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Governments Should Not Run Businesses But Only Provide Regulatory Framework For The Business - Essay Example

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It is said that "In a world of instrumental rationality institutions are unnecessary; ideas and ideologies don't matter; and efficient markets-both economic and political-characterize economies."- (Douglass C. North pp 1)
The Economic History of the World has traversed through various policies and schools of thought in different periods…
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Governments Should Not Run Businesses But Only Provide Regulatory Framework For The Business

Download file to see previous pages... These ideologies positioned themselves towards left, right or center way of political thinking. Several combinations of the political and economic ideologies have taken shape with a proper mixture of what was believed to be ideal at that particular point of time. These combinations took the form of Elitism, Pluralism and Corporatism, the purpose of these theories being to define and describe the relationship between Government, Business and Society. These theories, concepts and ideologies had also given rise to certain economic terms explaining the relationship between government and business, which are important and need an understanding to pursue our further discussions on this paper. They are:
Classical Economics - implying a minimal role for the government with greater independence for the business to act and interact on its own with the forces of demand and supply to bring in equilibrium of the economy.
Keynesian Theory of Economics - advocating a higher rate of interaction by the government on the market forces at a macroeconomic level, so that the advantages of such interaction can be possessed by the business. According to this theory no equilibrium of the economy will be brought by, without the interaction of an external force like that of the government.
Neo Classical Economics - identified the inefficiency the Keynesian theory to recognize the importance of economic infrastructural inputs like transport, ports, education, competitive market etc., which are vital micro economic factors to be considered for the wellbeing of the society. Any inefficiency creeping into these sectors because of the intervention of the government would result in the weakness of the total economy of the nation concerned.
"The framework of neoclassical economics is easily summarized. Buyers attempt to maximize their gains from getting goods, and they do this by increasing their purchases of a good until what they gain from an extra unit is just balanced by what they have to give up to obtain it. In this way they maximize "utility"-the satisfaction associated with the consumption of goods and services" - (Roy Weintraub 1985 pp1)
Although these principles provide different degrees of governmental interference in the businesses, to determine exactly the role of the government in bringing about the discipline into the business would be rather difficult and would depend upon the infrastructural and natural resources in reserve for the country. This paper attempts to bring about a comprehensive answer to the question, whether the government should extend its presence more into the various businesses or limit its role to a mere regulatory body so that it oversees that the business run smoothly and achieve the goals for which they had been established. The analysis of the answer to this question is being carried out by a review of arguments against the government owning businesses and also a review of the regulations by the government on the conduct of the businesses.
The Government Business Enterprises can be defined as" agencies and organisations which are established by government- usually ...Download file to see next pagesRead More
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