Regulating World Markets in a Liberal Global Economy

Abstract

There is an apparent paradox in the title of this essay: regulating markets would appear to be incompatible with a liberal global economy, yet we shall argue that the global economy is not quite as liberal as is sometimes claimed, that illiberal regulation of markets persists and in some cases ought to be removed, whereas in other cases efficiency and equity might increase if there were greater regulation of the global economy within a broadly liberal framework. A liberal economy is not the same thing as a laissez faire economy and a degree of market regulation is indeed compatible with a liberal global system. The question is not whether liberalization always is desirable but what are the circumstances under which economic performance would be enhanced by deregulation and, conversely, under what circumstances would intervention in market processes be beneficial.