Eastern Europe, Caucasus and Central Asia, market economy, Post-communist transition and development issues, state intervention

Christopher Hartwell: To talk about state intervention into markets is to really confuse the issue

On June 16, Christopher Hartwell, President of the Center for Social and Economic Research (CASE), gave the keynote speech at an open discussion on the topic of state intervention into the market. The event, held in Vilnius but focusing on conditions in Belarus, gathered numerous students from the European Humanities University (EHU) to discuss the pros and cons of state intervention. Sponsored by the Konrad Adenauer Stiftung and supported by the Wilfred Martens Center, the discussion was one of a series of student-led debates.

Dr. Hartwell’s speech focused on key differences between the state and the market. “The state is a collection of political institutions, staffed by humans, using human actions, but somehow it is granted special status or possessing a special ability to act in ways in which others are forbidden from acting,” Dr. Hartwell noted. The market, on the other hand, “is a decentralized function for communication of human desires – mainly willingness to pay”.

Having defined these two concepts, Dr. Hartwell made a point that the state intervention into market idea is essentially self-contradictory: “to talk about state intervention into markets is to really confuse the issue. Markets exist outside of the state, and any state intervention necessarily changes the composition of that market from what it would be absent intervention”.

He concluded his speech with a statement that the issue of state intervention pits two competing mechanisms of human action against each other. “On one side is a decentralized, effective mechanism for coordinating millions of anonymous actors and generating a benefit for each of these actors. On the other side is another manifestation of human action, a collection of political institutions, populated by humans with their own incentives and goals and with special moral dispensation to violence if the edicts of the state are not followed.”

During the ensuing discussion, various economic arguments for and against state intervention in the Belarusian economy were debated, especially in light of Belarus’ authoritarian political system. Questions regarding the desirability of economic integration and the role of trade were also mooted, along with conjecture on how reform could be achieved in Minsk.