QS Study

Historical Background of State Enterprise

From the beginning of civilization, business was very simple and done in a limited way. Improvement of business started with the exchange of money. For a long time, people did their business by personal step. Actually, at that time business was very small and not complex. So there were no hard rules and regulations to run the private business. By the course of time when the state had come with a larger point of view and civilization started improving state enterprise became a bigger issue. There is a long history of state enterprise which is given below:

Free economist exists in the world since ancient times “Laissez-faire policy” developed in France during the early part of the ninetieth century. Adam Smith, a famous economist described the theory. He said the government needs no intervention in the countries business and industry. Privatization of business and industry will the path of development. The government will be busy only in the maintenance of administration and establishment of justice. But some serious problems arose due to the expansion of privatization discrimination took place in society. The major differences were created for poor people. As a result, most of the general people became poorer and also started to be discriminated. Thus, “The Laissez fair policy” started decline and communism were developed. Communism concept came as a solution to the laissaz fair problem and got a huge popularity.

Communism means government faring all the power and control ores the stale and the economy actualities by declining all the effects of privatization on business. Today there is no entry of other business is free from government intervention. Even the pioneer of capitalism named the USA is also not free from government effects on the economy.

After the 2nd World War “Social welfare policy” was developed with many enterprises are growing under the custom of government and also the government is slanting to keep custom ones private business also.

Where every industrial enterprise exercises their independence called capitalism. Where the main important industry remains in the hands of the state and the rest are given the independence it is called a mixed economy. If privatization is little prohibited then it is called the communist economy. With a view to, establishing communism the government of Developing Countries, like, Afghanistan, Uganda, Bangladesh, etc. has made many banks and insurance companies under the state. But due to unavoidable circumstances, a many of those companies are now in hands of private companies.