Markets and Governments

This volume is an important contribution to the growing discussion on governments versus markets. The early debate was comparatively uncomplicated. Should there be a big government or one with a smaller role? Should we have free markets with no government intervention or let the state run the economy? The battle-lines were clearly drawn and economists, policy-makers and social commentators took sides according to their beliefs, intellectual orientation, and sometimes, convenience. Over the years, the arguments of professional economists on the subject have grown increasingly sophisticated. Few people now believe that things can simply be ‘left to the market’. Economists understand that there are ‘market failures’ just as there are ‘government failures’. A modern market cannot run efficiently unless there is a proper system of governance. But exactly what constitutes ‘appropriate regulation’ and what is ‘good governance’ are very hard questions to answer and will be the subject of research for some time to come. The current debate is increasingly centred on where government intervention is required and what is best left to the market. Contributions by leading academics from around the world including three Nobel Laureates: Amartya Sen, Joseph Stiglitz, and George Akerlof, discuss general analytic and theoretical problems of markets and the state, and comment on specific sectors such as environment, education and social security. The papers have a development focus and are of special interest in India.