State Control and Public Control of Business

Topics: Government, Public policy, Policy analysis Pages: 13 (2468 words) Published: January 10, 2013
1)Historical perspective
on public control of
framework of state
control of business.

What is business?
• The buying or selling of goods/services/activity of
making money.
However, the term is too vague.

• According to F.C Hooper: “business means a whole
complex field of commerce and industry, the basic
industries, processing and manufacturing industries
and the network of ancillary services, distribution,
banking, insurance, transport and so on, which serve
and inter-penetrate the world of business as a

What is business environment?
• It can be defined as the total surrounding,
which have direct or indirect bearing on the
functioning of business.
• The set of external factors(social, political,
legal etc.) which are uncontrollable in the
nature and affects the business decisions of
the firm.

Public policy
• In simple words it is a plan of action undertaken
by a government to achieve some broad public

• However, in the words of senator Daniel Patrick
Moynihan: “ public policy is what the
government chooses to do and not to do”.

• It may deal with a wide variety of
issues both vital or trivial.
• It may also deal with important areas
as defense, education, public health,
housing, employment, relief for
calamities, inflation and recession etc.
While it cannot ignore trivial issues
like changing the color of the currency

Areas of public policies
1. Economic management:
it is the most important area. Prior to onset of
the great depression, it was assumed that every economy is
self-correcting and moves towards the right direction to restore the nation’s economic health. But the great depression has changed the view. The self-correcting economy has been found to be inefficient in dealing with problems of depression.

With the emergence of stabilization measures adopted by
governments to combat recession and depression and the
concept of welfare state. It is assumed that state intervention is essential and inevitable in economic activities.

2. Labour management relations:
initially the management thought that labour
is like a vendible commodity that can be brought and
sold at any time. But the concept of industrial
democracy had made it imperative to adopt national
labour policy to protect the rights of the workers.

3. Shaping of public policies affecting the corporate
stakeholders expectations if unmet may
transform social concern into pressure on business
and government. A gap between the expected and
actual performance stimulates public issue.

4. Welfare state:
previously society blamed the unemployed
for their plight. But now-a-days it is believed that
every man has the right to do a good job, decent
food, clothing and shelter. It is the responsibility of
the government to guarantee these rights. This has
also led to a whole series of measures – such as
social security , aid to families with dependent
children, education, Medicare- designed to help
people whose basic needs have not been met for
one or the other reason by the market system

Classification of public policy

• Regulation is generally enforced through criminal
law statues which stipulate how people should
act towards one another.
• Distribution policies provide for goods and
services such as welfare and health segments of
• Redistribution policies aim at rearranging one or
more of the basic schedules of social and
economic reward as in the case of progressive tax
policies which tax away proportionately more
money from rich than poor.

• Capitalization policies include:
i) cash payments to farmers to improve
agriculture and
ii) tax subsidies to encourage exploration and
production in selected industries and audit
subsidies .
• Ethical issues have recently cropped up. These
include cloning of humans, death sentences,
euthanasia etc. The court don't settle these
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