The STATE, the Markets, and the Community

Abstract

AbstractFreedom from fear of being dominated by others is a fundamental premise for a fulfilling life in a society. Hobbes argued that this can only be ensured if there is a visible central authority, the Leviathan. This central authority is the State, which would legally monopolize the use of violence, ensure law and order, and assure justice for all. But this Leviathan itself needs to be shackled and the power of the state appropriately tamed to operate within the bounds of the rule of law, lest it itself becomes the feared despot. The State must ensure security and justice for everyone, especially the weak, the disadvantaged, the marginalized, and those with special needs. Thus, perhaps the most important public good is an efficient and fair State, working in the interest of all and not just a select few. Laws must be written and adopted, but equally importantly, enforced and applied equally to all without fear or favour. Much is expected of the State, but what it can do effectively is a function of its capability. The two must be matched. Trying to do too much results in mediocrity, damages State credibility, and erodes trust. The State must therefore prioritize what it can do well and let the markets and society step up and address the remaining needs. The role of the State should be to enable the ecosystem for the markets to operate and societies to thrive in peace and security and assurance of justice.