Keynesians vs Liberals: Debate on State Intervention in Economics

Extract

[...] Unfortunately, it is necessary to note that certain episodes of economic history seem to invalidate a vision as radical and seem to call for state intervention despite everything. The Keynesian current is based on the theory of John Maynard Keynes, who advocated that the state was the only actor capable of mitigating the inefficiencies of markets, exacerbating social inequalities, and preserving collective goods. As it is the only actor capable of ensuring these three aspects, it must mitigate the failures that a self-regulated system encounters. [...]

[...] Keynesians vs Liberals: Debate on the Role and Action of the State The Keynesian current and the liberal current traditionally oppose each other as the two great currents of economic science. One of the contentious issues of the debate is precisely the subject of the role and action of the State. The last global financial crisis in 2008 has intensified debates on the role of the State and the ability of the system to self-regulate. Should the State intervene to compensate for a system that cannot avoid global financial crises since 1929? [...]

[...] Since the 1970s, this current has resurfaced with neo-liberals such as Milton Friedman, Thomas Sargent, and Arthur Laffer, who have proven that interventions destabilize the system by altering the reactions of economic agents. They have denounced the harmful effects of budget deficits, particularly on the private sector, and advocated for self-limitation of financial power. They are also the origin of the explanation of the 'snowball' effects of state debt. They therefore call for the privatization of economic sectors and deregulation. This is today the doctrine that prevails within international financial institutions such as the World Bank or the IMF. [...]