Government Hurts the Economy More Than It Helps

  • Margaret Levi


To quote Nobel Laureate Douglass North (1981, p. 2), “The existence of the state is essential for economic growth; the state, however, is the source of man-made economic decline.” Long debunked but still kicking is this knee-jerk view, held by too many contemporary economists, that only the second half of this proposition is true and, moreover, that it is true at all times and in all places. Adam Smith, long considered the progenitor of theories of the limited state, was actually one of the first modern advocates of productive government involvement in the economy. For Smith, it is private interest embodied in good husbandry governed by the protection of property rights that produces public virtue. He advocated a combination of the division of labor, the invisible hand, and—lest it be forgotten—appropriate public laws, policies, and practices that enable individuals with wide-ranging capacities to generate economic growth for the country in which they reside.

Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  • Margaret Levi
    • 1
  1. 1.Stanford UniversityStanfordUSA

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