The role of the state in a market economy

The state at all times of its existence played a role in the market economy. It performed various economic functions (collection of customs duties and taxes, protection of private property, etc.), and also acted as a "watchman", which should protect private activity. The role of the state in a market economy, as well as its functions, underwent significant changes in the 20th century.

To date, we can formulate the following economic functions of the state:

1. Legal regulation of the functioning of private business.

2. Financing of production.

3. Redistribution of income through the system of transfer payments and progressive taxation.

4. Funding of fundamental science, environmental protection.

5. Regulation and control of prices, employment, economic growth.

6. Ensuring social guarantees and social protection for all segments of the population.

The state in a market economy exerts influence in two directions: through influence through various economic arguments on the functioning of the private sector and through the public sector. The modern economy consists not only of the private sector and entrepreneurship, but also of their public sector and entrepreneurship. In the twentieth century it became one of the full-fledged subjects of the economy, and began to act as producer, investor, buyer, etc.

The state sector in a market economy is based on state ownership, which prevails in economic, capital-intensive, marginal and unprofitable industries, the development of which is unprofitable from the point of view of private business. State property is the production infrastructure (communications, roads and railways, energy, etc.), social infrastructure (health, education, environmental protection, etc.), the new knowledge-intensive industries, the development of which requires initial considerable costs ( Nuclear power, aerospace, etc.). If we talk about the boundaries of the public sector, then they are never permanent. The share of state property can change, based on the level at which its combination with private property is best contributing to the growth of socio-economic efficiency and the solution of problems of stabilizing the economy.

In general, the role of the state in a market economy can not be overestimated. It protects entrepreneurs from attacks by the monopolies, creates the most favorable conditions for the development of economic activity, solves issues of national defense and defense. Occupying a special place in the economy, the state at any time can concentrate the necessary resources to solve certain problems. The role of the state in a market economy is not always regarded as positive. So, in some cases, state intervention can significantly weaken the market mechanism, inflict great harm on the country's economy. A similar picture was observed in the 70-80's. The last century in France, when the high activity of state intervention in the market economy led to the outflow of capital from the country, due to which the rate of economic growth fell significantly. In order to get out of this situation, deregulation and privatization were needed, which was done in 1986.

In the 21st century, it is generally accepted that the economy should be social, therefore, mankind strives to connect the market economy with the social policy of the state and ecology. This can only be achieved if the role of the state in a market economy is only positive, and human rights and dignity will be the highest value.