The Korean Economic Forum
Views on the State in Fiscal Policies
Dongsuk Oak (Incheon National University)Year 2023Vol. 15No. 4
AbstractThe problem of how to define the role of the government in public finance is the same as the view of the state(nation) that defines the reason for the existence of the state. There are various perspectives on the role of the government in the public finance, and this study classifies them according to the types of the view on the state. The views can be broadly divided into two categories: Based on the theory of state organism, the absolutist view of the state that the government should pursue values that are essentially different from the market; and the view of the state that the government and the market are compatible means that pursue essentially the same value based on the social contract theory. The theory of public finance reflects the latter view of the state, as it basically derives social welfare based on the utility of individuals. This can be further divided into three views: as a holistic plan for optimizing social welfare, the cost-benefit analysis that promotes partial improvement of social welfare, and the view as a service provider. Although it is difficult to give a clear answer on which fiscal and state views are desirable for fiscal management, this study argues that it is desirable to promote the evolutionary development of society while recognizing the government as a service provider.