Economic interventionism

Economic interventionism or central economic planning is any action taken by a government, beyond the basic regulation of fraud and enforcement of contracts, in an effort to affect its own economy. 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 equality, managing the money supply and interest rates, or addressing market failures. The intervention may to direct, or indirect as in the case of indicative planning. When this economic planning is extensive, the economy is referred to as a planned economy.

Economic interventionism is generally associated with the political left (socialist, left-wing liberal or green parties) which believes that certain market outcomes are undesirable and ought to be mitigated. Economic interventionism is sometimes practised by national conservative parties with the thinking that the free market can damage national traditions, social order, or the authority of the state itself.

[edit] Types of interventions

Economic interventions common in contemporary governments include targeted taxes, targeted tax credits, minimum wage legislation, union shop rules, contracting preferences, direct subsidies to certain classes of producers, price supports, price caps, production quotas, import quotas, and tariffs.

[edit] Effects

Economic intervention can be seen by more economically right-wing entities as damaging to the economy. Economically left-wing entities see economic interventionism as a way of ensuring that firms adhere to the social boundaries of that country. It is difficult to suggest precisely what effects it will have on a given society.

[edit] See also

• Mixed Economy
• Crowding out

[edit] External links

• Size of Government

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