Redefining the role of the state
For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.
Europe
New Paradigm Knowledge Base
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The Challenge
Decaying infrastructure and a lack of investment in education and innovation expose the weaknesses of an overly market-driven paradigm
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What went wrong?
Reducing the role of the state in the economy was seen as the best way to ensure high levels of growth.
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New Economy in Progress
The challenges of our time require us to rethink the role of the state and the need for a more active fiscal policy.
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CHART: The steep decline in net public investment
Total capital expenditure minus the cost of replacing worn-out depreciation of assets.
5 possible ways that are discussed to redefine the role of the state
- 1. Boost investment in education, healthcare, infrastructure. This could more than pay for itself.
- Use fiscal policy as a tool for macroeconomic stabilization and to boost economic activity
- 3. Use of state as an entrepreneurial actor, investing in and deploying new technologies.
- 4. Central banks could distribute money directly to citizens in an attempt to boost consumer confidence and consumption.
- 5. Demonstrate the indispensability of the state by tackling monopolistic capitalism.
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