State (Government) Regulation of the Capitalist Economy, the system of economic and political measures taken by the state in the interest of private capital. It began to emerge at the pre-monopoly stage of capitalism, when it became clear that many economic problems and contradictions could not be resolved within the context of free competition. Under pre- monopoly capitalism, state regulation essentially amounted to creating external conditions for private capital to function at a profit. At that period the bourgeois state pursued an active foreign economic policy, and helped establish the infrastructure and develop the military industries. State economic regulation was given a fresh impetus under monopoly capitalism when internal and external contradictions sharpened. It has become state-monopoly regulation of the economy, and is now used to strengthen and consolidate the domination of finance capital and the leading monopoly groups. Without it, the modern capitalist economy could not operate. Practically all spheres of the economic life of capitalist countries are drawn into its orbit, as well as foreign economic relations. Alongside the overall objective of state-monopoly regulation—to consolidate the domination of finance capital—there are also many concrete objectives which become of greater or lesser priority depending on the acuteness of the contradictions and any other difficulties the capitalist economy is facing at the given moment. Among them are the stimulation of economic growth, problems of jobs, improving the balance of payments, the fight against inflation, modernisation of the economic structure, etc. The main areas where state-monopoly regulation is instituted include the cycle of production, the sectoral and territorial structure of the economy, scientific and technical progress, foreign economic ties, and social relations. Anti-cyclic regulation largely consists of curtailing the growth of capital investment and production when the economy is expanding, and trying to prevent the overaccumulation of capital and the overproduction of commodities in order to reduce the gravity and length of the period of falls in production, investments and employment during the impending crisis. State agencies stimulate the demand for commodities and services and the growth of investment and employment during crisis and recession. Additional financial stimuli are created to stimulate the economic activities of private capital, and state investments are increased. State-monopoly regulation of the sectoral and territorial structure is also carried out with the help of financial stimuli and 343 state investments, which ensure more favourable conditions for certain industries and regions and encourage their accelerated development. State regulation agencies also try to interest private monopolies in the promotion of scientific research and application of its results, in the export of commodities, capital, and scientific and technical information. The material base on which state-monopoly regulation is founded is comprised of part of the national income which is redistributed via the state budget and used to satisfy the requirements of the economy, and the state economic sector. State-monopoly economic regulation is implemented through administrative, credit and monetary levers, and the policies carried out in the state sector of the economy. Credit and monetary levers imply the regulation of interest rate, minimum bank reserves, and certain measures on the stock market. The state draws on these levers to modify the balance between the supply and demand of money in a preset direction. Budgetary levers consist of taxes, the state-sanctioned premature depreciation write-off of fixed capital, and the granting of state credits, subsidies and guarantees. The state uses these to either increase or decrease the financial stimulation of private capital investments, scientific research, and the export of commodities and capital. State regulation agencies actively influence demand via government capital investments, as well as via state purchases and contracts, drawing on the budget funds. Military purchases and construction contracts are of special importance. The state usually invests in those industries where private capital is hesitant. State purchases and contracts enrich monopolies and modify the economic structure, as the state pays exorbitant prices. Government military orders warp the economy of the capitalist countries. Due to them, the tax-paying public is robbed by the military industrial monopolies, while capital and labour are diverted from productive uses; the emergence and development of the military industrial complex is the major result. The most widely used instrument of state-monopoly regulation of the economy is state ( government) economic programming under capitalism. The opportunities to regulate the capitalist economy by the state are restricted, first, by the basic economic law of capitalism, under which private owners make economic decisions in the interest of higher profits, and not in the interest of state regulation; second, by the amount of money at the disposal of the state; third, by the scale of mass struggle against the redistribution of national income by the state to the advantage of private capital. Some of the current major factors restricting the effect of national forms of state- monopoly regulation are the growing interdependence of the capitalist countries’ economies, and the activities of the transnational. The system of state-monopoly regulation cannot resolve the most urgent problems modern capitalism faces, in particular those linked to inflation and unemployment, which testifies to the fact that this system is in crisis. Another testimony to the same fact is the gravity of the economic crisis of 1974-75, and the new slump in production in 1980. It is becoming increasingly evident that state regulation of the capitalist economy is a highly contradictory phenomenon. While instituting measures to curb inflation, the bourgeois governments promote the stagnation of production, and hence unemployment; while trying to limit declines in production during crisis, they fuel inflation. The constant upheavals in the economies of the capitalist countries prove that state regulation of production is intrinsically alien to the private capitalist system, and that the modern productive forces require new relations of production founded on public ownership of the means of production.