One Man’s Intervention

Policy debates today are often framed as debates over state intervention, pro or con. It’s assumed that we know what a state intervention is.

Ha-Joon Chang questions this assumption in a contribution to Institutions and the Role of the State. Whether child labor laws, environmental standards, or immigration laws count as “interventions” depends on where you look. Of the last, Chang writes, “many neoclassical economists who criticize minimum
wages and ‘excessively’ high labour standards in the advanced countries
as unwarranted state interventions that ‘artificially’ set up entry barriers into
the labour market, do not even regard the heavy restrictions on immigration
that exist in these countries as a state intervention (not to speak of supporting
it), although immigration controls set up an ‘artificial’ entry barrier into the
labour market as much as the above-mentioned ‘interventions’ do. This contradictory
attitude is possible only because these economists believe in the right of
the existing citizens of a country to dictate the terms of the non-citizens’ participation
in ‘their’ labour market, without explicitly stating their ‘political’ position
on this matter” (9).

He points out that defense, regarded by even the most libertarian of libertarians as a legitimate function of government, is in practice far more than defense: “the U S federal state, despite its laissez faire rhetoric,
has strongly influenced the country ‘s industrial evolution through defence procurement
programmes and defence-related R&D contracts – especially in industries
like computers, telecommunication, and aviation . . . .  So ,
again, the prevailing vision of the role of the state, where ‘defence’ is accepted
as one of the ‘minimum’ functions of the state (almost shading into ‘non-intervention’ ) , makes people underestimate the importance of the US federal government
in the country’s industrial development” (11).

Chang misses the fact that some do object to the state interventions that he claims are not disputed, but his general point is correct: “no market is in the end ‘free’ [better – absoloutely free from ‘state intervention’], as all
markets have some state regulations on who can participate in which markets
and on what terms” (10).