Are economic crises mainly triggered by external objective factors or rather by government misguided state interventionism?

In the context of the specific measures, instruments and programmes of economic state interventionism applied during the recent financial and economic crises, there are still debates concerning the assessment of their effectiveness and the resolution of whether these interventionist measures actually help economies and reduce the scale of the development of crises or rather generate these crises. One of the key, fundamental currents in the history of economic thought, i.e. classical economics, points to the need to limit the government's influence on the economic process as much as possible, leaving all processes in the economy to the market mechanism. In the 20th century, economic, financial, social, technological, political, etc. realities changed, which determined the development of various concepts, forms and aspects of economic state interventionism, including the successively increasing influence of the state on economic and financial processes. On the other hand, the 1970s saw the development of neoclassical currents, which, on the one hand, referring to classical economics, updated the question of the importance of the dominant categories of production factors, including categories of production factors of increasing importance, i.e. technology, information, entrepreneurship, innovation, etc. The growing importance of these categories of production factors was due to the third technological revolution taking place at the time, determined by the development of ICT information technology, structurally changing economies with a growing service sector, the increasing scale of deregulation of financial markets as a result of the commodity crises of the 1970s. In addition, it happened that the symptoms of a developing economic crisis were misinterpreted and, in order to limit the level of investment credit, central banks raised interest rates, causing an increase in the cost of borrowing money, a decrease in the availability of credit, a decrease in the level of liquidity in many economic entities and, consequently, an aggravation of the economic crisis. This kind of situation occurred at the end of the 1920s and led to the then greatest economic crisis known as the Great Depression of the period 1929-1933 in the USA and up to 1934 in Europe. Also in terms of the government's formulation of budgetary and fiscal policy, signals from the financial markets and the economy were often misinterpreted, which then resulted in the inappropriate use of interventionist economic, budgetary or fiscal policy instruments. For example, the introduction of a historically large amount of additional money into the economy during the coronavirus pandemic (Covid-19) in 2020 became one of the key factors in the rise in inflation in 2021 - 2023. The tightened anti-inflationary monetary policy of central banking caused a significant downturn in the economy. In view of the above, the frequently misinterpreted symptoms of changes in the economic situation in the economy determined the inappropriate application of anti-crisis economic policy instruments, which led to the occurrence of another crisis or aggravation of the scale of the already developing economic crisis. In view of the above, an important research thesis can be added to our considerations concerning the importance of the role and significance of state interventionism not only in the context of anti-crisis economic policy but also in generating economic, financial, debt, etc. crises. I therefore address the following question: Do you agree with my following thesis that honestly and fairly towards the citizens, fully realistically pro-social, without corruption and respecting the legal norms in force, state interventionism conducted within the framework of economic policy usually solves economic problems, reduces the scale of economic crises, etc.? On the other hand, state interventionism conducted within the framework of economic policy, but conducted unreliably unfairly towards citizens, unethically, with acceptance of corruption, usually leads to economic, financial, debt and other crises and generates various economic, social and other problems. In view of the above, considerations concerning the evaluation of the effectiveness of measures, instruments and systems applied by the government within the framework of economic state interventionism, the resolution of whether these interventionist measures actually help economies and reduce the scale of the development of crises or rather generate these crises, should also include the determination of the scale and legitimacy of the application of keys economics in the context of the fluctuation of economic processes within the framework of multi-year business cycles, the growing indebtedness of the system of state finances and the unaccounted for negative effects within the framework of social, climatic and environmental external costs, i.e. environmental pollution and greenhouse gas emissions, etc.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

Are economic crises mainly caused by external objective factors or rather by misguided governmental state interventionism?

What is your opinion on this topic?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best regards,

Dariusz Prokopowicz