Section 1 Critical Report Political economy examines the relationship between the state and the market. It explains how the government interacts with economic agents within the state boundary. Scholars have formulated various theories to explain how the state should relate to the economy. The major debate is whether the state should intervene in the market. Some scholars observe that state intervention is inevitable in case normalcy and constancy is to be restored in society. Such scholars observe that the market is exploitative, meaning that it should not be left to exist independently. This view is held by neo-liberalists. The scholars observe that the idea of free market economy does not hold because producers from time to time tend to hoard important products that can easily bread violence within the state. It is therefore the responsibility of the state to intervene in the operations of the financial system to guarantee peace and stability. On the other hand, there are scholars who argue that the market should be left to operate according to its internal logics (Ricardo, 2009). To such scholars, intervening in the market would be suicidal because manufacturers and investors tend to shy away from controlled economies. Scholars such as Thomas Ricardo and Adam Smith uphold this view. The theory supporting this strand is referred to as liberal theory. Marxists and neo-Marxists have a different stand as regards to the operations of the market. These scholars observe that the owners of the means of production control the market. The proletariat has nothing to offer in society apart from his/her labor. To Marxists, the state is the property from the rich, which is often used to subjugate and oppress the poor. Karl Marx noted that the ruling class would one day lose power to the proletariat due to a number of reasons. This paper attempts to explore the relationship between the market and the state since the time of Plato to present day. Stages of Capitalism and Effects to Society The contemporary capitalistic system can be traced back to the fourteenth century whereby a conflict emerged between the owners of land the workers. Everything was running smoothly before the fourteenth century since serfs and lords never produced for the market. The economy was domestic meaning that people produced goods for domestic consumption. The crisis of the fourteenth century caused many tribulations. It was occasioned by poor weather conditions and technological stalemate in the agricultural sector. Through the revolution, serfs acquired land while some moved to urban area in search of greener pastures. The collapse of manorial system in England generated a class of tenant farmers meaning that they were at liberty to market their goods. Through this, they could acquire new technology that was later used in advancing farming. Through this relationship, a new form of capitalism set foot, which was referred to as feudalism. Feudalism paved way for mercantilism, which was a major form of capitalism. According to Karl Polanyi, even though mercantilism aimed at commercialization, it never interfered with basic production elements such as labor and land (2006). He notes that competitive labor market was only in