Compare and Contrast Dependency Theory and Neoliberalism - Essay Example

The role of the neoliberals and dependency theories in the international relations and economic activities is significant. Borrowing from the fastness of their assumptions, these principles are universally applicable. However being coined from different aspects these theories, have many differences. These range from the theorist to the history of the theories extending to the evolution of the theories. However, since both of the theories apply in the same political and economic arena, they share numerous similarities too. Therefore, these theories are analysable in a side-to-side comparison and contrast in many aspects. Definitions and assumptions of neoliberalism and dependency theories The dependency theory refers to the model explaining the notion of flow of resources. According to this theory, resources flow from the boundary or the periphery of the undeveloped and poor countries to the centre of the economically stable or the wealthy states enriching the developed countries at the expense of the weak states1. Whereas the dependency theory originates from third world countries to explain the fate they suffer in the hands of the developed countries2, Smith describes the neoliberalists as people from the economically stable nations concerned with the modern political economy3. Neoliberalism refers to the modern political, economic theory that favors free trade4. Hays and David describe neoliberalism to favors the privatization of public organization with minimum government intervention in the commercial business5. It is seen to advocates for a decrease in public expenditure on social services On the other hand, being from the third world countries, the dependency theory assumptions are based on these nations6. They hold that, countries that are more developed should play a part in improvising those countries that lie below in development7. Their assumptions, therefore, focus on the capitalist approaches to break the development of these countries. Besides this theory hold a view of under development rather as a process as compared is to a stage8. For these countries, under development forms a process to reach a full developmental goal or a full potential. Finally, the theorist holds that significant influence to the third world countries is by financial aid and subsidiaries9. However, they not that foreign aid is never free rather it has some attached strings10. This foreign aid most of the time form a debt trap for the developing countries. On the other hand, the neoliberalism theorist assumes that the market is a place with the undisturbed will to go into a tight equilibrium around the fair price. In this, deregulation of the prices, therefore, benefits the people thus increasing value. Secondly, they hold that the investors and the consumers always want to make best choices11. According to the model, these are best achieved in the free market since the information circulation is comprehensive and accurate12. In their views the neoliberals, the market clashes, and bubbles are a result from the distortions of the intervention process brought about by the government. Besides, they hold that between the private and public run organization, the private organization produce better results since the competition drives the profit. Therefore, they argue that it is worth the private firms taking over from the state-run markets. Finally in the global economy, if the distortions of the government are eliminated the regulations will bring he increased prosperity all over the world. History timeline of the neoliberalism theory On the timeline of these two theories, the neoliberalism is the oldest. Alexander Rustow first coined it in 193813. Being a German socialist and economist, Rustow mainly contributed to the social market economy, which contributed to the shaping of the economy of West Germany after the Second World War. After the regime of neoliberalism, other theorist viewed this term as harsh. Therefore, in 1940 David Mitrany described it as functional neoliberalism. He is recalled as a person behind the notions of the functionalism14. His international approach to the functionalism featured in the British debates especially on the socialism and pluralists. Influenced by the studies about organizing and the following rapid growth of modern corporations experienced in the industrial world, Mitrany developed the theory of functionalism as a form of contemporary neoliberalism in order to achieve social peace and prosperity15. By this principle, he proposed a new international order of transnational cooperation. He wrote this to confront the profound crisis then and using the theory’s argument; he met the global and regional cooperation. His main preoccupation was connected to the efficient administration of limited resources as a crucial premise in obtaining cooperation and a working peace. Then Ernst Haas and others came up with the idea of neo-functionalism theory16. This neoliberalism theory sought to explain a chance in the deviation of a problem to be solved by a given organization. Therefore, he founded the concept of the international organization is established with an explicit problem-solving design. In this theory, he took into account two primary variables that are cognitive in nature, adaptation and learning17. At different setting, if people adapt they are likely to fit in this economy. However, learning makes it possible to establish and conceptualize independence from a pattern of recurring behaviors. He sees the developing world’s economies as those with recurring patterns of institutional behavior of which they are interdependent. Robert Keohane and Joseph Nye made a significant contribution to the commercial field especially in the economic sector18. During twenty-first century, they looked on the evolution of the patterns of governance, and they affect management previously associated with the nation or non-state19. Doyle is seen as a figurehead in the modern liberalism in the republican model. Doyle argues that liberalism currently has two legacies either pacifistic or imperialistic, however, can be simultaneous20. Doyle claimed that the first there was pacification of foreign nations when the US and the Great Britain engaged in a continual strive. The liberal worlds invade the weak non-liberal states and display striking distrust in dealings with powerful non-liberal states. Either in his part Doyle used the term liberal in a wider Kantian sense in his arguments. History timeline of the dependency theory In the timeline of the dependency theory, Andre Gunder Frank established that not a single concrete socio-economic part of this world can be understood separately but as a part of this world system. He emphasized that, countries are not developed because they generate their history from the same context that they produce their economic development21. In this, he expressed that there was a particular relationship between the exploitation of a country by another. Besides Fernando Henrique Cardoso and Enzo Fallettos have a significant contribution to the development of the theory of dependency22. They developed the theoretical framework and the practical implication of the independent development of the dependency theory. Besides, they wrote about the dependent capitalist development in Latin America. They viewed the clear evidence that the manufacturing sector is expanding dramatically in many third world countries23. Despite this, the process of neo-colonialism is still predominant. This is because multinationals corporations inevitably control the leading sectors. Historical events associated with the dependency and the neoliberalism theory; The theorists have different views on industrialization. For instance, Cardoso, “views the manufacturing sector is expanding dramatically in many Third-World countries, the process remains nonetheless neo-colonial, since the leading sectors are inevitably controlled by multinational corporations with headquarters in the North24”. Besides, on the import substitution industrialization Lieberman argues that among the capitalist counties used the imperialistic approaches to acquire resources while leaving the states in a continuous state of underdevelopment25. Further Coleman also supports this view that, in the industrialization period, the British rule apparently inhibited industrialization especially in the late-nineteenth century26. Further he argues that, even though India had a strong resisting force, the British force of change is described not as the one that could be easily resisted. This same view is supported by joseph who hold that, it was after the British that the guiding forces led to the development of India27. However, Doyle argues that the “stages of economic development of the international system came to interact with the various pre-industrial economies in ways that may be different but that in every case soon establish the dominance of the world order over the form of growth followed local28”. In this he argues that industrialization for third world countries cannot be achieved at the expense of the imperialist. On the economic crisis of 2008, the neoliberals argue that in the causer was the realm of policy. In this, they hold that it was as result of the partial nationalization of main banks and an enormous government stimulus program that contributed to this crisis in the financial field29. In their views, the dependent theorists however hold that the dominant neoliberal views were responsible for the economic crisis of 2008. They argue that he neoliberalists have lost their legitimacy making it to be responsible for the conservative30. In the Washington consensus, the developed countries wanted to marginalize the third world countries, in this, the neoliberal theorist argued that this was the sure way to get the country out of the provision welfare and promote income redistribution. However, the dependencies held that this was redistribution of income was difficult and they report that the even the word Washington consensus is damaged. According to them the Washington consensus could have brought untold miseries to the third world countries31. States of actions of rationality in the dependency and neoliberalism theories In the rationality to seek for mutual satisfaction, the neoliberalism to describe the new trends as hostile to the Satatism and the collectivism. By this, these attempt to form a new political economy that would prioritize the market as compared to the bureaucratic or means of ranking as means of ordering the economy encompassed within the law. In this, Rustow, for instance, revived the liberal principles after the crippling by the Nazi totalitarianism on the economy of German32. The neoliberals and the dependency theorists equally shared this view. For them since the aids do not help the developing countries rather they act as avenues for further exploitation33. This means that there is a need to seek for common ground for the third world countries and the developed to create a common ground for economic activities. Development opportunities for less developed countries Gunder holds that the developed countries continue to oppress the developing countries. In this he argues that "underdevelopment was and still is generated by the very same historical process which also generated economic development: the development of capitalism itself34”. More modern dependency theorist hold that, underdevelopment has some elements of exploitation. This is seen in one country exploiting another especially the developed countries exploiting the less developed. Finally Gunder finalises that “every ‘underdeveloped’ is a product of exploitation by the developed which presents capitalist, imperialist or colonialist exploitation35” on the other hand, Keohane argues that for the countries to develop interdependency is necessary. He holds that interdependence is one of the primary features to economic development. According for a country to develop extensively they should collaborate to the field of international regime for the country to achieve the desired countries36. Moderating the effects of anarchy in the two theories Both the theorists employ various mechanisms to cope with anarchy in the within the international system. Gunder, holds that the moderation will be achieved in any way. He holds that with advancement of many new works have the knowledge is being expound our and with time “the terms of the political debate have change as well”37. On the other hand, neoliberalism focuses on globalism and its governance38. According to Nye and Keohane, the trends in globalization in respect to national and international security environment and culture and society they need military strength in order to stand. However, Doyle examine the impact of domestic governance on the on cosmopolitan citizens, and the developing and developed countries. On this he holds that, governance of globalism should explain the role of the international institutional on the culture, identity and legitimacy39. Strengths and weakness in the theoretical framework The theoretical frameworks can be looked from various angles. To start with there is dependency theory criticism to the liberalism theory, in explanation of world politics they argues that the liberalism theory are oblivious especially to areas of importance issues. However on their side, Nye and Keohane show that the dependence approach takes into consideration many other issues that may not be necessary important40. However, Gunder points out that the liberal theorist avoid quantification and emphasize in their theory, even though they attempt to find relevant empirical evidence where possible and validate it to facilitate the understanding of the leaders it is lacking. Besides, the theories differ in the framework in the reference to the past. The liberalist theorist always overestimate the continued relevance of traditional views of world politics especially in the intellectual humility. In this Cardozo holds that they41 “underestimate the irreversibility of current trends toward complex interdependence42”. However on their hand, Doyle holds that their modern construct always draw from the past in an impressive manner that they should allay the scholars43 Conclusion To sum up, it is important to note that it is hard to achieve the universality. This means that countries should try to rely on each other on the understanding that is based on a mutual consensus. Despite the argument that the financial aid is not free, many nations cannot do without this aid. However, those nations that are developed should not take advantage of the less fortunate countries in the form of exploitation. Any model the nation takes should cater for the needs of its citizens and promote equality in trading. Bibliography Baldwin, David A, and David A Baldwin. 2015. “1978 Politics Book Reviews : International” 72 (3): 1165–68. 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