The statement articulates a fundamental challenge in modern governance and economic policy: finding the optimal equilibrium between the dynamism of a competitive market economy and the corrective, regulatory, and welfare-providing functions of an effective state. It advocates for a pragmatic approach, often termed a 'mixed economy,' where each entity plays to its strengths.

Justification for 'Markets Where Possible': Competitive market economies are powerful engines of growth, innovation, and efficiency. They should be allowed to operate freely wherever they can deliver optimal outcomes because:

1. Efficiency and Resource Allocation: Markets, driven by competition and price signals, are generally efficient in allocating resources to their most productive uses, responding to consumer demand and producer supply.
2. Innovation and Growth: Competition incentivizes firms to innovate, develop new products, improve quality, and reduce costs, leading to economic growth and higher living standards.
3. Consumer Choice: Markets offer a wide variety of goods and services, catering to diverse consumer preferences and empowering individuals with choice.
4. Decentralization: Economic decisions are made by millions of individuals and firms, rather than a central authority, leading to greater flexibility, responsiveness, and less bureaucracy.

Justification for 'The State Where Necessary': Despite the strengths of markets, they are not perfect and often fail to achieve socially desirable outcomes in certain areas. This is where an effective state becomes indispensable:

1. Correcting Market Failures:
   • Public Goods: Markets under-provide public goods (e.g., national defense, street lighting) because they are non-excludable and non-rivalrous. The state must step in to provide these.
   • Externalities: Markets fail to account for the social costs (negative externalities like pollution) or benefits (positive externalities like education) of certain activities. The state can intervene through regulations, taxes, or subsidies.
   • Information Asymmetry: Unequal information between buyers and sellers (e.g., in healthcare or insurance) can lead to inefficient or unfair outcomes. The state can regulate to ensure transparency and protect consumers.
   • Monopolies: Unregulated markets can lead to monopolies, which stifle competition, exploit consumers, and reduce innovation. The state regulates monopolies and promotes competition.
2. Income Redistribution and Social Equity: Markets, while efficient, can lead to significant income and wealth inequality. An effective state intervenes through progressive taxation, social welfare programs (e.g., unemployment benefits, food stamps), and public services (e.g., affordable healthcare, education) to ensure a basic standard of living and reduce disparities.
3. Providing a Legal and Regulatory Framework: Markets cannot function without a robust legal system that enforces property rights, contracts, and consumer protection laws. The state provides this essential framework.
4. Macroeconomic Stability: The state, through its fiscal and monetary policies, plays a crucial role in stabilizing the economy, controlling inflation, managing unemployment, and preventing severe recessions or booms.
5. Provision of Essential Services: Beyond public goods, the state often provides essential services like education, healthcare, and infrastructure, which are vital for human capital development and economic productivity, even if markets could theoretically provide some of them.

Conclusion: The 'right balance' is not a fixed point but a dynamic equilibrium that varies across countries and evolves over time. It recognizes that neither pure laissez-faire capitalism nor complete state control is optimal. Instead, a mixed economy, where markets are allowed to flourish under a framework of state regulation, intervention, and welfare provision, tends to yield the most sustainable and equitable development outcomes. The state's role is to complement, not supplant, the market, ensuring that economic activity serves broader societal goals while harnessing the market's inherent strengths.