SOCIAL SCIENCES

Neoliberalism Or Neostatism



Neoliberalism or Neostatism

Introduction

In the discussion below, we will take a detailed overview of what the concepts of neo-liberalism and neo-statism are. We will study their roles in development and what ideology stands behind it. Neo-liberalism is about giving authority to every individual living within the country while neo-statism is giving authority to the state to carry out all activities and own all the powers. While neo-liberalism has become a central concept in the social sciences describing the structural changes in the global economy since the 1970s, the concept is much contested. At the most fundamental level, neo-liberalism builds on the classical liberal notion implying the triumph of market forces and individual autonomy over state power. However, there is a considerable normative divergence between advocates of neoliberal ideas, who celebrate the ascendancy of the market, and those who suggest that the policies of neo-liberalism are associated with global inequality, economic disparity, and growth of unemployment, social exclusion, environmental destruction, and cultural homogeneity. Optimists stipulate that unfettered market forces will result in global prosperity, freedom, democracy, and peace. For pessimists, neo-liberalism has become an ideological construct associated with radical market fundamentalism based on the universal imperatives of competitive deregulation, liberalization, and privatization. This latter interpretation is often used synonymously with the concept of an exploitative form of neoliberal economic globalization (Levy, 2006, pp. 400- 469).

Discussion

Neoliberalism

Neoliberalism is the term commonly given to the political philosophy that emerged in the wake of the collapse of the Bretton Woods system and the economic recession of the 1970s. It drew upon the growing critiques of the welfare state and the crisis in Keynesian economics to advocate a small-government and free-market philosophy.

It was these English-speaking countries that initially embraced the philosophy and its policy applications of floating currency markets, reducing trade barriers, privatizing public sector activities, and deregulating industry. It also became associated with reforms of the public sector that came to be known as new public management, in which the public sector was required to operate more like private sector entities. These policy prescriptions were spread around the globe, particularly through international institutions such as the World Bank and the International Monetary Fund, which required recipient nations to comply with neoliberal governance and economic development principles. By the early 1990s, neoliberalism was the dominant economic paradigm across much of the developed and developing world, even though the practical applications of the philosophy varied considerably from country to country. Neoliberalism's intellectual hegemony was challenged by the global financial crisis of 2008, with some political actors arguing that neoliberalism's excessive faith in free markets has caused the crisis (Von Hayek, 1994, pp. 49-66).

Role of Neoliberalism In Development

Neoliberalism both center on conceptions of rationality, yet they are quite distinct in terms of their treatment of individual rationality. Neoliberalism's critique of the democratic welfare state centered on the limitations of public reasoning. Building on John Nash's critique of Adam Smith, neoliberalism sought to point out the ways in which individuals pursuing personal interests operated against the public ...