The question of government interference in economic activities has been debated for a very long time by the economists. While the early economists considered economics as a handmaid of politics, the modem view is that politics is the handmaid of economics. With the growing importance of the role of government in economic welfare, the modem economists firmly believe that the sphere of government in economic development has no boundary. However, there is no unanimity among the economists about the extent and mode of government intervention in the economic sphere. Hence, we can identify the following political ideologies regarding the government intervention in an economy.
- The earliest opinion was that the government has nothing to do in an economy as the society will regulate itself. This opinion also stated that the government will wither away over a period of time. These ideologists are called Anarchists.
- Opposing the anarchists view is the Communists view. According to them, the individuals cannot do anything on their own and there is a need for government to supervise and regulate individuals. The state will own everything and it is the fundamental duty of the government to organize and direct all economic activities. Hence, government becomes the custodian of the society and it has a very wide role to perform.
In between the above two views, there are two more views about the extent of government intervention in an economy. While one view highlights the individuals, the other lays emphasis on the need for the government.… Read the rest