State Intervention

… a core concept in Socioeconomic and Political Context and Atlas105.

Concept description

Policonomics (reference below) defines state intervention as “any action carried out by the government or public entity that affects the market economy with the direct objective of having an impact in the economy, beyond the mere regulation of contracts and provision of public goods.”

Policonomics goes on to say:

“Government intervention advocates defend the use of different economic policies in order to compensate the flaws of the economic system that give way to large economic imbalances. They believe the Law of Demand and Supply is not sufficient in order to ensure economic equilibriums and government intervention should be used to assure a correct functioning of the economy. Examples of these economic doctrines include Keynesianism and its branches such as New Keynesian Economics, which relay heavily in fiscal and monetary policies, and Monetarism which have more confidence in monetary policies as they believe fiscal policies will have a negative effect in the long run. On the other hand, there are other economic schools that believe that governments should not have an active role in the economy, and therefore should limit its intervention, as they believe it will have a negative impact in the economy. They believe that the economy should be left to run in a laissez-faire way and it will find its optimal equilibrium.”

See also: Market Failure; Unintended Consequences; There Ain’t No Such Thing As A Free Lunch – TANSTAAFL; Command and Control Solutions vs. Taxes and Subsidies.

Atlas topic, subject, and course

The Study of the Socioeconomic Context for Politics and Policy (core topic) in Socioeconomic and Political Context and Atlas105.


Policonomics, Government Intervention, at, accessed 11 December 2018.

Page created by: Alec Wreford and Ian Clark, last modified on 11 December 2018.

Image: Nicholas Say, CambridgeHouse International, at, accessed 11 December 2018.