The Economic Role of Government in the History of Economic Thought

Unpublished working paper. Prepared during postgraduate study at the Doha Institute for Graduate Studies; not published in a peer-reviewed journal. The full text is in Arabic and available as a PDF from the top of this page.

Abstract

This paper examines the long-running intellectual argument between advocates and opponents of state intervention in economic activity, tracing how that role evolved across schools of economic thought.

It begins from the two poles: the socialist school, which granted the state a monopoly over economic activity through central planning, and the classical school, with its night-watchman state confined to defence, security and justice while economic activity was left to individuals. It then shows how the foundations of laissez-faire were shaken by successive crises — most recently the global financial crisis — which opened the way for the state's return, not merely as supervisor and regulator but as a parallel economic actor.

Sections

• The state's economic role in classical and Marxist thought — from Adam Smith to Karl Marx
• The twentieth century, between Keynes and neoliberalism
• The debate reopened after the global financial crisis

Conclusion

The paper argues for a system combining free markets with fiscal policy instruments, leaving government able to influence the economy in both boom and slump through taxation and spending, while the private sector retains its role in capital formation and investment. The relationship it proposes is complementary rather than competitive, built on trust, with government concentrating on infrastructure and oversight rather than crowding the private sector out.