Is strongly developed economic state interventionism more of an anti-crisis measure reducing the scale, levels and probability of financial and economic crises or does it rather generate and escalate these crises?
Are recent economic and financial crises, including the global financial crisis of 2008, the pandemic economic crisis of 2020, the strong rise in inflation in 2021-2022, the energy crisis of 2022, the recession of the economy of the first half of 2023, the result of overdeveloped state interventionism, manual control of monetary and fiscal policy and deregulation of financial markets?
The research I am conducting shows that the recent economic and financial crises, including the global financial crisis of 2008, the pandemic economic crisis of 2020, the strong increase in inflation in 2021-2022, the energy crisis of 2022, the recession of the economy of the first half of 2023 are the result of overdeveloped state interventionism, the manual control of monetary and fiscal policy and the deregulation of financial markets. From the research I conduct in the problem of the sources of economic, financial and other crises, it follows that strongly developed economic state interventionism is usually undertaken as an anti-crisis and/or pro-development measure aimed at reducing the scale, level and probability of occurrence of financial, economic crises, etc., but, on the other hand, often the mentioned interventionist activity of the government leads to an escalation of risk levels and generates the mentioned crises. Recent years of the Polish economy have been a series of economic crises generated by various factors but also by the government. In 2020, the government, through the introduction of lockdowns and national quarantines, generated a deep recession in the economy, then through the introduction of a large amount of printed money into the economy without coverage in the products and services produced, an increase in inflation was generated from 2021, a particularly deep energy crisis in Poland in 2022 (due to the blocking of the green transformation of the energy sector), an increase in interest rates by the NBP, a decline in investment and a downturn in the economy in 2022 and 2023, up to another recession in the economy in the 1st half of 2023. During the previous years, thanks to the applied chaotic economic policy of the government and monetary policy of the NBP in Poland, one crisis was replaced by another, and so on. And SME companies and enterprises lost a lot thanks to these crises, which were largely generated in previous years thanks to the applied, chaotically conducted, ad hoc, non-strategic, etc. economic policy of the government and monetary policy of the NBP central bank. In 2023, the scale of bankruptcies of companies and enterprises in the SME sector in Poland was the highest for many years. It is therefore necessary to continue research in the problems of the role and importance of economic state interventionism in the context of changes in the rate of economic growth and economic development, and to develop the most appropriate system solutions, economic programs, instruments for activating economic activity, activating innovation, counteracting the development of crises and implementing solutions that will result in increasing the macroeconomic stability of the economy with simultaneous sustainable economic development, including taking into account the implementation of the objectives of sustainable development, the principles of the green economy and closed-loop economy, sustainable and zero-carbon economy.
I am researching this issue. I have published the results of my research in several publications, including the following chapters in a monograph:
"Recent economic crises and the prospective climate crisis of the 21st century and the green transformation of the economy" (Recent economic crises and the prospective climate crisis of the 21st century and the green transformation of the economy).
Chapter Ostatnie kryzysy gospodarcze a perspektywiczny kryzys klimat...
"Economic and financial crises in the 21st century and the anti-crisis state interventionism that prevents them" (Economic and financial crises in the 21st century and the anti-crisis state interventionism that prevents them)
Chapter Kryzysy gospodarcze i finansowe w XXI wieku oraz zapobiegają...
In view of the above, I address the following question to the esteemed community of scientists and researchers:
Are the recent economic and financial crises, including the global financial crisis of 2008, the pandemic economic crisis of 2020, the strong increase in inflation in 2021-2022, the energy crisis of 2022, the recession of the economy of the first half of 2023, the result of over-developed state interventionism, the manual control of monetary and fiscal policy and the deregulation of financial markets?
Is strongly developed economic state interventionism an anti-crisis measure that reduces the scale, levels and probability of financial and economic crises, or does it rather generate and escalate these crises?
Does state interventionism reduce the development of financial and economic crises or does it rather generate and escalate these crises?
What do you think about this topic?
What is your opinion on this issue?
Please answer,
I invite everyone to join the discussion,
Thank you very much,
Best regards,
Dariusz Prokopowicz
The above text is entirely my own work written by me on the basis of my research.
In writing this text, I did not use other sources or automatic text generation systems.
Copyright by Dariusz Prokopowicz
- State intervention is highly required in times of economic crisis since a handful of capitalists control the market.
- Public and private partnerships are required to generate competitive capital formation and investment, especially in poor countries.
- In times of economic crisis, the resilient capacity of the population needs to be developed by generating a sustained economic pattern, so that the people will not be living in the street and will not be starved.
All European countries are developed countries, and to float, the economy is getting tougher since the production that the European countries are producing is also being exported. Developing countries like India, China, and South Africa also produce and export.
With all these examples, the government needs to think about when to intervene and open the market.
The crises of a capitalist economy are, in general, born in the private markets. However, the state intervention could exacerbate the situation in the time of crisis by not solving the underlying problems that caused it in the first place. It became pretty popular (since 2008) to name this kind of policies as a ‘kicking the can down the road’. We are just ‘papering over’ a bridge to a next, even bigger crisis, e.g. by not letting many zombie companies going under.
Neiclassical (incl. New Classics and New "Keynesian") economics consider the state as a disturbance to the (efficien) market economy. "State interventionism", accordingly, is a tendencially negative expression for public policy. In fact, it is difficalt to imagine an economy without a state and its interverntions. Whether these interventions have positive or negative effects depends on the goals and the measures taken (and, of course, of the viewpoint of those who value them). Some interventions/ measures need not have an exonomic goal (e.g. the lock-downs during the Covid pandemy were not introduced to improve economic development). During crises, even those who are against public economic policy in good times call for state help. A good example for the variity of state intervention are the measures of different countries to fight inflation. Some intervened more or less directly into the price formation, some reduced taxes on goods and services, and others tried to compansate via transfers the negative inflation effects for those who were most strongly hit.
Well, regarding to Keynes it is definitely important to have state Intervention to coop crises. But the key point is to define right way of intervention. Just printing money is not a good idea. So, everything depends on particular circumstances of crises.
State interventionism can both mitigate and exacerbate financial and economic crises depending on the effectiveness of policies implemented, regulatory oversight, and the specific context of intervention.
It works if it is balanced properly during economic slowdowns and crises.
Underdeveloped and developed countries need to work in 3Ps so that the economy will be boosted