'Private' Means to 'Public' Ends: Governments as Market Actors

Abstract

Many people recognize that governments can play salutary roles in relation to markets by (a) “overseeing” market behavior from “above,” or (b) supplying foundational “rules of the game” from “below.” It is probably no accident that these widely recognized roles also sit comfortably with traditional conceptions of government and market, pursuant to which people tend categorically to distinguish between “public” and “private” spheres of activity. There is a third form of government action that receives less attention than forms (a) and (b), however, possibly owing in part to its straddling the traditional public/private divide. We call it the “government as market actor” form, whereby government instrumentalities pursue traditionally “public” ends through traditionally “private” means. Inattention to this pervasive form of government action might signal a theoretical blindspot attending the public/private distinction itself. At least as importantly, however, this inattention also denies us a practical opportunity: it prevents our more fully exploiting the government role in question. This essay, part of a larger project, aims to encourage fuller theoretical appreciation and wider practical use of the role we identify. It first offers a provisional taxonomy of recurrent forms that the government market actor role appears to take, affording a wealth of illustrative case studies in so doing. It then envisions additional good that governments might do, simply by extending their market acting roles to spheres in which they have yet to be fully utilized. The essay concludes by suggesting next steps in both theorizing and employing the government market actor role.

Keywords: Central Banks, Finance, Financial Regulation, Government, Government Sponsored Enterprises, GSEs, Markets, Macroprudential Regulation, Monetary Policy, Private Law, Public Law, Public/Private Divide, Regulation, Soveign Wealth Funds