Makronom Series on the Relationship between the Market and the State in the Post-Corona Age
COVID19 and the climate crises, growing inequality and financial market stability: almost everywhere, the relationship between markets and governments needs to be re-examined. A review of the series in the online magazine Makronom.
PUBLISHED16. MARCH 2021
READING TIME3 MIN.
“The provision of public goods is one of the core tasks of the state. In addition, the state takes over tasks in the market economy, among other things, where the market fails or produces politically undesirable results,” writes Makronom editor Susanne Erbe in the lead article of the recently published series.
Here, we briefly introduce three of articles from the Makronom series. You can find the complete series – here.
Government spending during the great transformation, by Richard Sturn
In his article on the future role of the state, Richard Sturn asks how state mismanagement can be avoided and what the prerequisites are for a state that is capable of acting.
According to Sturn, “neither state faith nor fundamental state skepticism […] are good starting points for a socio-economically beneficial role of the public sector.” In the spirit of a new paradigm, Sturn demands that state action must not suffer from the syndrome of state faith, state skepticism, legitimacy dilemma, prevention paradox and the resulting erosion of trust. Otherwise, public debt and money supply “become” crisis drivers – and the government sector itself becomes a problem (a weight) instead of a driver.”
Looking forward, Sturn demands that the public-private interface in our innovation systems be transformed from a weak link to a driver. Citing the work of Mariana Mazzucato, Sturn argues that too narrow, static confinement of the state’s portfolio of actions has serious drawbacks. As a result, the state often becomes the pawn in the hands of private monopolistic interest groups, which in turn leads to distributional conflicts.
“The challenges of complex, forward-looking state tasks are not escaped by outsourcing these tasks to the private sector, but by the difficult further development of instruments and mechanisms of political accountability under uncertainty,” says the professor of innovation, development and growth at the University of Graz.
How to dispose of Corona debt, by Helmut Reisen.
Public debt in the EU has grown enormously in the wake of the Corona crisis. In this article, ex-OECD Research Director Helmut Reisen analyzes the possible options to reduce government debt again.
Conclusion: Whether austerity policies, debt cuts or financial repression, every form of debt consolidation produces winners and losers. While a combination of different instruments is possible, this process will require some democratic work on the part of our society. The task is to balance this democratic process in the best possible way.
The modern state on a mission to the future by Tom Krebs
A modern state is needed to deal with the climate crisis in an effective and socially just way, writes Mannheim-based economist Tom Krebs in the article based on a forthcoming study commissioned by the Forum New Economy.
Tom Krebs describes what such a modern state and the basic features of modern climate policy could look like – here.