1.10           ndian      onom
     role of the state in an economy.6 If we look back                  establishment of different economic systems in the
     into the economic history of the world, we see                     past.
     three possible roles for the state/government in an                      On the issue of regulating the economy
     economy:                                                           there has been no debate, as we see all economic
           (i) As a regulator of the economic system                    systems being regulated by the state only. But the
                 (where the state takes important economic              selection of other two functions of the state in an
                 decisions, announces the required kind                 economy made the real difference. The economy
                 of economic policies, takes the sole                   which selected both the roles (ii and iii) for the
                 responsibility to get them implemented,                state under monopoly we called them the state
                 and controlling and punishing those who                economies. This category of economy had two
                 don’t oblige to those economic decisions).             variants in the socialist economy at least the
         (ii) As a producer and/or supplier of ‘private                 labour was not owned and exploited by the state
                 goods and services’ (these include all                 unlike the other—the communist economy where
                 those goods and services which constitute              labour used to be under complete state control.
                 the part of market and which will be                   These economies had almost no market.
                 distributed among the needy according                        The economic system which left both the roles
                 to the principles of market mechanism.                 (ii and iii) as the sole responsibilities of the private
                 Here the state earns profit as a private               sector was called the capitalistic economic system.
                 enterprise).                                           Here the state had almost no economic role but
        (iii) As a producer and/or supplier of ‘public                  played a passive role as the regulator.
                 goods’ or ‘social goods’ (these include                      Mixed economies had at least kept one
                 goods and services which look essential                economic role fixed for the state (i.e., iii), of
                 from the perspective of social justice and             supplying public goods to the needy people. In
                 well-being for the people. Education,                  some of the mixed economies the state went on
                 healthcare, sanitation, drinking water,                to take some of the roles of supplying the private
                 nutrition, caring for the differently                  goods (i.e., ii) even by carrying a heavy burden of
                 abled and old, etc., come under this                   subsidies.
                 category. These goods which are generally                    The WB document—the World Development
                 distributed free of cost at times, might               Report, 1999—was a judgement on the possible
                 reach the beneficiaries at subsidised prices.          and suitable role of the state in the economy, which
                 The loss incurred by the state in this way             suggested a timely shuffling of state’s role in the
                 is paid out of the public exchequer which              economy as per the socio-economic and political
                 means that the whole economy pays for                  needs of the economy. We may understand the
                 the cause of a few people).                            moot question via Keynes for whom the political
          As different economies select different roles                 problem of mankind is to combine three things:
     for the state according to their socio-political                         (i) economic efficiency,
     ideologies, the world had differing ways of                             (ii) social justice, and
     organising the economy and had resulted in the
                                                                            (iii) individual liberty
        6.    A highly concise and to-the-point idea on the issue comes       In the process of realising the above-
              from Joseph. E. Stiglits, ‘The Role of Government in      mentioned objectives, an economy cannot go for
              Economic Development’, the keynote address at the
              Annual World Bank Conference on Development               either allowing only state’s role in the economy
              Economics, 1996.                                          or only the market’s role in the economy. These