Community, Market and State in Development: An Introduction

Abstract

The classical economists rejected the mercantilist doctrine of state intervention and regulation, and called for a retrenchment of state activity in order to allow for the operation of free-market forces. However, a market cannot exist in a vacuum. It is artificially created, and can function only if the players in the market, such as producers, wholesale traders, retailers, and consumers, follow the rules of the free market. The implication here is that the government has to play a very positive role to encourage the smooth functioning of the market by enforcing rules and regulations to eliminate constraints to overall economic growth and development. Thus, the successful operation of a free-market economy is greatly dependent on the effective functioning of the competent government.