Essay Example on Historical Background Since capitalism has existed state Intervention








Historical Background Since capitalism has existed state intervention in the economy has been an agenda of economic politics as an important issue The debate over the role of the state within capitalism reveals the different kinds of capitalism First kind of capitalism is liberal capitalism which is centered on the thought of the state as having a minimum role in the economy the second kind is o regulatory capitalism or social democratic capitalism that is centered the thought of the state as a cooperating with the regulatory and private sector and and the last one is state capitalism in which the state has a role within the market as a both entrepreneur and regulator The last 50 years covering the second and third quarters of the twentieth century have been passed with the dominance of state intervention and Keynesian economics which suggests state intervention Critical views of free market capitalism especially the great depression of 1929 came to the forefront and developed Many countries have started on protectionist nationalist industrialist moves as well as developments that capitalize on the Soviet Union s planner s conception

These trends increased further after World War II and the golden age of capitalism which lasted until the late 1970s began on the axis of the new world order formed after this war This process called as a Golden Age because of four key elements Keynesian economic approach partial improvement of income distribution fordist accumulation regime and leaving the control of businesses to professional managers to make it more efficient These elements brought both the growth rates of the capitalist world and the prosperity of the capitalist world This process generally described as regulatory capitalism has become the dominant capitalist regime of the Pax Americana era that began after the Second World War This system based on social democracy especially in Western European countries can be considered as a center of regulatory capitalism although it is developed over the US with the wider US understanding of state interventionism stronger labor processes and better welfare programs In addition countries such as Japan and South Korea in the East adopted industrialization policies under the leadership of the state under the name of developing state and took a position in world economy as a different form of regulatory capitalism 

These countries especially Japan which are weaker than Western European countries in the context of welfare programs are powerful countries in the economic context Yet the political and economic developments that took place in the 1970s caused this process to become debatable When OPEC increased its oil prices and its cost inflation and high unemployment were added to the declining trend of profit rates it brought the Fordist accumulation regime and dominant Keynesian policies to perish In reaction to this collapse the process of redefining the role of the state in the economy on the axis of post fordism which represents the neoliberal paradigms and flexible production mode under the leadership of the USA and the UK has begun Thus the understanding of social welfare state was pushed backward The new process foresees the abolition of all the mechanisms that would prevent the industrialized country s distribution of the world s capital on the world and that the intervention of the state in the economy would be reduced to a minimum The expansionist tendency of the capital and the process of decentralization of production by spreading production to the world geography in this direction started to be called globalization Neoliberal paradigms as a process involving all economic social and managerial spheres have been read as a triumph of the market to the state with the realization of socialism and the increasingly stronger influence of the capitalist block on globalization

Within the framework of privatization and deregulation practices under the minimal state discourse the Keynesian welfare state has been left behind and the main aim has been the withdrawal of the state from the economy This process of walking within the framework of the Washington Consensus symbolizing neoliberal politics while giving minimal role to the state on the other hand led to the developmental state practices especially in East Asia Countries in East Asia particularly South Korea are united by continuing their original policies with the new system China on the other hand underwent market reforms at the same time as neoliberalism dominated the economic structure of socialist market economy Hence it has not been possible to minimize the state in the economy in the mentioned countries Neither these examples nor the environment of successes and crises which cannot be fully achieved in the economic context has brought about the reorganization of neoliberalism 

The Post Washington Consensus which could be described as the expanded and revised version of the Washington Accord at the end of the 1990s redefined the state market relationship Market friendly and efficient state strategies have been adopted as the two complementary elements of the state and the market In a sense this would be referred to as the recall of the state which means that the state undertakes the role of catalyst in the economy through regulatory institutions and policy instruments It seems that in the twentieth century perhaps capitalism socialism controversy has been more aggravated within capitalism Because every crisis is a period of depression capitalism has renewed itself and has taken on a new administrative pattern In this context the approach of the Kinds of Capitalism developed by Hall and Soskice 2001 can well express this situation

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