Comparative economic policy UNIT 1

Economic policy

how the state manages conflict in market societies by using compensatory mechanisms to prevent instability and inequality.

Karl Polanyi questioned

conceptual validity of self-regulating markets, they create instability and social unrest

Four institutions on market society

1) Balance of power system 2) International gold standard 3) self-regulating market

4) liberal state

The gold standard

Currencies were tied to gold

Fiscal policy

Use of government revenue collection(taxes) and expenditure(spending) to influence a country's economy. Used to achieve goals like economic growth and inflation control

Monetary policy

Country's central bank controls the amount of money and the cost of borrowing money (interest rates) to keep economy stable

Keynesian vision about state intervention

Stabilizing the economy and promoting full employment

Neoliberal vision about state intervention

minimizing intervention and promoting market-based solutions to social and economic problems

Laissez-faire

the policy of leaving things to take their own course without interfering

Endogenous state

a state of an economic system that is determined by factors within the system itself rather than by external influences

Exogenous state

Something that originates or is introduced from outside a system or organism

Classical capitalism

Economic decisions are primarily driven by the forces of supply and demand with minimal government intervention

sosiodemocratic capitalism

Markets + strong welfare system. Combines capitalism with government support to reduce inequality

Liberal meritocratic capitalism

success based on talent in a market economy. Focus on equal opportunity, where best and most talented people rise