector right form industrial production to food to media.

Thus when privatization came in to picture, the governments started to keep few strategic sectors with it (like military, space etc.,) and leave the rest to private. By doing this the complexity of the administration process which increased with the increase in technological advancements become manageable. Thus governments were able to focus on their core area of administration. This is claimed to be one of the reasons for recent economic crisis where private institutions became bankrupt by which the economy of US is greatly affected.

The debate became aggravated post the 2009 economic crisis where the banks are questioned for their failures by the supporters of state-controlled economy. They claim that the increased role of the markets have led to the downturn. China is proud of its state capitalization model and the present equation of private players and their dynamism is hard to reverse.

To protect the country form external shocks or internal financial mess the governments should look for ways to strengthen their market systems. It must also be understood that the state and market both are complimentary and a state along with a market that is safe will prosper.

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12y ago

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Q: Debate on state vs market
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