The state at all times of its existence played a role in a market economy. It performed various economic functions (collection of customs duties and taxes, protection of private property, etc.), and also acted as a “watchman”, which should protect private activity. The role of the state in a market economy, as well as its functions, underwent significant changes in the 20th century.
Today, the following economic functions of the state can be formulated:
1. Legal regulation of the functioning of private business.
2. Financing of production.
3. Redistribution of income through transfer payment systems and progressive taxation.
4. Funding for basic science, environmental protection.
5. Regulation and control of prices, employment, economic growth.
6. Providing social guarantees and social protection to all segments of the population.
The state in a market economy has an impact in two directions: through the impact of various economic arguments on the functioning of the private sector and through the public sector. The modern economy consists not only of the private sector and entrepreneurship, but also of their public sector and entrepreneurship. In the XX century, it became one of the full subjects of the economy, and began to act as a producer, investor, buyer, etc.
The public sector in a market economy is based on state ownership, prevailing in the national, capital-intensive, unprofitable and unprofitable sectors, the development of which is unprofitable from the point of view of private business. State property is industrial infrastructure (communications, roads and railways, energy, etc.), social infrastructure (healthcare, education, environmental protection, etc.), the latest high-tech industries, the development of which requires considerable initial costs ( nuclear energy, aerospace industry, etc.). If we talk about the boundaries of the public sector, then they are never permanent. The share of state property may vary based on the level at which its combination with private property best contributes to the growth of socio-economic efficiency and the solution of the problems of stabilizing the economy.
In general, the role of the state in a market economy is difficult to overestimate. It protects entrepreneurs from attacks by monopolies, creates the most favorable conditions for the development of economic activity, and resolves issues of national defense and defense. Occupying a special place in the economy, the state at any time can concentrate the necessary resources to solve certain problems. The role of the state in a market economy is not always seen as positive. So, in some cases, government intervention can significantly weaken the market mechanism, cause great harm to the country's economy. A similar pattern was observed in 70-80 years. of the last century in France, when the high activity of state intervention in the market economy led to the outflow of capital from the country, due to which the pace of economic growth fell significantly. To get out of this situation, deregulation and privatization were needed, which was carried out in 1986.
In the XXI century, it is generally accepted that the economy should be social, therefore, mankind seeks to combine a market economy with the state’s social policy and ecology. This can only be achieved if the role of the state in a market economy is only positive, and human rights and dignity will be the highest value.