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The Limits of the MarketThe Pendulum Between Government and Market$
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Paul De Grauwe

Print publication date: 2017

Print ISBN-13: 9780198784289

Published to Oxford Scholarship Online: January 2017

DOI: 10.1093/acprof:oso/9780198784289.001.0001

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Who is in Charge? Market or Government?

Who is in Charge? Market or Government?

(p.97) Chapter 9 Who is in Charge? Market or Government?
The Limits of the Market

Paul De Grauwe

Oxford University Press

This chapter argues that the high labour costs in Northern Europe are the result of high productivity, which generates purchasing power, allowing people to buy new goods and services, and also the means to expand collective facilities and social security. These facilities form a necessary counterweight against a market system which is seen as cold and unfair. Without these corrections the market system approaches its limits and will be rejected at some point. Without government to provide public goods and social security, a market system cannot survive. At the same time a strong market system generates the resources for a strong social security system. Market and state are like twin brothers, inseparable and serving to reinforce one another. That is also apparent from the data on competitiveness and labour costs. The Scandinavian countries, which have the highest labour costs, belong to the most competitive countries in the world.

Keywords:   productivity, labour costs, competitiveness, public goods, social security

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