FROM INTERVENTIONISM TO LIBERALIZATION

In the beginning of the last century, the strongest economies of the world initiated a process to establish necessary rules in their economies. The invisible hand of the market had to be under regulation to mitigate its perverse effects.

During WWI there were episodes of food hoarding and speculation. When the war was over, hyperinflation hit several countries of Europe. That provoked governments to intervene the economy to control such phenomena.

With the spread of Socialism, economic law was intended to regulate all those affairs arising from economic relations. The core instrument was economic planning.  Socialism influenced non socialist countries to adopt some principles of government intervention to ease social tensions.

When the Great Depression arrived in 1929, a reduction on the demand and credit caused unemployment and poverty widespread.  Then, the US Government established the Great Deal to overcome their evil effects and preserve justice and equity.

After WWII more government interventions were justified to rebuild the destroyed economies of those countries involved directly in the conflict. Moreover, by that time, several former colonies got independence, and for the new governments it was necessary intervene their economies and to enhance their institutions.

Government interventions on the economy were crafted through economic law and continue to do so. Economic law regulates, discipline and sanctions economic policy and planning and integrates the legal categories (formal) with the economic categories (material).

As long as government interventions were strong, unions and all kind of institutions in defense of social and economic conquests were created.

With diverse levels of intervention, the government regulated the economy through among others the following policies:  fiscal, monetary, financial, labor, market, private and public property, use of natural resources, investment, foreign economic relations, and the role of government itself that included the creation of enterprises to compete or complement the private sector.

With the time, government interventions went beyond economic reasons and responded more to political interests, depending on the conditions of each country.  The more or less government intervention performed until the free market economics of President Reagan and Prime Minister Thatcher was in place.

Later, the US Treasury Department, the World Bank and the International Monetary Fund, following the ideology of free market economics, set up an array of 10 points for developing countries in crisis that included policies in areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy. Globalization got force. ICT technologies contributed to that.

With the events mentioned, it appeared that government intervention, considered necessary in their early stages was over. At least, in the manner and with the purposes it was established through law economic.

Nowadays, government intervention with its visible hand is intended to regulate the government itself and interfere less and less in the economy, i.e. in the private sector. The importance of unions and institutions to defend the rights of the disadvantaged has diminished.

Privatizations, concessions, contracts and public -private partnerships are the rule of the game.  The main justification for such change is that government is a bad administrator and private sector can do things more efficient. It may be.

In general, even industries where the private sector was not interested in, like defense, public security, health and education, now are heavily privatized. 

In the last three decades a concentration of income and wealth has taken place around the globe.  Changes in labor arrangements are depriving more and more workers´ rights.

Like a century ago, market forces look uncontrolled once again. Eight years later, the most recent economic and financial crisis throughout the world still lasts in several countries dragging unemployment and poverty.

Government intervention has to be rethought.  Law economic and its material instrument, economic policy should be in favor of the well-being of most of the people; not the other way around.