Differences between Liberalism and Democracy - Coursework Example

Political Science Differences between liberalism and democracy Federalism refers to a long-term al organization of thepolitical powers where the national and local governments have diversified authority. Additionally, both the local and national governments possess the power to make laws, provide public services, and maintain law and order. Federalism ideology emerged and stood as it provides an expedient method to harmonize diversified smaller governments in attaining the wider goals and objectives. Therefore, it majorly focuses on bolstering commerce and advanced military security. For instance, some Greek city-states collaborated with the Athens to establish confederations that would help them forge a robust common defense to counter external threats and attacks (Robertson, 2012, p.2). On the contrary, democracy refers to the government that is meant to serve the people, and it is led by the people, and hence it is for the people (Kazin, Edwards, and Rothman., 2010, p.221). In the context of democracy creativity destruction that follows the growth of capitalism allows a large number of votes to reward the leaders within the government. Therefore, it aids to mitigate, slow, or stop those effects of capitalism that hinder, threaten or harm them. Within the realm of democracy, success in development of the economy is not just economically efficient and viable. It needs workable strategies that ensure contending political forces expand their markets. Further, they ensure that they can mitigate their market force and their impacts (Kazin, Edwards, and Rothman, 2010, p.77). Compared to neorealism, the aspect of embedded liberalism consents that it is essential for the state to construct and maintain institutions. However, there must be a declared stress over the shared values and regulations to ensure the promotion of cooperation and not just the balance the balance of power. For instance, the IMF, GATT, and the World Bank outline the standards that guide the process of consultation and multilateral assistance. The situation accelerates the attainment of a global economy besides the promotion of market confidence. Liberalism suggests that the normative frameworks that underpin the institutions and the structures hold the governments towards their commitment (Doces and Nega, 2013, p. 639). The circumstance allows the formation of formal rules, guidelines, and procedures that help in shifting without affecting the core values. For example, the Bretton Woods system of monetary was greatly predicted depending on the values and ideas set by the UK and the US. In this context, neither the IMF nor the pegs of adjustments operated as planned (Frasher, 2012, p.7, 8). In order to experience a successful democracy, it must be built on the basis of the cultural status of the society and a broader perspective of the socio-economic status. The factors, in this case, involves structures of wealth creation, urbanization, the degree of urbanization, education levels of the society, and the existence of a vibrant civic culture. When these conditions are in place, the society is presumed to have the necessities that could spur an emergence and stability and democratic transition (Doce, 2013, p.644). Liberalism holds fast to the enforcement of the human rights and their ownership of private properties. It abandons those programmes and laws that curb, limit, and regulate the practice of private property rights. Further, the ideology of liberalism supports the vigorous state of the government in the action of enforcing the individual property rights (McDonough et al., 2010, p.83). The Great depression The great depression of the world occurred in the 1930s, and the situation was an economic crisis that brought about unprecedented economic dimensions. The depression stands as the unique failure of longstanding industrial economies. It was facilitated by the Second World War, and it affected the overall world economy and the environmental aspects of formulating and implementing policies. The effects of World War II were eminent, they changed all the patterns international lending and debt systems. Ideologically, it has been determined that social democracy is more superior to the aspect of liberal capitalism. Social democracy is superior because it is egalitarian, humane, and enhances social justice. It is alternatively the best compared to liberal capitalism variants that have for a long time dominated the dimension of economic and political development. Irrespective of the variant compared with social democracy, liberal capitalism is a failed system of governance. Alternatively, social democracy would bring about the transfer of powers from plutocratic-focused corpocracy to strong, organized and participatory activities (Navarro, 2012, p.198, 199). A banking failure is usually not an ordinary adventure. The situation makes the financiers lose their capital and the deposits making it hard for the people to conduct business (Dunn, 2011, p.51). A failure to offset events through the use of automatic forces changed the direction of the system economy into that of depression regarding the gold standard. Claims reveal that it was not the standards of gold changed but rather the ways through which the leaders operated these standards. The notion of imposing tariffs means an expansion in the importing countries and contractive to those countries that are losing. It is inadequate to term world depression as losses made in the world gold market, currency appreciation, and a fall in prices. The Bank of England predicted a collapse in the global banking costs of the world firms, and it stood at $2.8 trillion. On the other hand, the BBC also estimated the increased tax of &7 trillion spent by the banks of the world and the other institutions of finance. The development of these interventions was to prevent a spill over of the finances into the economy. Additionally, it was to avoid a great depression from invading after a similar depression was over. Further, it was to prevent re-establishment of mass unemployment that had corrupted the interwar periods. To avoid depression, the World Bank and the IMF needed to act as money lenders to increase public demand and maintain the public spending. The situation was made possible by the fiscal governments that managed to prevent depression (Dunn, 2011, p.52). In the light of the interventionist model and the strategy of the third world of import substitution, there was gross inefficiency and corruption (Heaven Can’t wait, p.5). Full establishment of the democratic capitalism occurred after the world’s second war in the regions of the West mainly North America and the Europe. Therefore, for the mainstream of the economy, problems like public deficits, inflation, and excessive private and public debt com as a result of selfish powers to amass wealth (Streeck, 2011, p.9). Additionally, failure of the rationales of the market and the economic utility beliefs, government support, if left to incentives of monetary values will fail to reflect (Kim, 2013, p.107). Responses of the key institutions of the Bretton Woods system to the underlying causes of the Depression Due to the existence of the Keynesian revolution in the 1940s, various states adopted formal employment policies. Turnell (2009) noted that, when countries adopt the full employment system, it was clear that they experience balance of external problems than their counterparts who have not. He adds that, for a full domestic employment policy to rise from the liberalized structures of trade, rigorous efforts are needed. The efforts help to stop the spread of recession and at least strike a balance in the payment equilibrium (p.423).It is recommended that, policies aiming to stabilize and spur the economy should be consistent with the international trade system. The situation will ensure efforts made by one country are not brought down by the backlash of another (Turnell, 2009, p.426). New Bretton Woods was a finance compensatory plan that was used to prevent frustration of the policies of the domestic governments that aimed at full employment. The plan was to aid at balancing the difficulties that accompanied the failure of other countries from maintaining their full employment strategy. It was designed to arise from deflation through the compensatory deposits made by the NIFE (the National and International Full Employment). For instance, under the NIFE, there are balances of paid equilibrium. In this case a country that has moved to increased surplus makes deposits into the IMF. The countries that experience the deficits receive these funds. Arguably, the New Bretton Woods scheme is developed to prevent that experience deficits from contracting their economies (Turnell, 2009, p.429). Dowd (2014, p.359) asserts that, the new system of Bretton Woods was set up to regulate the gold standards only in the weakest point after the second world war. He adds that Bretton Woods was for the standards of the dollar that had commitments with the Fed to maintain the unpredictable prices of the gold. The system of monetary acceleration went on through 1960s leading to inflation and surge in the market stock. It failed in the 1970 due the attendances of brokerage resulting in problems for the president in maintaining Bretton Woods. He further abandoned its peg and the price float. Another response was that of the countercyclical lending through the World Bank. It took its cue from the establishment of the World Bank in the light of the Bretton Woods meetings. NIFE neglected the proposal that prosperity of the world and the backward countries rely on the constant and abundant flow of finances from the large industrial countries. The NIFE then proposed that, individual countries that have an advanced economy should bear the loan shortage responsibilities. The system proposed that, if there is a fall in the investments abroad, concerned governments will be required to provide the World Bank with an amount equivalent to their shortfall. The funds would then be used to stabilize the economies that are reliable to fall (Turnell, 2011, p. 428). The New Bretton Woods scheme had similar goals to the Keynes’ union but was more automatic than. Essentially, the scheme implemented indigenous reserves that would back the deficit of a country by its imports. Response of the US The core belief of US economy received a shock from the Great Depression over a long-lasting period. The US lost a decade in the crisis of the economy, and this intertwined with the thoughts of the citizens, policymakers, and intellectuals that capitalism had failed them. The US thought that the methods of recourse regarding the failed market were an increment in state interventions. These responses were seen as short-term solution to curb the ills of capitalism. Further, they noted that the attempts to solve unemployment could solve the problem on a continuous basis. The strategies made related to war because, the war businesses made the economy boom due to increased opportunities, better living, and military spending could also boost the economy. In the bid to explain the economy, arguments were combined to create the best strategy possible. For example, the Keynesianism and the Marxism ideologies suggested that, continued prosperity is generated by the use of defence finances (Duncan, 2013, p.220, 221). The interpretation of Marxist concerning the Great Depression elucidated that capitalism had gained a novel impasse. Capitalism ideology proposed that, it is fair to implement the Keynesian strategy to revert a collapsing economy temporarily. It suggested that, through state funds, there will be a flagged economy, hence state capitalism. The situation is achieved through the implementation of dual strategies that will straighten the businesses via the government spending and enhancement of stimulus. In the centre of the war period, efforts and concerns emerged that if there is withdrawal of the military funds, the economy will collapse. In the midst of these hostilities, there were doubts about the existence of the lack of potential investments channels due to the inability to secure full employment. Arguments suggested that war spending should be continued even after the war ends. The state feared that the economic problems might persist even after the war is over. Contextually, the disadvantages of government spending were not given consideration because the special interests promised to secure the government’ profits (Duncan, 2013, p.223). The American government looked at the UK as the upcoming source for the next economic crisis. The government then started developing strategies to prohibit a similar crisis from happening. Since the terroristic acts of September 2011, the US has refocused its complex military-industry to extend and maintain a permanent war economy. Indeed, there is a dire need to secure the efforts of the external countries that could lead to an economic collapse within the super-power country. The effects of the economic collapse are eminent, and it is further a threat to the state to leave a chance to the wars that could lead to a critical financial crisis. For instance, properties are destroyed that lead to loss of capital. Sustained permanent reign in the war against terror will see the US contain a stable economy throughout. In addition, full the implementation of employment policies will ensure that the available resources are put into task ensure the generation of revenue that will see a prospering economy. Biobliography Doces, J, & Nega, B., 2013, Democracy in Sub-Saharan Africa: Is There a Neighborhood Effect?, Perspectives On Global Development & Technology, 12, 5/6, pp. 639-660, Business Source Complete, EBSCOhost, viewed 21 April 2015. Dowd, K., and Hutcinson, M. 2014. How should financial markets be regulated? Cato Journal, 34(2). Duncan, T, & Coyne, C 2013, The Origins of the Permanent War Economy, Independent Review, 18, 2, pp. 219-240, Business Source Complete, EBSCOhost, viewed 21 April 2015. Dunn, S. 2011. Old ideas for new times; Was Galbraith Right? The Great Crash, 2008, and Galbraith’s patience. Challenge, 54(6). 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