The Role of Government
  “What should governments do?” forms perhaps the oldest continuous debate in political philosophy, even if the debate over the economic role of government is more recent. The extent of government involvement is, in many ways, the most fundamental of ideological divisions. A continuum can be visualized between those on the far Right, who, favour the absolute minimum of government involvement; and the far Left, who favor total government involvement in the economy. The Right  argues that individuals should be left to make economic decision for themselves. While the Left believes that only collective action and ownership or intervention by the state can solve the social problems and inequalities thought to be inherent in capitalists. It is generally the case that leftist regimes have favoured greater government involvement in production while rightist regimes have favoured less.
  Political debate usually takes place some distance from each end of the continuum; however, at different times in Western societies over the past two centuries, the pendulum o
f state involvement has oscillated between different points on it. During that time period there have been several main phases of government involvement.
The laissez-faire society
  For present purposes, the late eighteenth century is a　reasonable starting point for discussing the role of government in mixed economies. This was the final stage of mercantilism, a time in which governments were intimately involved in the minutiae of the economy. Regulations were especially directed at developing the wealth and power of the nation by restricting external trade, but they also entailed internal regulations addressed to national purposes. The general aim was to use government to further the economic ends of the nation, but by a set of ad hoc decisions rather than a clear, consistent programme. The mercantilist’s role for government was large and intrusive; in other words, the political part of society was to dominate the economic.
  As a reaction against this kind of society, Adam Smith wrote The Wealth of Nations in 1776, in which he argued, in addition to advocating free trade among nations, for a greatl
y reduced role for government.
  Smith envisaged a smaller role for government than that in place at the time. The first duty- that of defence- has always been a government role, even the main reason why governments exist at all. The second duty- to provide a system of laws- has two main aspects. It is an extension of the defence role within the country; a society needs to protect itself from those unwilling to abide by its rules. It also has market role. The free market system Smith advocated needs a system of laws to enforce contracts and to safeguard property.
  The third duty is rather more complex. There are certain goods government can provide for the benefit of society as a whole, but for which it is difficult to devise any way of making the direct beneficiaries pay, such as roads or bridges. These goods, later called ‘public goods’, are best provided by government. It is not easy to specify exactly which activities fall with the third point, but much of what we would now call‘ infrastructure’ was clearly meant to be included, in Smith’s view, as was education of at least a basic kind.
leftist
  Other than these rather minimal functions, the desirable role for government in Smith’s view was to simply stay out of economic life as possible. Market processes would, by themselves, lead to better overall outcomes than those which could be achieved by government. The basis for this theory is the reverse of mercantilism. Government should be simply the facilitator for the market and should step in  as a last resort. The importance of Smith is that his views have enjoyed substantial continuity to the present day. The neo-classical or libertarian economists of the late twentieth century certainly say Smith as the key influence on their ideas.
The rise of the welfare state
  In the nineteenth century, especially in Britain, there was a serious attempt to establish the kind of minimal state advocated by Smith and his followers. However, although overall living standards greatly increased in Victorian Britain, there were unfortunate side-effects, including the exploitation of child labour, inadequate housing and poor public health. It was in part as a reaction to the excesses of laissez-fair capitalism that Marx and others ar
gued in the mid-nineteenth century that there were contradictions within capitalism which led irrevocably to the exploitation of workers. Towards the end of the nineteenth century what later became known as ‘the welfare state’ arose to alleviate some of the worst excesses of capitalism by re-establishing the state’s responsibility for the well-being of its citizens.
  Many European countries had substantial welfare programmes by the turn of the twenties century. but, due to the greater persistence of laissez-fair thought, the first programmes in the United Kingdom were only adopted just prior to World War Ⅰ, and in the United States not until the Roosevelt years of the 1930s. This period and the immediate post-war period were the high points of what the Friedman call ‘Fabian socialism and New Deal liberalism’ . In the United Kingdom and European, but not the United States, there was also a related programme of industrial nationalization in order that the commanding heights of the economy should be kept in public hands. In the period after World War Ⅱ, most European countries adopted ever more elaborate welfare programmes  to safeguard their citizens ‘from the cradle to the grave’. They provided gen
erous unemployment benefits, universal health schemes, educational assistance and social aid programmes aimed at the disadvantages. 

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