Compare the way in which institutionalists and Marxists conceive of Essay

Compare the way in which institutionalists and Marxists conceive of the state and its role in the economy - Essay Example By the 1960s, there was ageneral opinion of living in a ‘mixed economy’ (also known as organised capitalism), which changed dramatically since the mid-1970s, when Neo-Liberalism came into existence thataimed atending mixed economy and bringing back market principles unimaginable inthe years just after the WWII.The emergence of Neo-Liberalism in the last few decades has changed the nature of debate on the State’s role, and the state is no longer regarded as a neutral guardian of its citizens, but as a major tool in the hands of the economically powerful social classes or as a predator (Chang, 1994). In this context, the essay will examine the Institutionalists and Marxists notions on the state and its role in the economy, two major theories on political economy that were popularduring the latter half of the twentieth century. The term ‘free market’ generally refers to economy that is free from state intervention. To analyse whether a particular market is free or not, one must review the underlying institutions thatframe the structure for obligations and rights of participants in a specific market,along with various other ‘externalities’ (Schotter, 1985). The institutions that must necessarily be analysed includeregulations(formal and informal ones) that govern the organisation and exercise of interests (regulations on lobbying, political relationshipsand incorporation);ideologiesassociated with concepts of rights and justiceprevalent in that particular society; andthe institutions that ascertainstructural changes in rights and obligations, such as processes for social or legal changes. Therefore, by defining ‘free market’ and ‘state intervention’one can also analyse whether market failure is evident and if state intervention may make the failing market more efficient. From the perspective of the