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Interventionism in the Era of Globalization

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Interventionism in the Era of Globalization Pratical theory 9 Stanisław Kowalczyk, Roman Sobiecki Interventionism in the era of globalization Interventionism is a system of influ- entities, weakening of their competitive- ence of a nation state or an integration ness, which consequently can translate group on the economy as a whole or on into deterioration of the macroeconomic separate sectors, whose role is to allevi- situation in the long run. A manifesta- ate contradictions between the micro- tion of unreliability of interventionism and macroeconomic objectives. can also be the temptation to overuse the tools of interventionism to achieve strictly The tools used for this purpose are of political, party or electoral goals. There- economic, legal and administrative na- fore, the trick is to find the right relations ture (Sobiecki, 2015). More specifically between interventionism and the market – economic and legal, as well as admin- activity. istrative and legal, and sometimes persua- The beginnings of interventionism sive. Thus, interventionism is not an oc- date back to ancient times, when Athens casional and accidental influence of a state was fully supplied with the goods of for- through its institutions, but an ordered eign origin, which was the reason for the system subordinated to the achievement collapse of the domestic production. This of specified objectives. situation forced the introduction of duties Interventionism is necessary to achieve on imported goods to protect its own pro- reasonableness on a macroeconomic scale duction. It can, therefore, be concluded and to alleviate contradictions with the that it was a little taste of interventionism, approach to the reasonableness from the so it is as old as the institution of the state. microeconomic point of view. It is impor- The growing importance of a duty, as a tant to note that just as the market is im- tool of a conscious influence of the state perfect, interventionism can also be un- on the economy, occurred together with reliable. Nothing happens automatically. the development of money and commod- A manifestation of such market imperfec- ity relations. The first economic theory, tions include monopolization, adverse ex- which was the basis of the conscious appli- ternal effects, instability of the economy cation by the state of a tax to gain a com- (crises, inflation, unemployment), as well petitive advantage, was mercantilism. J.B. as unequal distribution of income. A re- Colbert – the Minister of Finance from sponse to these market imperfections is 1665 to 1683 – is considered to be the interventionism. creator of the customs policy, using the fi- In turn, an indication of the unrelia- nancial and non-financial instruments in bility of interventionism may be over-reg- the defence of domestic economy. But R. ulation, which manifests itself by adverse Turgot (1727-1781) in 1774 decreed a free- conditions for the operation of business dom of imports and exports of grain to 10 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2 stimulate and expand the use of the land. with it, gradual violation of the economic An intellectual leader of protectionism in equilibrium, leading to the degeneration the USA was H. Carey (1793-1879). In of the role of the financial sector and the 1890, the USA introduced the so-called dominance of the economy based on debt McKinley tariff, by increasing the level of (Podedworna-Tarnowska, Sokół, 2018). duties from 24-30 to 50 percent, which The role and scope of the government in 1897 was increased to 57 percent (So- interference in the economy is one of the biecki, 2015). issues, which are subjects of discussions In the economic history of the world in the economics and the clash of views we have experienced an alternation of of many generations of economists. This periods, once with the predominance of occurs with greater or lesser intensity and a significant state interference, and once a certain periodicity. A. Wojtyna (1992) with the rules of the free market. It ap- defines it as “strange timelessness” of the plies primarily to international trade. This discussion. alternation was determined by the eco- John Maynard Keynes (1883-1946) nomic situation. In the times of crisis, the is usually considered to be the father of economy required much more interven- the modern concept of state intervention- tion of the state, and in the good times ism. Although in his basic work entitled: liberalism dominated. It is similar nowa- The General Theory of Employment, In- days (Herman, 2015). terest and Money, 1936, he did not write about interventionism, he supported state “New” or modern interventionism involvement in the market mechanism. Interventionism can have different J.M. Keynes (1936) considered the scar- faces. We may deal with a political, mili- city of private capital to carry out the nec- tary, social, as well as economic (business) essary investments as the main cause of interventionism. Here, we are primarily the need for such involvement. For these interested in the economic intervention- reasons, the state should be taking an ever ism, that is the economic role of the state greater responsibility for directly organising in the economy, identified with the in- investment (p. 246) and should provide volvement of its bodies in the regulation the stock of capital at the necessary level in of economic processes, and, to put it dif- the perspective of one or two generations (p. ferently, the role of the state in the crea- 613). The main objective of this involve- tion of mechanisms of influence on the ment was to “rescue” the demand. economy (Wojtyna, 1992). To be more Keynesian theory was a response to the precise – to what extent is such a form greatest economic crisis of the first half of of economic interventionism possible in the twentieth century and the widespread the era of globalisation? Especially in the criticism of laissez-faire as the economic age of dominance of global companies thought. The increased state involvement (corporations), transactional and virtual in the market mechanism was also sup- economy and a pervasive financialisaton ported by the programmes of recovery of on the one hand, and the weak and still national economies implemented after weakening nation state on the other. In World War II. The situation changed in the world, where most of transactions ap- the 1970s. The return of the idea of the ply to financial markets, and not the real economic liberalism began the process processes of production and distribution of the gradual “elimination” of the state of goods. And that means an overgrowth from the market and the economy. This of the financial sector in relation to the process was enhanced by globalization manufacturing sector, and associated and international corporations, growing Interventionism in the era of globalization 11 in strength. Thus, the state with the rule (the export of these producers is an im- of law was dismantled (Miszewski, 2019), port to the country that has increased its understood not as going to the stage of state expenditure) will also be satisfied. anarchy, but as a stage of an atrophy of Similarly, domestic producers who are the state as the regulatory and institution- competitive can be satisfied, because they al basis. will have a chance to increase the supply. However, it should be noted that In the short term, possible negative ef- the interventionism according to J.M. fects will not be noticed, and above all, Keynes could be effective in combating the positive effects, i.e. an increase in con- the economic crisis, but in the conditions sumption, reduction of poverty, etc., will of relatively closed economies. Stimulat- become apparent. However, in the long ing demand through increasing the state run, negative macroeconomic effects will expenditure resulted in stimulating the become visible, including the inadequacy supply of domestic enterprises, and thus, of the economic growth in relation to the in increasing employment, which in turn additional state expenditure incurred. So, contributed to the increase in revenues, so what to do? The answer is: nowadays, in to the increase in the demand, but here, a globalised world, unconventional tools of private consumers. The mechanism, should be used to stimulate economic called the multiplier effect, stimulated the growth to improve the level of social wel- economic growth of the country, which fare, and to reduce poverty. increased its spending. The same mecha- A specific need for restitution of the nism under the conditions of globaliza- state involvement in the market has been tion, that is when the boundaries are open referred to again in connection with the to the operation of the market, will not first global economic crisis of the 21st produce the same effects as in the case century. As early as October 13, 2008, of a relatively closed economy. The state just one month after the spectacular col- expenditure will indeed stimulate the de- lapse of Lehman Brothers Holdings Inc., mand, but the following increase in pro- S. Lohr wrote in “The New York Times” duction will not necessarily take place in about plans of the US government in- the country, which increased its spending. volvement in rescuing falling compa- With low competitiveness of the economy nies under a telling title: “Intervention Is of the country, which increased its ex- Bold, but Has a Basis in History”, so bold, penditure, the growing demand will large- and perhaps even insolent intervention, ly be met by imported goods. This means but with a strong foundation in the past that the increase in the state expenditure (Lohr, 2008). of one country (with low competitiveness At the same time, A. Asensio and M. of the economy) under the conditions of Hayes (2009) wrote about the role and globalization, may stimulate the econom- views of post-Keynesians as follows: If the ic growth of another country (with higher economic systems functioned in the way the competitiveness of the economy).
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