sign in sign up
<<
Home , Economic interventionism

Pratical theory 9 Stanisław Kowalczyk, Roman Sobiecki Interventionism in the era of

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 – 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 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 . 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 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 of the world in the and the clash of views we have experienced an alternation of of many generations of . 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 . It ap- defines it as “strange timelessness” of the plies primarily to international trade. This discussion. alternation was determined by the eco- (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: 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 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 thought. The increased state involvement (), 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 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 . 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 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). postulated, it would Is it good or bad? The answer is: it de- be difficult to propose something better, pends on the point of view. Consumers but since the world is uncertain, econom- do not have to see any negatives, because ics must be able to achieve better results. they have something to buy, regardless of There must be an alternative economic where the product comes from (the im- policy, assuming the normative role of ported one can be even cheaper). Foreign the in the sphere of in- producers who can export to the country come distribution, and a discussion about that has increased its state expenditure the long-term effects of this policy on the 12 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2

economic growth (Asensio, Hayes, 2009, theory moves in the world of utopia or p. 76). And in conclusion: central banks fantasy (in ’cloud-cuckoo-land’). It is de- and governments have to manage the unbri- tached from reality, unfounded, unreal- dled economy, in spite of the fact that there is istic, and based on assumptions that are no ‘natural’ way or optimal rule of doing it practically impossible to be implemented (p.76). This is how the “demand” for some (Nell, 2016). form of state involvement in the market Modern science questions the basic and its “unbridled” mechanism, in other theories that make up the neoclassical words, some form of interventionism, has paradigm, such as the General Equilib- been revived. The main question that aris- rium Theory and the Efficient Markets es in connection with it is: what kind of Hypothesis, recognising that both have interventionism would it be and how ef- conceptual weaknesses as well as inef- fective could it be in this period changed ficiencies in addressing the underlying after 60-70 years? problems of public policies, which is syn- The doubts about this are all the more onymous with the fact that they do not justified because, as L. Dobusch and J. meet scientific criteria. What makes them Kapeller (2009) write, at the beginning of so durable and resistant to criticism is ex- the 21st century it was much more diffi- clusively neoclassical ideology (Slattery, et cult not even to eliminate, but to perma- al., 2013). This is particularly emphasised nently weaken the supremacy of classical in the case of criticism of the effective paradigms of the neoclassical thinking market hypothesis, which, by definition, than it was after 1929. (Dobusch, Kapel- considers the market to be an effective ler, 2009, p. 145). This is a consequence of allocation mechanism. However, as T.I. the fact that today Keynes’s concepts no Palley believes, the neoclassical theory longer have the of “freshness” as in is absolutely incapable of describing and the . In the following decades, they explaining the world, and that the neoclas- were repeatedly criticised and devalued, sical model is an ontological impossibility despite the efforts of the post-Keynesians. (Palley, 2016, p. 262). Moreover, at the beginning of the 20th century, alternative theories to liberal Causes of modern interventionism concepts, such as institutionalism and Hence, the need to return to the idea , were of significant importance, of state interventionism was born mainly which further strengthened the argu- out of the first global economic crisis of ments for the state intervention. Finally, the 21st century. The crisis has exposed there was little confidence in the financial the weaknesses of neoliberal concepts, markets then (Krugman, 2009). their effectiveness in solving problems of , eliminating crisis Today, despite the evident weakness of situations, and limiting market turbu- neoclassical theories, they continue to be lence. Analysing the causes of this crisis treated as mainstream, denying the rank from a state perspective, according to R. of effective theories to other economic Skidelsky, the main reason was a wrong currents and thoughts. And this is in spite and inadequate macroeconomic policy. A of the fact that modern economics, this policy that has been drastically and un- very mainstream economics, has taken on justifiably restricted, precisely in favour sophisticated, econometric models that of the market and the financial sector (p. have little to do with reality and have very 223). The consequence was a deep deregu- limited scientific value (Żyżyński, 2019). lation of many unstable activities, includ- E.J. Nell says explicitly that neoclassical ing in particular financial services, and Interventionism in the era of globalization 13 underestimation of the deepening income and in the countries that export raw inequalities in the society. materials, which are key to US exports Meanwhile, both deep income in- (Blecker, 2016, p. 211). equalities, as shown, for example, by the studies of T. Piketty (2015), J.D. Os- R.A. Blecker (2016) sees the counter- try (2015), T. van Treeck (2015) and H. action to this extremely unfavourable situ- Boushey (2015), as well as globalisation ation not only for the American economy, resulting from growing , as which is significant, in the strengthening in turn shown by L. Podkaminer (2019), of the role of the public sector, especially inevitably lead to a decline in economic in the new financial policy, which focuses growth. And although the relationship on spending on infrastructure invest- between income inequality and econom- ments, solar and wind energy, public edu- ic growth is complex, J.D. Ostry (2015) cation and other social and environmen- writes directly on this issue: attention to tal needs. income inequality may serve both equity It is precisely in the first place in the and growth at the same time. (p. 156). In new role of the public sector, rather than turn, as T. van Treeck (2015) points out, possible changes in the market rules. inequalities in income and wealth have Opinions about self-regulating proper- direct social and macroeconomic implica- ties of the market have been widely ques- tions. The latter, among others, in a form tioned and it did not happen for the first derived from A. Hansen (1887-1975) of time in modern history. The market econ- secular economic stagnation. omy – yes, but based not on the system of Analysing the US economy after the regulations generated by corporations and 2007-2009 crisis, including the excep- financial markets, but on state regulations tionally slow recovery and prolonged sec- and institutions. State, because, as G.W. ular stagnation, R.A. Blecker concludes Kołodko writes: The market itself, without that five main factors are responsible for government intervention, neither develops blocking it in such trajectory: nor has the capacity for self-regulation (...) • first of all, the weakness of demand of If the market was left alone, it would anni- households, caused by the stagnation hilate itself (Kołodko, 2013, p. 127). The of real wages and the growing income problem is that the role and importance inequality, of the state, both in terms of fiscal redis- • structural changes leading to a tribution and regulation, have been dras- reduction in the number of people tically minimized. They were minimised employed in proportion to the rate of mainly by the third player created by changes in production, globalisation, i.e. financial markets. This • low private sector investment despite player weakened the nation state in the record profits and low interest rates, first place, leading to the minimisation of • austerity in (the continued its regulatory significance, and then the primacy of the thesis about the “traditional” market mechanism, leading absolute and timeless harmfulness of to the destruction of its basic principles the budget deficit, although, as written and functional interdependencies. by L. Podkaminer (2019, p. 299), the These reasons make state regulations global economic growth nowadays and state activity, in the sphere of the mar- requires unsustainable public finances ket mechanism and capital, necessary to- on a global scale, day. Prof. Peter Flaschel has a very strong • information about the global economic opinion on this matter. In an interview slowdown, especially in the euro area in 2011, he stated explicitly – , 14 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2

to some extent, has always had a criminal It is worth noting that some research- nature and has indeed become so again af- ers consider the support that Keynesian- ter the prosperity phase that followed World ism provides in this respect, i.e. in terms War II, so it must be regulated, otherwise of explaining contemporary economic criminals will always dominate it (Flaschel, problems, institutionalism, as important. 2013, pp. 5-60). Today you can produce Some even talk about a post-Keynesian rotten meat and sell it on the market, but institutionalism, or the Institutionalist you have to be aware that the securities Post-Keynesian School (Lavoie, Seccarec- on the financial markets are always like cia, 2013). In such a unified paradigm, this rotten meat. However, if someone institutionalism provides microeconomic sells rotten meat – this person goes to foundations (including: labour market prison, but if someone sells such “rotten theory, consumer theory, industrial or- meat” on the financial markets, he or she ganization theory, theory, price usually does not suffer any consequences. theory), while post- That person should also be punished be- offers a macroeconomic framework (com- cause the sellers of such commodity know prehensive employment theory, inflation perfectly well that they sell also toxic, theory, production theory, growth theory, just financial, assets, to their customers. international trade and finance theory, Therefore, capitalism must always be reg- ) (Lavoie, Seccarec- ulated in a strong and well thought-out cia, 2013). way (Flaschel, 2013). For these reasons, there is much to According to the Nobel Prize winner suggest that interventionism in the age of P. Krugman, the economists themselves, globalisation is extremely difficult, if at all fascinated by the rationality of the indi- possible, at least in the form known from vidual, the infallibility of the markets and the 20th century history. And that is for their own theories, led to this state. That two main reasons. First of all, because the is why they did not pay attention to the state intervenes according to this idea, limitations of human rationality, (...), the and the country in the age of globalisa- problems of institutions gone amok (...) the tion has been reduced to a “minimum” imperfections of the markets leading directly form. The form in which it performs the to the dangers that arise when regulators functions primarily outside the sphere of do not believe in regulations (Krugman, the economy, such as public order, exter- 2009). Today, it must be acknowledged nal security, etc. Secondly, supporters of that financial markets are far from be- interventionism see it as a remedy for the ing perfect, are subject to extraordinary problems of contemporary economy. Let illusions and madness of crowds, and in us add, the problems caused to a large ex- this situation, the Keynesian economy tent by globalization processes. For these remains to be the best basis we have for reasons, contemporary problems, includ- explaining the meaning of the recession ing economic ones, are global in nature. and depression that has affected the glo- Interventionism – at least the well-known balised world. This is all the more im- one – as evidenced by its very nature, is portant because the primary objective of national. Limited to one country. It is the globalised financial markets is not the therefore impossible to solve global prob- real economy and its undisturbed devel- lems with instruments or policies specific opment, but a turbulent economy with a to a single country. So, is interventionism chance for profitable speculative opera- possible nowadays, i.e. in the global era? tions (Flejterski, 2017). Interventionism in the era of globalization 15

Models of interventionism in the global tax is a utopia, but a useful utopia global era (Piketty, 2015). While there is considerable consensus W. Szymański, wondering whether on the need to strengthen the presence globalisation can be made more rational, of regulations in today’s economy and to proposes the introduction of a transna- limit the role of crisis-generating financial tional coordination, i.e. rules binding on markets, there is no longer any consensus a global scale (Szymański, 2007). At the on the level at which to intervene. same time, he stresses the basic difficulty Already in 2005, i.e. before the first that is associated with it, i.e. the difficulty crisis of the 21st century broke out, J. in enforcing the implemented solutions. Stiglitz wrote about the need to strength- According to this author, this cannot be en public international institutions and done without involving the nation state to ensure an increased voice and power and its bodies in the coordination process of the poorest countries in these institu- itself. However, such a process will still tions (Stiglitz, 2005). A few years later, he be long and complicated, overcoming at developed a broad programme of changes least such phases as: regional integration, necessary for the US to reduce the gallop- interregional arrangements and finally the ing income inequalities in the country. creation of forms of the global organisa- The state intervention would concern, tion. The creation of global institutions among others, such issues as: taming the and offices today, more than 10 years -af financial sector, limiting the power of cor- ter W. Szymański wrote these words, still porate executives, eliminating corporate seems unrealistic and even less real than benefits, a progressive tax system or an 10 years ago. economic growth program based on pub- This selective review of views and posi- lic investments (Stiglitz, 2015). In turn, tions already shows a lack of clarity about a already in 2000, J.A. Scholte wrote about possible intervention. There are two main the collapse of the redistributive state and threads here: the first one about the ne- the need for transplanetary governance cessity of intervention at the global level, (Scholte, 2006). or as J.A. Scholte (2006) calls it – trans- planetary, and the second – intervention G.W. Kołodko writes both about the at the state level. Some voices have taken necessity to support market corrections the view that it is necessary to intervene of the rate of stream flows and resource where it is possible and when it will be ef- changes with state interventionism, as fective. The problem is that no approach well as about a global regulator and global guarantees such effectiveness today. So, regulation (Kołodko, 2013). According to what are the possibilities and their advan- this author, the conduct- tages and disadvantages? It is possible to ed at the level of the nation state cannot formulate an opinion that nowadays there be effective (Kołodko, 2017). are at least three models of intervention- M. Mazzucato promotes the entrepre- ism available: globalization, regional and neurial state, which does much more than authoritarian. simply correct market errors (Mazzucato, 2016, p. 87). T. Piketty, in his famous Globalisation model Capital in the 21st century, is considering The globalization model generally as- new tools to regain control over the crazy sumes interference in the market not so financial capitalism. According to him, much of individual countries but of global such a tool could be a global progres- institutions, like the UN and its agencies. sive capital tax. However, as he admits, a Such a scale of interventionism could cer- 16 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2

tainly be effective in eliminating market Regional model degeneration and limiting the arbitrari- The model of regional intervention- ness of transnational corporations. How- ism has been implemented in Europe for ever, the problem of the reality of this several decades in the form of the EEC/ model arises immediately when trying to EU. This is currently the most advanced formulate concrete actions and proposals. model of supranational cooperation. A The condition for the implementation model with common institutions, regu- of intervention on a global scale is the ne- lations and, above all, joint authority in cessity of such an agreement on a global the form of the European Parliament, the scale. Agreements on consent to give up Council and the European Commission. some of the national economic autonomy, This model is naturally not without flaws precisely for the benefit of global institu- or shortcomings, which is clearly illustrat- tions. And that is where the real problem ed by the past few years, but at the same begins. Global interventionism in fact time has shown considerable effectiveness means a world (global) government. So at in terms of building high quality techno- least a substitute for a global government, logical and production regimes, safety or a global bank, global regulations and a protection of the common market against global law enforcement system. Without many negative processes and phenomena global solutions, including global public created by the global market (e.g. in terms finances, it is impossible to solve the prob- of food safety). If this model shows re- lems of the modern world (Postula, 2019). sistance to disintegration and centrifugal processes in the near future, it may be- However, is it credible to assume come a transition model to a globalization that such a solution will be accepted by model. a global society, and in principle by the authorities of individual countries? Es- Authoritarian model pecially because in recent years we have The authoritarian model is a model of seen a growing wave of , as intervention based on authoritarian (dic- described by A.K. Koźmiński, a new na- tatorial, totalitarian) nation states. In fact, tionalism whose blade is directed mainly this is currently the most widespread vari- against globalization and global compe- ant of the state participation in the mar- tition (Koźmiński, 2019). This is all the ket. While the two previous models exist more important because this model is the rather in the postulative sphere, naturally most reasonable one. Modern problems apart from the EU model, the authoritar- have arisen as a consequence of globali- ian model functions in the real sphere, in zation processes and are, therefore, global other words, it exists in reality. And in problems. Hence, their solution is only the social and economic reality of quite possible at a global level. There seems to a number of countries. However, this is be no other solution. Economists and a model of state intervention that is dif- politicians speak out on this issue more ferent from the two previous ones. This and more often. It should be assumed difference relates primarily to the issue that such an option will be possible, and of in whose interest the state interference not just because another does not exist. in the economy and social structures is Of course, the way it is implemented is implemented. While the two previously a completely different matter, but there is presented models are implemented in the no doubt that it can only be implemented interest of the whole society, or at least the in the form of a gradual, multi-stage co- vast majority of the society, be it global operation process and partial agreements. society or of a specific region, in the case Interventionism in the era of globalization 17 of the authoritarian model, only the in- models of state involvement in the mar- terests of a certain and relatively narrow ket mechanism presented above do not group are respected. As a rule, a social naturally exhaust all existing and poten- group associated with the authorities of a tial forms of state intervention. At least country. This group is, for example, the the Scandinavian (Nordic) or continental ruling party (e.g. China, South American model, which is most evident in Ger- countries), a particular tribe/community many, can be recalled here. These models (African, Arab countries), but also a part share a common feature with the models of the economy, usually linked to the so- described above, such as globalization called military-armament complex (Rus- and regional. The state involvement is in sia, South American, African countries). the interest of a significant part of the so- This shows the difference between this ciety. In the interest of many social and model and the two previous ones, as al- professional groups. That is what makes ready stated above, but also the multiplic- them so different from the authoritarian ity of its forms. However, a gradual unifi- model. There is still a Chinese model, cation of this model cannot be excluded. which in some ways stands out from the Currently, it occurs in a dispersed system rest. This difference is naturally the lead- of individual countries. Ultimately, how- ing importance of the ruling political ever, alliances and agreements between party. For these reasons, it does not seem authoritarian states are possible in order to be a model that could be used in other to implement the adopted political and countries. Additionally, this model, by its economic strategies. It is possible that very nature, is exposed to the temptation the initial basis for such alliances will be to evolve towards an authoritarian model. military cooperation, which will gradu- And certain features – such as the above- ally cover further areas, including the mentioned leading role of a political party economy. – make this model very similar to the au- thoritarian one. There is one more difference between this model and the previous ones. Its pur- Instruments of interventionism pose is not to limit the imperfections of The basic tool for the implementation the market mechanism, but to seize it in of state interventionism is financial and, the interest of a small group in the soci- above all, fiscal policy, which can mitigate ety. And the way in which this seizure is market mechanism malfunctions, stimu- carried out often leads to even greater ir- late economic growth, mitigate the cycli- regularities due to the inefficiency or even cality of economic processes, counteract ineptitude of the state interference. In this unemployment and excessive income dis- way, a new form of capitalism is being parities, and regulate condi- formed on the basis of authoritarian sys- tions. This is supported by a monetary tems – , to which, as M. policy. Bałtowski describes it, it is difficult, how- Opportunities in this respect are in- ever, to attribute a feature of enlightened creasingly recognised and, after a period interventionism (Bałtowski, 2017). of advanced liberalism, are being restored Despite these significant differences to a proper place of the fiscal policy. This from the two above mentioned models is evidenced not only by the opinions of of interventionism, this form of activity many economists, but also by the posi- of state authorities cannot be overlooked tions of international organisations. The when considering the relationship be- OECD report, Interim Economic Out- tween the state and the market. The three look, for 2016, was even entitled: Strong- 18 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2

er growth remains elusive: Urgent policy flow of public investment, and (iii) a more response is needed. The report states: A active fiscal policy. Whether all these pro- stronger collective policy response is needed posals are realistic today is one question, to strengthen demand. Monetary policy can- but the second, even more important, is not work alone. Fiscal policy is now contrac- about the motivation and causative power tionary in many major economies. Struc- of the state to implement at least some of tural reform momentum has slowed. All these suggestions. three levers of policy must be deployed more The OECD report, issued in 2018, actively to create stronger and sustained stated: Trade cooperation is needed to halt growth (OECD, 2016). Global growth global value chain disruption and its con- remains virtually invisible. Global mac- sequences on growth and jobs (OECD, roeconomic policy, including monetary, 2018, p. 19). It is also recommended to fiscal and structural measures, must sup- strengthen intergovernmental coopera- port demand and resource reallocation tion in order to prepare for even harder to a greater extent than before. Reliance times ahead. solely on a monetary policy is insufficient A significant number of economists to ensure satisfactory economic growth. are also in favour of better and more con- sistent fiscal policies. In this regard, M. E. Hein, analysing J. Steindel’s views Blyth fears that a more active fiscal policy, on the secular stagnation of the capitalist which will burden the class of economy, formulates the following pro- first, will have no chance of being imple- posals to counteract these unfavourable mented. It will simply be blocked by capi- tendencies: tal and financial markets, a fact that poli- • increasing public expenditure, as well ticians are more aware of than economists as counter-cyclical fiscal policy to proposing such changes (Blyth, 2016). stabilise effective consumer demand growth, However, there are many indications • increasing growth-friendly public that stabilising economic growth in the investment, mainly in the areas such as modern world requires broader macroe- infrastructure, technology, education, conomic and industrial policies, financial and research and development, regulations and other corporate govern- • low interest rate policy, ance rules. Ö. Onaran therefore proposes • regulation of the financial sector, a policy mix package to increase the share reducing the income claims of rentiers of wages (for example by increasing the and shareholders, minimum wage or collective bargaining • reducing households’ propensity to on labour law) which, together with in- save by redistributing pre-tax income creased public investment in social and through higher wages, progressive physical infrastructure, would give a sig- taxation and social transfers, nificant stimulus to growth (Onaran, • improving international economic and 2016). Although, there still remains a key monetary policy coordination in order issue of the redefinition of the role of pub- to avoid serious imbalances and rising lic investment, especially in areas such as debt (Hein, 2016, pp.167-168). environmental (green) investment and in- vestment in social infrastructure. This is The actions proposed above focus on because the motive is far from suffi- three main directions: (i) stimulating con- cient to mobilise private capital resources sumer demand, by improving the income in this scope. However, public investment situation of workers, (ii) increasing the in green industries such as renewable en- Interventionism in the era of globalization 19 ergy, public transport and housing is nec- the situation of enterprises, but ignored essary to achieve the emission targets and the impact of state regulation on this situ- to address the environmental crisis. ation. Therefore, it is no coincidence that in Also, in the area of social infrastruc- the literature (...) we find the category ‘mar- ture, such as public expenditure on health ket failure’, but there is no category of ‘gov- care, education, child and elderly care, ernment failure’ (Williams, Coase, 1964, defined today as current expenditure, p. 195). And these, as Coase describes, should be appropriately redefined as per- social arrangements, are always more or sonal capital expenditure. Nowadays, these less unreliable (Williams, Coase, 1964, p. services are often provided by the private 195). sector based on a profit motive, remain- R.N. McKean was more cautious ing far from being adequate in relation to about this. According to him, both mar- needs. ket and government failures should be Practice proves that the vicious circle analysed and opportunities to improve of financialisaton, growing inequalities, the functioning of both players should slowing down the accumulation and pro- be identified (McKean, 1965). Especially ductivity, points to the need for an alter- in the sphere of governmental activity, native approach to a coordinated policy a good understanding of what McKean mix, based on sustainable economic de- called the “unseen hand in government, velopment and public investment (On- in the governmental sector”, aran, 2016). All the more so because the can greatly help to shape the public deci- rapidly spreading financialisaton is not sions better. For a long time, economists only an expansion of financial markets have been pointing out to the “invisible but also (and, according to T.I. Palley, hand” that guides the allocation of re- above all) a change in the objectives and sources in the private sector. The com- methods of operation of corporations and pany theory, private sector models and the way they control the market: We need conditions for the functioning of this to confront more forcefully the neoclassical... mechanism have been created. However, (Onaran, 2016, p. 262). with the growing role and importance of the government, more attention should be Summary paid to understanding the mechanism of This redistributive and stabilising role the government and public sector. A gov- of the state described above and counter- ernmental theory is therefore needed to acting market malfunctions within it is complement the company theory and to also not without controversy and criti- better understand the “invisible hand” in cism. For the market may be defective, the government sector (Piketty, 2015). but naturally the state may also be defec- tive (), as was demon- Hence, generally speaking, state inter- strated by the twentieth century and the vention can reduce market failures and “experiment” with countries commonly errors. However, government failure may referred to as socialist. contribute, not so much to eliminating or The termgovernment failure was prob- minimising, but by inappropriate state in- ably first used by R.H. Coase in 1964, in terference in the market, even exacerbat- a discussion with E.W. Williams on the ing economic and social problems, on a impact of government regulations on the large scale. But there is much to suggest U.S. industry performance. Coase stated that the market degeneration that has that economists generally analysed the taken place in the last few decades is an impact of market mechanism failure on exceptionally strong impulse to opt for 20 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2

the “return” of the state to a much larger countries this has already taken place af- extent than has been the case over the last ter the global financial crisis of the first four decades. And in a large part of the decade of the 21st century.

References: 1. Asensio A., Hayes M. (2009), The Post Keynesian alternative to inflation targeting, “European Journal of Economics and Economic Policies: Intervention”, May, Vol. 6(1), p. 76. 2. Bałtowski M. (2019), Kapitalizm państwowy. Próba konceptualizacji, in: Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, Mączyńska E. (ed.), Warszawa, Wydawnictwo Naukowe PWN. 3. Blecker R.A. (2016), The US economy since the crisis: slow recovery and secular stagnation, “European Journal of Economics and Economic Policies: Intervention”, Vol. 13(2), pp. 211-212. 4. Blyth M. (2016), Policies to overcome stagnation: the crisis, and the possible futures, of all things euro, “European Journal of Economics and Economic Policies: Intervention”, Vol. 13(2), p. 226. Interventionism in the era of globalization 21

5. Boushey H. (2015), Bringing inequality back in, “European Journal of Economics and Economic Policies: Intervention”, Vol. 12(2), pp. 183-189. 6. Dobusch L., Kapeller J. (2009), Zur paradigmatischen Konstellation aktueller ökonomischer Theorie, “European Journal of Economics and Economic Policies: Intervention”, Nov, Vol. 6(2), p. 145. 7. Flaschel P. (2013), You have to regulate capitalism, otherwise the criminals will dominate it, interview, ”European Journal of Economics and Economic Policies: Intervention”, Vol. 10(1), pp. 5-6. 8. Flejterski S. (2017), Współczesne finanse z perspektywy koncepcji nowego pragmatyzmu ekonomii umiaru, in: Etyka i ekonomia. W stronę nowego paradygmatu, Mączyńska E., Sójka J. (red.), Polskie Towarzystwo Ekonomiczne, Warszawa, p. 140. 9. Hein E. (2016), Secular stagnation or stagnation policy? A post-Steindlian view, “European Journal of Economics and Economic Policies: Intervention”, Vol. 13(2), pp. 167-168. 10. Herman A. (2015), Aksjologiczne aspekty teorii i praktyki zarządzania wartością, “Kwartalnik Nauk o Przedsiębiorstwie”, No. 2. 11. Keynes J.M. (1936), The General Theory of Employment, Interest, and Money, Palgrave Macmillan, p. 246, 613. 12. Kołodko G.W. (2013), Dokąd zmierza świat. Ekonomia polityczna przyszłości, Warszawa, Prószyński i S-ka, pp. 127, 143 and 391. 13. Kołodko G.W. (2017), Nowy pragmatyzm i jego znaczenie dla uczciwego gospodarowania, in: Etyka i ekonomia. W stronę nowego paradygmatu, Mączyńska E., Sójka J. (red.), Polskie Towarzystwo Ekonomiczne, Warszawa, p. 61. 14. Koźmiński A.K. (2019), Nowy pragmatyzm kontra nowy nacjonalizm. Szanse i zagrożenia dla Świata i Polski, in: Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, Mączyńska E. (ed.), Warszawa, Wydawnictwo Naukowe PWN. 15. Krugman P. (2009), How Did Economists Get It So Wrong?, “The New York Times Magazine”, Sept. 2. 16. Lavoie M., Seccareccia M. (2013), Special Issue: Post-Keynesian and Institutional , “European Journal of Economics and Economic Policies: Intervention”, Vol. 10(1), p. 9. 17. Lohr S. (2008), Intervention Is Bold, but Has a Basis in History, “The New York Times”, Oct. 13. 18. Mazzucato M. (2016), Przedsiębiorcze państwo. Obalić mit o relacji sektora publicznego i prywatnego, issue II, Poznań, Wydawnictwo Ekonomiczne Heterodox, p. 87. 19. McKean R.N. (1965), The Unseen Hand in Government, “The American Economic Review”, June, Vol. 55(3), 496, 505. 20. Miszewski M. (2019), Instytucjonalne uwarunkowania urzeczywistnienia wizji gospodarki globalnej, in: Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, E. Mączyńska (ed.), Warszawa, Wydawnictwo Naukowe PWN, p. 279. 21. Nell E.J. (2016), A great deal of neoclassical theory is set in cloud-cuckoo-land, interview, “European Journal of Economics and Economic Policies: Intervention” ,Vol. 13(1), p. 4. 22. OECD (2016), Stronger growth remains elusive: Urgent policy response is needed, The OECD Interim Economic Outlook, 18 February 2016. 23. OECD (2018), Growth has peaked amidst escalating risks, The OECD Economic Outlook, 21 November 2018, p. 19. 24. Onaran Ö. (2016), Secular stagnation and progressive economic policy alternatives, “European Journal of Economics and Economic Policies: Intervention”, Vol. 13(2), p. 235, 238, 262. 25. Ostry J.D. (2015), Inequality and the duration of growth, “European Journal of Economics and Economic Policies: Intervention”, Vol. 12(2), p. 147-157, 223. 26. Palley T.I. (2016), We need to confront more forcefully the neoclassical position and show the absolute impossibility of the world it describes!, interview, “European Journal of Economics and Economic Policies: Intervention”, Vol. 13(3), p. 262. 22 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2019 / 2

27. Piketty P. (2015), Kapitał w XXI wieku, Warszawa, Wydawnictwo Krytyki Politycznej, pp. 644-645. 28. Podedworna-Tarnawska D., Sokół H. (2018), Dylematy finansjeryzacji. Dłużne papiery wartościowe w finansowaniu przedsiębiorstw w Polsce i w Unii Europejskiej, Warszawa, Oficyna Wydawnicza SGH, p. 14. 29. Podkaminer L. (2019), Globalna stagnacja: co ją powoduje i jak ją przezwyciężyć, in: Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, E. Mączyńska (red.), Warszawa, Wydawnictwo Naukowe PWN, pp. 288-301. 30. Postuła M. (2017), Cena nierówności. W jaki sposób dzisiejsze podziały społeczne zagrażają naszej przyszłości?, issue II, Warszawa, Wydawnictwo Krytyki Politycznej, pp. 432 ff. 31. Postuła M. (2019), Globalne finanse publiczne – archaizm, fakt, marzenie, in: Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, Mączyńska E. (red.), Warszawa, Wydawnictwo Naukowe PWN, p. 309. 32. Scholte J.A. (2006), Globalizacja. Krytyczne wprowadzenie, issue II, Sosnowiec, Oficyna Wydawnicza Humanitas, p. 447. 33. Slattery D., Nellis J., Josifidis K., Losonc A. (2013), : science or neoliberal ideology?, “European Journal of Economics and Economic Policies: Intervention”, Vol. 10(3), p. 322. 34. Sobiecki R. (2015), Interwencjonizm w rolnictwie: dlaczego jest konieczny? “Kwartalnik Nauk o Przedsiębiorstwie”, No. 2, pp. 38-39. 35. Steindl J. (1952), Maturity and Stagnation in American Capitalism, Oxford, Basil Blackwell. Note: Austrian (1912-1993). His works were inspired by the scientific output of M. Kalecki (1899-1970). 36. Stiglitz J. (2005), Globalizacja, Wydawnictwo Naukowe PWN, pp. 198 ff. 37. Stiglitz J. (2015), Cena nierówności. W jaki sposób dzisiejsze podziały społeczne zagrażają naszej przyszłości? Warszawa, Wydawnictwo Krytyki Politycznej, pp. 432 ff. 38. Szymański W. (2007), Czy globalizacja musi być irracjonalna? Warszawa, Oficyna Wydawnicza SGH, pp. 220, 223-225. 39. Treeck van T. (2015), Inequality, the crisis, and stagnation, “European Journal of Economics and Economic Policies: Intervention”, Vol. 12(2), pp. 158-169. 40. Williams E.W., Coase R.H. (1964), Discussion, ”The American Economic Review”, Vol. 54(3), p. 195. 41. Wojtyna A. (1992), Rola państwa we współczesnej ekonomii, „Ekonomista”, No. 3, pp. 353, 355 42. Żyżyński J. (2019), Umiejętność odchodzenia od stereotypów szansą ekonomii, in: Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, E. Mączyńska (ed.), Warszawa, Wydawnictwo Naukowe PWN, p. 200.

Prof. dr hab. Stanisław Kowalczyk, Institute of Market and Competition, Collegium of Business Administration of the SGH Warsaw School of Economics Dr hab. Roman Sobiecki, SGH Prof. Director of the Institute of Market and Competition, Collegium of Business Administration of the SGH Warsaw School of Economics

Translated by: mgr Monika Borawska