The role of the state in the economy

The role of the state in the economy is a matter that is central both in practice and in theory. At the same time, the principal approaches to solving this issue proposed by some scientific schools have significant differences. On the one hand, liberal economists adhere to the position of minimal state role in regulating the economy. And some scientific schools justify the need for active government intervention in market processes. It is rather difficult to find the optimal scale of state regulation. Therefore, it follows from history that in some countries there were periods when both the first and the second point of view prevailed.

The role of the state in the economy is determined when considering it as a subject of management, ensuring the organization of the functioning of all elements of a certain socio-economic system. The state acting as the public representative as a whole establishes the rules for interaction of other economic agents with exercising control over their observance.

The role of the state in the economy of a market type is reduced to the priority right of coercion, fixed by law. It finds its implementation in the form of a system of sanctions, which are applied when the current legislation is violated in the form of an appropriate normative act. When considering the role of the state in another aspect, one can see its display in the form of an equal business entity simultaneously with private firms, since it is in the person of enterprises that it produces certain types of goods or services.

The place and role of the state in the Russian economy from the point of view of practical application can be considered on the basis of its interaction with the market mechanism. State regulation of the economy is necessary in the event of a situation in which the result of the impact of market forces is not sufficiently effective from the position of society. In other words, government intervention in the economy is justified only if the market does not ensure optimal use of resources by the public interest. These situations are called market failures, which include:

- Adoption of legislative acts and control over their execution and observance of property rights with contractual obligations.

- Distribution of resources and provision of public goods in the production of these resources themselves. Public goods are characterized by certain properties. First, the so-called non-competitiveness, in which the lack of competition between consumers for the right to use these goods is due to the increase in the number of consumers without reducing the utility available to each of them. Secondly, it is non-exclusivity, which provides for limiting the access of an individual consumer or the whole group to benefits due to emerging difficulties.

The role of the state in the economy depends not only on objective factors, but also can be determined by certain political processes or by public choice. However, in some liberal countries, state influence on the economy can not be limited only by compensating for the failures of the traditional market .

It should be noted that the role of the state in the mixed economy is characterized by the inefficiency of not only the market component of the mechanism. Some expansion of the regulatory function of the state and the amount of resources controlled by it, above a certain limit, negatively affects the economic situation.