The Economy and the Modern State

Essay by lord_fosterA+, February 2004

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What do people expect modern states to do about the economy and how do states attempt to accomplish these results?

People living under the sovereign power of an independent state expect theirgovernment to keep and maintain a stable, expanding economy. If the government does not keep and maintain a stable economy it is likely that there will be a complete collapse of, not only government, but the established society. This breakdown can, to an extent, lead to revolution or civil war. If the prosperity of the economy is confined only to the

distinguished, refined elite; then the social system will eventually turn into a totalitarian system where the benefits of this open market become unavailable to the lesser classes of society. Once this "system" changes government is likely to take a more active role in controlling the economy and this can either have a positive or negative effect. Shively demonstrates the success of the military regime of South Korea whereas the economy grew rapidly with extensive government intervention (93-96).

The leading cause of economic collapse in new democracies is the bad mistakes the governments make while influencing economic decisions and investments (93). This is not to say that government intervention is necessarily a bad thing, it is just that governments tend to favour certain interests that benefit them and not the people thus, damaging the economy or stagnating the growth of the economy. Usually the citizens of this independent state will hold the government accountable for the failure or success of their economy and its growth. If it does not fair well then the people's beliefs in government may fall for its bad policy or decision making, decimating its own

legitimacy. Governments, on the other hand, tend to try to control same key aspects of the economy namely, "inflation and...