TAILIEUCHUNG - A Companion to the History of Economic Thought - Chapter 27

C H A P T E R T W E N T Y - S E V E N The Economic Role of Government in the History of Economic Thought The question as to the appropriate role for government within the economic system is as old as economic thought. For much of that history, the economy was seen as but one piece of a larger social system and the study of economics | CHAPTER TWENTY-SEVEN The Economic Role of Government in the History of Economic Thought Steven G. Medema Introduction The question as to the appropriate role for government within the economic system is as old as economic thought. For much of that history the economy was seen as but one piece of a larger social system and the study of economics or political economy as one facet of a larger social theory. Only with the advent of commercial society and the organization of economic activity more overtly within the context of the market did the perception of the economy as a quasiindependent part of the social system begin to gain currency. This has a number of implications but for present purposes one stands out the earlier economic literature envisioned a system wherein government and economy are integrally linked aspects of the social system whereas in later literature government and economy - or government and market - are often viewed as independent spheres of action with corresponding questions as to how much one should intrude upon the other. The perspectives that motivate or underlie the discussion of the appropriate economic role for government are many and diverse the resulting analysis thus reflects diverse and often contradictory accounts of the appropriate economic tasks for government. This vast topic requires the selective adoption of an organizing principle and that adopted here is the economic role of government as a The Economic Role of Government 429 response to the forces of self-interest. While this necessarily excludes a variety of contributions and perspectives it provides the vehicle for a useful analysis of how the economic role of government has been viewed throughout the history of economic thought and analysis and the forces that have motivated these views. Pre-Classical Economics One defining characteristic of much pre-classical economic thought is its naturalistic or natural law orientation - an orientation reflected in the .

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