Transformation of world social and economic relations under the influence of business processes informatization as well as infrastructural and institutional consequences of virtualization along with transnationalization and networkization of global economic environments have stimulated many radical changes in public structures of the states worldwide. If a state strives to keep and use further its regulative competences, moreover, if it plans simply to survive under today's extremely dynamics environment, it simply must shift to much more efficient principles of functioning. The latter assume implementation and further use of all latest achievements of information & technological progress and also use of certain elements and mechanisms of networking. This chapter considers the key instruments used for modernization and upgrade of public economic regulation using the potential of advanced technologies and networking in overcoming the major failures of economic governance (corruption, lack of expert information, high costs of targeted and truly efficient state regulation and/or stimulation etc.). In this context, new principles are being formulated – those of outstripping progress of the states as market actors. Using these newer principles, the state would be able to accumulate the key advantages of technological progress much quicker than the private companies are doing the same today.
TopThe State And The Market: Three Hundred Years’ War
Incredible number of book chapters and books overall has been dedicated to the determination of the state’s place and role at the market. There is not a single school of economic thought that would ignore this issue. Depending on scientists’s vision of the market and its dynamics, their perception and ideas of the state’s role as a market regulator differ a lot.
Wide variety of economic understandings of the state’s role allows us making a conclusion that none of the economists has actually fully excluded the state from the market economic system. State’s place and role, means, methods and forms of its participation in the economy vary, depending on a theory, however, the state is always present in any economic system, to this or that extent.
As our analysis of various economic teachings shows, the role of the state in the economy has been always changing, depending on particular conditions of social development. The key changes in this regard have concerned the transformations of social progress targets at particular historic stages, fluctuations of market environment and changes in economic relations. Additional influence has been always coming from the key features of the state itself – political regime, the state of political machinery, the level of corruption etc., since the state itself can be seen as a subject of management, with its own external and internal factors of development.
The general aims of state regulation of the economy have been also more or less the same, stable: levelling the economic cycles, improvement of production relations, increasing the general level of welfare in the society, overcoming the negative consequences from monopolization and income misbalances in the society etc. However, in various times and countries very different instruments have been applied to serve these purposes. Initially, the instruments of state intrusion concerned foreign trade only, thus, the basis of protectionist policy has been formed. The state was an “invisible participant” in all external economic relations, thus getting its own benefits (through custom duties and other similar payments). These benefits the state got mostly from its internal consumers of imported commodities, and further these benefits were used to strengthen the national wealth which during those times was always measured in gold and silver bullions.
Years later, the role of the state in the economy has been limited to the function of some sort of “night watchman”, that is, providing and maintaining the efficient conditions for production as well as for internal and external trade. The instruments of state regulation of economic relations at that stage mostly concerned the conditions created for business activities, and the level of their adequacy to market demands was determined by the levels of efficiency and self-organization. However, once the market got the status of an ideal self-organized system and at the same time entrepreneurial talents became the cornerstone for national welfare achievement, all related state economic policies needed to be reconsidered, and immediately.
Since then, the instruments of state regulation over the market became, by turns, the separate components of social economic relations, of production and trade processes. However, their ability to impact the economic system development was sometimes more and sometimes less efficient.
The Keynesians stated that demand must be the key object in state regulation of economic relations. Thus, they presented their revolutionary (for those times) theory of economic growth based on state stimulation of national consumption. They also developed the system of accelerators and multipliers of economic development (Lectures, 1999). The monetarists suggested another way to achieve economic growth and welfare – through regulation of money supply which has its own impacts on the number and the quality of production factors (especially investments) and also on potential demand (the level of prices, in their presentation). Finally, more recent theories, specifically, the theory of market failures fully exclude the state from market relations, thus limiting the circle of its responsibilities and authority to competitive environment maintenance and also solving the issues in which business has no interest or simply sees little sense due to the lack of commercial interests for typical market agents (Lectures, 1999).