Currently, the idea prevails that governments can sometimes improve market outcomes by interfering with the economy. Among the most relevant aspects of economic science is its ability to foster instruments for States, more precisely to governments, to assess the economy of societies, seeking efficiency and equity _ two fundamental concepts for promoting economic growth and development.
In general terms, efficiency would be linked to the issue of optimizing production, use and allocation of resources (whether they are raw materials or capital) and the development of productive capacity in terms of development technological. Equity, on the other hand, would refer to the redistribution of income, the creation of conditions for a good quality of life, seeking conditions so that all individuals have access to the basic and necessary conditions for the good being-social. However, seeking efficiency and equity in a context in which the capitalist system predominates is not an easy task, since the bases of capitalism are based on the accumulation of wealth, on private property and, therefore, on the inequality between the people.
But the presence of the State as the regulator of the economy was not always defended. In the past, in the times when a classical thought in economics was constituted with works such as the one by Adam Smith (Wealth of Nations, 1776), there was a critique of mercantilism and the monopoly of trade by States, which held a strong control over transactions. economical. Thus, the idea was defended that the development of free trade would be necessary, a condition sine qua non for the growth of capitalism. It was believed that the market balance (between supply and demand) would be guaranteed by the “invisible hand” of the economy, which in itself would ensure that economic “health” was guaranteed.
But what history has shown us not only in the very distant past, but today, in the early years of 21st century, was that the market without interventions can lead society to economic chaos, situations of crisis. Therefore, given the fragility of the discourse of the “invisible hand”, the idea of a greater State economic regulation, even in times like today, when economies of a nature prevail neoliberal.
Thus, economists use the term market failure to refer to a situation in which the market alone cannot allocate (invest, direct, direct) resources efficiently. As Nicholas points out Gregory Mankiw (2004), thehe market failures can be caused by at least two factors: externalities and concentration of economic power.
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With respect to externality, it is the impact of someone's actions on the well-being of those around them. Thus, there are “negative” externalities, such as pollution, but also others of a “positive” character, such as a scientific discovery by a researcher. Thus, as for the negatives, the government can fight them to reduce the harm to society in general. As for the positive ones, the State can encourage its results to unfold, achieving more and more individuals (an example of this is in the encouragement of biodiesel, in the creation of medicines generics).
Economic power has to do with the capacity of an individual or a group to unduly influence market prices, a capacity that can contribute to the creation of monopolies. In this case, the State will be able to regulate the price so that there is no abuse and so that there is greater efficiency economic (a good example is in the regulation for the operation of energy concessionaires electrical).
So what should be clear is that the “invisible hand” is unable to ensure fairness in economic prosperity. Obviously, we must emphasize here that market autonomy is indeed fundamental to the wheel of the economy, but economic deregulation with An exacerbated reduction of the State, as defended by the first ideologues of economic liberalism, seems to be something dangerous, if not impracticable.
Therefore, equity and economic efficiency need the presence of the State to be achieved (or at least pursued). Hence the importance, at the same time, of public policies (which try to reduce social differences in the struggle for equity), as well as the presence of the State in the creation of a mechanism to promote production, that is, efficiency productive.
Paulo Silvino Ribeiro
Brazil School Collaborator
Bachelor in Social Sciences from UNICAMP - State University of Campinas
Master in Sociology from UNESP - São Paulo State University "Júlio de Mesquita Filho"
Doctoral Student in Sociology at UNICAMP - State University of Campinas
