Neoliberalism Theory and Economic Development in East Asia - Essay Example

Neoliberalism theory and Economic Development in East Asia Neoliberalism theory and Economic Development in East Asia The term neoliberalism is a combination of two words neo and liberalism. Neo refers to any new ideology that can be harbored by an individual, a group of people or a nation. Liberalism on the other hand is more specific as it refers to any idea that can be regarded as political, religious or even economical. Neoliberalism theory has several definitions depending on how it is understood within any given locality. Nonetheless, the most suitable understanding of neoliberalism can be said to be the practice of achieving economic progress by allowing people to pursue what they believe in most. The theory of neoliberalism majorly revolves around five concepts; the rule of the market, cutting of public expenditure for social services, deregulation, privatization as well as eradication of the concept of public good. The points mentioned above are the pillars on which neoliberalism are based (Harvey, 2005). The principle of the rule of the market is based on creating a market that is free of any rules that exist irrespective of the consequences that may follow. The rule of the market also revolves around opening international trade thereby allowing interested parties to come and invest within a particular locality without much cost. Another concept within the rule of the market is that prices are no longer controlled by the government and that both goods and services can move freely within a given locality without any challenges standing on their way. The rule of the market recognizes the role that is played by the employees and aims at de-unionizing workers and scrapping off all bargain agreements that had been put in place prior to the introduction of the rule of the market (Chang, 1998). Overally, the principle of the rule of the market aims at ensuring that all stakeholders involved are participating in what they are good at. The second pillar of neoliberalism is cutting of public expenditure. This comes out when the government reduces funding on aspects such as education and health care. On the same note, the government reduces their level of participation while carrying out projects such as road maintenance, bridge maintenance as well as the supply of water. This though should not be misunderstood to mean that the government is abandoning its roles, nevertheless, it implies that the government is reducing how much it participates in such projects thereby allowing the people to carry out the projects in the manner that they know best. Neoliberalism is also based on the deregulation. This means that the power that the government holds that allows it to regulate items and costs is reduced majorly to prevent any incidence of the government reducing the profits that might have come with the project. Neoliberalism is also based on the aspect of reducing all things to do with public good. This is to mean that the government withholds all the support it used to provide to sectors such as healthcare, social security and education. Those who have low income are asked to find a way of supporting the education of their children. In a scenario where by they are unable to fund aspects such as treatment, the government deems this people as lazy. Neoliberalism is also based on the ideology of privatization. Privatization implies that the government sells all state owned corporations to private investors thereby allowing the private investors to offer better services than it used to provide. Some of the ventures that the government can sell include hospitals, banks, schools as well as other key industries at its disposal. Any government that is interested in neoliberalism can also let go ventures such as railroads, electricity supplying industries, freshwater supplying industries as well as toll highways. Though privatization has always been advocated for majorly for the purpose of raising the kind of the goods produced as well as the services offered, privatization has always resulted into poverty. This is majorly hinged on the event that the private owners have always charged way too much for the goods and services. This has always resulted in the public paying too much for the goods and services and the investors accumulating more wealth. History has it that the United Kingdom was the first nation where neoliberalism was implemented. Neoliberalism then spread to the USA before being fully embraced by the Anglophone nations. It is common knowledge that whenever an idea is introduced, it must be compared to the status of events. In as much as neoliberalism has been welcomed within different parts of the world, it has braved several conditions that can be termed as vetting conditions (Chang, 1998). This includes the fact that neoliberalism has to contend with the political practices within the particular nation. Similarly, neoliberalism has to contend with hypotheses that are created by different people to counter it as well as the different kinds of governments within which neoliberalism shall be implemented. For the practice of neoliberalism to be understood within East Asia, it is of importance to first come to terms with the level of development within East Asia. The Eastern region of Asia has overtime leaned towards the concept of developmentalism. This is to mean that as the concept of neoliberalism was being introduced within East Asia, the main obstacle that was standing on its way is that of developmentalism. Developmentalism was so ingrained into the people of Eastern Asia to an extent that it became a creed. Japan, which is the first East Asian nation to match up with the western nations in terms of development, opened its borders to developmentalism late in the nineteenth century. At that time, the leadership of Japan was trying to rebuild the whole nation following a period that was devastating to their economy. The government then clearly put distinctions between the private and the public sectors. In like manner, the government separated economics from politics given that the two when joined cannot lead to the accomplishment of the desired projects within the stipulated duration. From Japan, developmentalism in East Asia became the creed of nations such as Korea, the North and the South as well as Taiwan. In spite of the wave of developmentalism spreading through East Asia at that time, nations such as Singapore were slow to act and this explains the gap between these nations in terms of development. For starters it is far-reaching to recognize the fact that neoliberalism does not yield the same results everywhere it is applied. This is majorly because neoliberalism relies heavily on the geographical setting of the locality as well as the industrial settings of the area that it is introduced. In like manner, it has been said that though neoliberalism comes with the a whole set of policies, trends in technology as well as beliefs it rarely impacts both the society and the government immediately (Evans, 1995). Thus explains why the skeptics are always so first at discrediting neoliberalism at the early stages of its introduction. In the developing nations however, neoliberalism relies heavily on both the set-up of the particular nation as well as the take that other world regions have. Stakeholders will attest to one fact however, that the clash between neoliberalism and developmentalism is majorly hinged on the fact that the two hypotheses contain ideologies that contrast each other sharply. It is also of importance to recognize the fact that in many instances, industries together with those who work within the said industries oppose neoliberalism because they view it as something that denies them their source of income. That though is not saying that both neoliberalism and developmentalism are too antagonistic that they do not have anything in common. The two ideologies both foster the accumulation of capital as well as high economic performance. In a like manner, it is far-reaching to note that the two hypotheses reflect different mechanisms on how the state can intervene within the respective markets. Within the East Asia region, the development of neoliberalism has been faced with ideological clashes (Gao, 1997). Within the East Asia region, we can also say that the development of neoliberalism differs among various nations that have embraced it. The difference in neoliberalism is majorly due to the difference in the extent to which developmentalism was embraced by the various nations. Similarly, the developmental of neoliberalism depends on the national difference between the nations, the difference in endowment with resources between the nations as well as the difference in culture. The difference in rate of neoliberalism also relies heavily on the strategies that neoliberalism is put through as well as the institutions of politics that exist within the nations. Neoliberalism in Japan for example has been characterized with constitutional democracy and the fostering of the rights of the people. Japan has also focused on civil rights thereby ensuring that there exists consensus between the public and private sectors. Neoliberalism in Japan also recognized the great role that is played by workers in each work set up, because the workers were always encouraged in all the responsiblities that they took part. The Japan situation sharply contradicts the situation experienced in Korea where the government has the final say on everything that takes place within the market. Unlike Japan, Korea has mainly been ruled by the military that has suppressed both individual and civil rights thereby widening the gap that exists between the labor sector and government. The whole world can attest to the fact that the economy of East Asia has increased steadily for the last thirty years. Moreover, irrespective of the unpredictability of the world market, East Asia has been experiencing significant growth with China and Japan leading the pack. The fact that the region contributes a whopping 40% of the global growth is no mean achievement. Similarly, the fact that a third of global trade takes place within East Asia means that the region is integral towards the world establishing strong economic growth. This significant growth in the economy of East Asia has mainly been attributed to neoliberalism. This implies that the nations of East Asia focused on the creation of a friendly market so as to increase the growth of the economy. Similarly, the East Asia administrations agreed to scrap most of the laws that hindered flow of commodities within the market. This act led to the opening of East Asia to both local and international investors. In as much as the government reduced its participation win key industries like banks and hospitals, East Asia defied the norm by ensuring that the investors who took over did not accumulate wealth but rather improved the quality of goods and services that were being produced and offered to the local population for consumption and trade as well as the international market. This has resulted into the continuous softening of commodity prices there by preventing inflation and spurring continuous flow of cash within the economies of the various states. In as much as the government reduced funding for services such as education and healthcare, the government provided and opportunity for the individuals who had low income to make more than they used to make (Pirie, 2005). In the process being better placed to afford the expensive healthcare facilities as well as quality education. This was achieved when the government reduced its involvement in the key industries allowing the private investors to pump in more resoucres into the sector there by creating more job opportunities and with a better pay as well as increasing the profits that come from the industries that were created. The decision of the government to lower its participation in projects such as rail repairs, road maintenance and supply of electricity and water came with positive consequences. Better and more efficient rail and roads were created when the private sector came in the picture. This led to the faster development of infrastructure. The supply of electricity and distribution of clean water led to the society becoming more complete and in return, everything that supports development of the economy was in place. Though the economy of East Asia has risen due to several other factors, neoliberalism is one of the factors that greatly influenced the growth of the economy within the region. It is of significance though to bring into perspective the period that the rise in growth has lasted. Up until the 1970’s the Eastern Asia region had its economy rely on oil trade. Nevertheless, the oil shocks that came in the 1970’s made them had a rethink and agitate for something different. It was then that the concept of neoliberalism was introduced (Aglietta, 1998). East Asia was greatly inspired to catch up with developed nations like the United States and the United Kingdom who majorly concentrated with the concept of fundamentalism. In as much as the period beginning 1980’s marked the introduction of neoliberalism within East Asia, the practice of developmentalism was still strong within the entire region. It therefore forced the leadership of the East Asia nations to find a way of bringing the best out of both neoliberalism and developmentalism. At first though developmentalism was highly practiced and though neoliberalism was embraced it was not fully incorporated into the system of the East Asia economies. The decline of the East Asian economies in 1990’s was the ideal turning point for the East Asian economy. Japan for example. Whose economy had been on the rise for the entire period recorded a decline of 40% within the economy. It forced them to seek funding from their Federal Reserve. Nations such as Thailand and South Korea that had no strong economic base were left with no choice but to seek financial solutions from financial institutions such as the World Bank and the International Monetary Fund. The skeptic individuals traced the economic slump of the East Asia region to the poor policies that were in use then. The close working relationship that existed between the governments, banks and key sectors of the industry were blamed for contributing to the downfall. People viewed the close association as a mechanism to accumulate wealth rather than to provide solutions to the economy. It was then that stakeholders who were consulted recommended mechanisms such as the retrenchment of workers and making the market free of any laws. This marked the full embracement of neoliberalism within the East Asia region. Following the decline in the economy of most nations within the East Asia region, people blasted the then administrations for being too conservative and hiding too much information from the people. This led to the abolishment of military administration that had been so common among the nations of East Asia (Bendix, 1970). Political democracy was embraced and this prompted the politicians who were elected in office to be more open and accountable to the electorate. This transparency spread across to the business executives and in the process attracting more investment into the nations as people occasionally invest in areas where they are certain of getting value for the amount of investment that they put. As a matter of fact, the involvement of the government in any activities of corporations was seen as being undemocratic. In addition, the East Asia nations opted for government led ventures though the government was to take a back sit and not contribute much. Most of the contribution was left to the scholars and stakeholders who were involved in making the decisions. Over and above, we can say that the economy of East Asian nations has been faring quite well for the over the past years. Though they had their own beliefs, their beliefs were questioned when the economy came falling. In a like manner, the East Asian nations were faced with both local and national challenges. This together with the trends that had been embraced by other economies of the world prompted the East Asian administrations to rethink and introduce the neoliberal practices. Following the introduction of neoliberalism, East Asia region can be said to have registered several changes apart from the economic resurgence that can be witnessed by everybody. In as much as the state reduced its participation in some matters of the economy, it put in place bodies that keenly regulated the activities of most of the institutions. This in a way contributed to transparency within various sectors of the economy. Neoliberalism within East Asia can therefore be compared to the interaction that takes place between the social forces and the state with the aim of accumulating wealth and making the economy better (Albert, 1993). A look at neoliberalism in both the United States and the United Kingdom and one will realize that neoliberalism took place within cities. Though in both cases neoliberalism involved the same practice, it can be noted that neoliberalism in East Asia has not only been founded on cities but rather it has spread to the locals. This explains the increase in Economy that has been witnessed in not only stronger nations like Japan and China but also in nations such as Thailand and Malaysia. Finally, it would be noted that the East Asian nations and the entire region has become more differentiated. The current administrations have been at the fore front encouraging the locals to compete with each other economically. In like manner the governments have been encouraging the citizens to not only invest locally but also internationally. Neoliberalism in East Asia has also resulted into more integration of the populations with proper coordination’s being made when carrying out various activities. Neoliberalism has also resulted in sharing of responsibilities thereby finding the best mechanism of handling any incident. On the positive side however, it is far-reaching to realize that neoliberalism has contributed to the significance growth that is being witnessed by East Asian nations currently. Similarly, it is of significance to recognize that neoliberalism is not only yielded different results across other parts of the world but in East Asia as well where other nations are more developed than others (Enlow, 2005). 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