Interventionism (economics)

Economic interventionism (sometimes state interventionism) is an economic policy perspective favoring government intervention in the market process to correct the market failures and promote the general welfare of the people. An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud and enforcement of contracts and provision of public goods. Economic intervention can be aimed at a variety of political or economic objectives, such as promoting economic growth, increasing employment, raising wages, raising or reducing prices, promoting income equality, managing the money supply and interest rates, increasing profits, or addressing market failures.

The term intervention assumes on a philosophical level that the state and economy should be inherently separated from each other; therefore the terminology applies to capitalist market-based economies where government action interrupts the market forces at play through regulations, economic policies or subsidies (however state-owned enterprises that operate in the market do not constitute an intervention). The term "intervention" is typically used by advocates of laissez-faire and free markets.

Capitalist market economies that feature high degrees of state intervention are often referred to as mixed economies.

Libertarians and other advocates of free market or laissez-faire economics generally view government interventions as harmful, due to the law of unintended consequences, belief in government's inability to effectively manage economic concerns, and other considerations. Government officials tend to be naturally disposed to seek more power and authority, and the money that usually goes with those things, and this quest often takes the form of economic interventionism which they then seek to justify. Many modern liberals (in the United States) and contemporary social democrats (in Europe) are inclined to support interventionism, seeing state economic interventions as an important means of promoting greater income equality and social welfare.

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