Economic interventionism
Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare of the people. An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud, enforcement of contracts, and provision of public goods and services.[1][2] Economic intervention can be aimed at a variety of political or economic objectives, such as promoting economic growth, increasing employment, raising wages, raising or reducing prices, promoting income equality, managing the money supply and interest rates, increasing profits, or addressing market failures.
This article is about government intervention in markets and market economies. For an alternative to markets as an allocative mechanism, see Economic planning.
The term intervention is typically used by advocates of laissez-faire and free market capitalism.[3][4] The state is inherently different from the private market economy because of the state's legislative, judicial and use of force monopoly as defined by the administrative law, while the private market is the result of individually operating legal entities primarily subject to property law, contract law and tort law. The terminology applies to capitalist market-based economies where government actions interrupt the market forces at play through corporate welfare like subsidies, regulation like price controls and state-created cartels (like the central banks or the economically totalitarian medical welfare state) and state-owned enterprises. Note that the result of regulation or government created cartels may no longer be either capitalism or a market economy. Note that regulation law should not be confused with regulatory law and does include the regulation in the US code, like Pure Food and Drug Act which is statutory law, as well as the regulation in the Code of Federal Regulations. From the point of view of the liberal model of government which always consists of a market economy, the material public law contains the legal obligations enforceable by government on private entities called regulation law and criminal law and conversely the legal obligations enforceable by private entities on government called the constitutional and administrative law.
Capitalist market economies that feature high degrees of state intervention are often referred to as a type of mixed economy.[5]