State Intervention in Times of the Global Economic Crisis

Abstract

The outbreak of the global financial and economic crisis in 2007 brought the “active state” back into business. Western industrialized countries are now experiencing a return to stronger state interventions in the economy, which are considered as the answer to the tremendous distortions brought by the crisis. This crisis had its origins in the US financial sector and led to the near-collapse of the whole US financial system. The US crisis quickly spread to other Western countries, thus becoming a global problem. It also was not confined to the financial sector and spilled over — with a slight delay — into the real economy. These distortions had the effect that states, which had previously been reluctant to intervene, implemented rescue packages for individual companies or undertook industrial political measures for whole sectors.