Influence of economic policy methodological bases on the social function of the state

The problem of the participation of modern states in a certain regulation of national economies is debatable today. Most of the developed countries and international institutions now follow the neoliberal approach, which recognizes the leading role of free market in the regulation of economic relations. This approach synthesizes modern achievements of neoinstitutional and neoliberal economic theories. The main document comprising these is the so-called "Washington Consensus", whose provisions, in spite of the criticism, are continuing to influence policies of the developing countries in many respects. The paper analyses theories and concepts that constitute its base and eventually justify the world economic order formed. The author''s aim was to show that the methodological orientation, if distorts and simplifies economic reality in order to please a few countries and international institutions interested, can have serious consequences for social policy. It was shown that each of the economic theories being analysed, if taken as a starting point of reasoning, has a particular general idea of the human nature, human''s needs and mode of existence. Market fundamentalism persistently imposes to the world community an idea of a man as a homo economicus, which suggests a significant limitation of economic and social functions of the state. Today there is a risk of destruction of the most important social institutions such as education, health care, social security, which were created in the late XIX century with the active participation of the state. The failure of neoliberal policies was demonstrated during the reforms of the 1990s in Russia. Our country gave an extremely important lesson to the whole world community having proved that capitalism, if not limited by the law and not restricted by the state, becomes a source of deep social disruption. The current challenge is to recognize the failure of market economy as a substitute of the state social functions and to arrange economic order so that the conditions for free development of human capabilities are created. The paper could be interesting for the representatives of public authorities, politicians, researchers and students studying history of economic thought.