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Neo-Liberalism. How is it Related to Free Market Fundamentalism - Essay Example

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Neo- Liberalism is a young economic and social theory (when compare with others) that promotes the idea of greater capitalism, with more government deregulation and privatization, free trade and shift to leaving the decision power with the market…
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Neo-Liberalism. How is it Related to Free Market Fundamentalism
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Download file to see previous pages The Roots of Neo- Liberalism
The popular ideology has its roots from the Father of Economics, Adam Smith, who advocated for less government role in markets, manufacturing and barriers to trade . This and other basic fundamentals such as the productivity of labor are mentioned in his book An Inquiry into the Nature and Causes of the Wealth of Nations. After the end of the World War, and during the Great Depression, liberalism was highly critiqued. The high level of unemployment, and downward spiraling business activity became the major threat to the foundations of Capitalism and it was at this time that prominent economists such as John Maynard Keynes and Margaret Thatcher stepped up with their theories that questioned such matters as the employment line and government intervention. Keynes’ belief was that the government could indeed be used for the purposes of taxation and borrowing, to stimulate and expand economies rather than simply to shelter storms . The two factors economies are measured by are employment determination and income distribution. Keynesianism felt that the economy would time and again result in weaknesses of employment demand generation, such as the Great Depression, and this could be cured with the use of monetary and fiscal policies. The Keynesian model would dominate Capitalist economies for nearly 35 years after the World War, introducing new institutions and unions.
Although Keynesianism as an economic model rose to become accepted reality for more than a quarter of a century, it would be replaced by the contradictory policies of neo- liberalism by the end of the 70’s. The switch between policies occurred over many reasons. Some attributed it primarily to global events such as oil price shocks, and the Vietnamese war, while others have placed the divide between Keynesians over policies as a primary reason. Others believed it was due to the lack of implementation of Keynesian policies in particular borders or countries due to rising globalization at the time. But one factor that all historians agree unanimously on is the change in public opinion over the mixed economy. One writer of her time, Ayn Rand, is famous for penning down the fears of the public over extensive regulation and control in her magnum opus novel; a fictional work titled Atlas Shrugged. Whatever the reasons, an amalgamation of these factors is what led to the rallying of public opinion towards Neo-Liberalism. Amongst those who strove for this cause, the names of three economic philosophers are embedded in history- Friedrich Hayek, Milton Friedman, and Robert Nozick are most relevant in understanding the views of Neo- Liberals. Each man had a different viewpoint of why there was a need for an open market economy, and each has left a mark in their own right for contributions vital to the cause. Neo-Liberalism, as an economic model, has served the economy well in that the standard of living has generally been upwards since its wide acceptance. We have also, seen the development of institutions such as the World Bank and the International Monetary Fund pushing for the removal of trade barriers and a more globalized world as the by-products of this approach, and over the last half decade, we have come to observe that Neo-Liberalism has become a global phenomenon. But is this static in lieu of the Global Financial Meltdown of 2008? Are critics of Neo-Liberalist polices correct in linking it to ...Download file to see next pagesRead More
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