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Intervention Vs. Non Intervention

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Intervention vs. Non-intervention
Charles Poor Kindleberger is a famed economic historian. He was the leading architect of the Marshall Plan (1945–1947). The Marshall Plan was initiated by the United States to aid Western Europe in which they gave $13 billion (valued today at $130 billion) to help rebuild Western European economies after the Second World War. There are essentially two opposing views on the nature of a market economy. Kindleberger believed that the market economy is inherently unstable, and a lack of intervention can lead to substantial social and economic costs and unnecessarily prolonged recessions. According to Kindleberger, "for the world economy to be stabilized, there has to be a stabilizer…". The opposing view to this is that market economies are inherently stable and fluctuations are just the economy’s attempt to adjust itself for optimal functionality. This view warns against active intervention and suggests allowing market forces to correct abnormalities and foster desirable outcomes.

The majority of contemporary macroeconomic models used by most governments and central banks is a convergence of the above two models. The general view is that decentralizing an economy stabilizes it and in the absence of external disturbances, a fluctuating economy will eventually and naturally stabilize itself. The booms and busts proposed by Kindleberger proponents as inherent features of a market economy necessitating intervention are seen by the opposition as not

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