Role of the State Pt. 5

When I teach the History of Economic Thought, one thing we focus on is how views on the role of the state have changed over time. It has a natural cycle to it, with eras such as the highly interventionist Mercantilist years followed by Physiocratic and Classical views stressing minimal government intervention. This is followed by a rebound in the other direction, and so it goes with a Keynes followed by a Friedman in the 50s, a rebound back to Keynes in the 60s, to classical ideas following the experience of the 70s, and so on, and so on.
Protection, justice, correction of externalities, social insurance, and the provision of public goods (which I would like to have seen emphasized more above) are, in my view, legitimate roles of the state. I have more trouble when it comes to redistribution, I prefer that everyone have an equal chance in life with the chips falling where they may (with insurance against outcomes where individuals end up with too few chips). But redistribution to correct problems associated with, say, uncorrected market failures that redistribute income unfairly, or to compensate for an unequal playing field more generally, is another matter.

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Role of the State Pt. 4

The newly elected Coalition government has announced an eye-watering austerity budget, with more detail of cuts to come. Similar moves are being made by governments across the developed world. Alongside this fiscal retrenchment the Coalition wants to initiate a debate about the role of the state. Are public sector activities better located in the private or third sectors? We will have to wait to see quite what this means in practice. Will the state disengage completely from whole areas of activity? Or is it a question of pushing provision out of the public sector, with government continuing to fund services and exert strong regulatory control?
Such a rethink could present opportunities for third sector organisations.

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Role of the State Pt. 3

The society which will not only prosper but flourish in these islands in the 21st century will be one which draws strength from these values side by side: liberty for all responsibility by all, fairness to all.
And there is no more appropriate forum for this debate than The Guardian, and the Scott Trust with which Hugo Young as a Director was so long associated - a newspaper and a Trust that has over the years been a voice for liberty, for a strong civic society, for fairness, and for internationalism.
And today and later I want to show how a long term reform agenda for the renewal of our country - the reform and modernisation of institutions and policies - flows from these tested and enduring values.

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Role of the State Pt. 2

Modern theories of relations between states seem to advocate polarized worlds, where nations are either headed toward inter-civilizational clashes or liberal-democratic uniformity. Similarly, theories of globalization posit either hyperglobalization or more state-centric scenarios. While it is unlikely that such extremities are realistic, states would need to remain relevant by adopting policies that understand and embrace these tensions in a globalized world. This essay seeks to formulate a framework for understanding the role of the state in a world where borders are becoming increasingly transparent. In doing so, it adopts a multidisciplinary perspective, drawing from research in international economics, global politics, and sociology. It links theory to application by arguing that the role of the state is to address each of these rationales for state formation, in the context of globalization. As traditional rationales for state formation and existence are rapidly being redefined, states need to adapt to these altered circumstances. This essay shows that there exist policy options that would allow the state to play a central role in this transition.

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Role of the State

It is summer – a good time to ask a big question. So I intend to ask the biggest question in political economy: what is the role of the state? The core purpose of the state is protection. This view would be shared by everybody, except anarchists, who believe that the protective role of the state is unnecessary or, more precisely, that people can rely on purely voluntary arrangements. Most people accept that protection against predators, both external and internal, is a natural monopoly: the presence of more than one such organisation within a given territory is a recipe for unbridled lawlessness, civil war, or both. In the contemporary west, there are three protections against undue exploitation by the stationary bandit: exit, voice (on the first two of these, see this on Albert Hirschman) and restraint. By “exit”, I mean the possibility of escaping from the control of a given jurisdiction, by emigration, capital flight or some form of market exchange. By “voice”, I mean a degree of control over, the state, most obviously by voting. By “restraint”, I mean independent courts, division of powers, federalism and entrenched rights. The government’s responsibilities are limited to protecting individuals from coercion, fraud and theft and to defending the country from foreign aggression. Read more here.