State Intervention: Theory And Practice

This paper traced back the history of the theories of state intervention from the mercantilism, the bud of the theory of state intervention, to the classical economics, the dormant age of the theory of state intervention, to the developed modern theory of state intervention finally.The innovation of the paper lies in the new angle of view that attributes the formulation of the developed theory of state intervention to the successful reconsideration of"market failures"and"government failures". Neither laissez-faire nor all-sided intervention is right. We need a prudent and flexible principle when the state intervention tools are used. According to the conditions of our economy in the process of the transition of economical institutions, the paper recommended a pointed and active role to the government whose power has been limited to a finite and narrow extend by the economical liberalism today.