ABSTRACT
The last decade has seen an impressive challenge by laissez-faire and pro-market strategists to the pro-state theories advanced by post-Second World War economists. The debate is not at all new since the discussion of the relative merits of market and state has been the cornerstone of political economy from the beginning. A short retrospective analysis is, therefore, useful in order to assess what is actually new in the 1990s. Conceptions concerning the self-regulating mechanism of markets have come full circle. During the Great Depression, the majority of economists criticized all institutional impediments to free functioning of markets. Too many regulations and state interventions were assumed to be the direct cause of unemployment, stagnation and financial instability. Only a minority of social scientists argued that it was the very nature of ‘pure’ and ‘perfect’ markets to trigger large instabilities and/or stagnation.
