The ends and means of public policy

How to appropriately balance the state and the market in public policy was arguably the defining question of the 20th century. The Western experiment with communism ended symbolically with the fall of the Berlin Wall in 1989. By that stage, public policy in the capitalist countries had grown quite sophisticated, and was much more than unchecked free markets. Notably, many of the liberal economies of the West had extensive welfare states with public health, education, transport and social security. These ‘social wages’ could be paid in large part because the use of markets to efficiently allocate resources to their most productive use in these economies had the led to the accumulation of significant wealth that could be redistributed by government. Liberal-democratic and social-democratic institutions ensured that this wealth was actually redistributed, or at least provided an avenue for protest when it wasn’t. Citizens of these societies could have their cake and it eat it too—they could enjoy both the private wealth of a market system and the social protections of a socialist one.