INVESTIGATING THE RELATIONSHIP OF THE STATE INTERVENTION AND ECONOMIC GROWTH

The economy is often described as a volatile concept. Many factors are in play that drive either the market up or down. For most people, when the economy goes up, everyone is satisfied. When the economy is down, people are miserable. When the economy is down, this trickles down to ordinary people, causing them to lose their jobs, homes, and other financial assets. Therefore, economists and other social scientists have always wondered what correct approach to is solving economic depression.

There are two major schools of thought in which method is most appropriate in solving economic downfall. One of them implies heavy state intervention, often in the form of financial packages and federal programs to boost individual and corporation welfare. The other group believes that no state intervention is needed and that the market will eventually correct itself through the actions of big companies. Throughout history, both concepts were used by different governmental organizations throughout the world. By researching which method worked best in which scenario in history is the focus of this paper. Determining the proper method to any economic problem can help determine the solution to the current economic trouble the world has.

By contrasting the two methods used in history, economists can realize that only a concoction of the two methods, state-sponsored market and lassiez-faire market, is the key to keeping a working economy. Through some state-sponsored programs, individuals and corporations can fall back safely during a dangerous recession. Some laissez-faire policies would also allow for more economic growth through either a recession or boom. The combination of the two methods can help the economy maintain and grow itself, even during these hard times.