Supply-Side Policies: Interventionist

While market-based supply-side policies seek to reduce government involvement, interventionist supply-side policies take the opposite approach — they involve the government actively investing in the economy to correct market failures, improve human capital, and build productive capacity. These policies are associated with Keynesian and New Keynesian economics, and were particularly prominent under the Blair/Brown governments (1997-2010).

Key Definition: Interventionist supply-side policies are government actions that directly invest in or support the development of the economy's productive capacity, addressing market failures that the private sector alone would not correct.

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The Theoretical Foundation

The case for interventionist supply-side policies rests on the recognition that markets sometimes fail to deliver optimal outcomes. Key market failures that justify intervention include: