CLASSICAL AND NEOLIBERAL ECONOMICS.

Classical and Neoliberal Economics

Classical and Neoliberal Economics

Introduction

Democracy is being eroded as power is concentrated in fewer and fewer hands. Biological and cultural diversity are dwindling at an alarming rate. Hard won social and environmental standards are threatened. If we continue on this course, the prospects for both current and future generations seem grim. The real challenge for human-kind will be providing a decent quality of life for a predicted population of 10 billion people in 2050, whilst reducing environment impacts to sustainable levels. Neoliberal economic globalisation is increasing the scale of that challenge. Yet the official line is that 'there is no alternative'. FOEI believes that a different, democratic, equitable and sustainable future is within our grasp. This paper sets out guidelines for developing fair and sustainable economies. It calls for new economic goals, including the equitable and sustainable use of limited resources and recognition of the importance of economic diversity; new devolved, transparent and participatory economic decision-making processes based on the principle of economic subsidiarity; stronger local and regional economies that increase local control of resources; investment in the 'real' productive economy; effective corporate control, including corporate accountability and liability mechanisms and international anti-trust legislation; and stronger multilateral governance of non-economic concerns including equity and sustainability(Blaug 2007).

Discussion

We live in a rapidly changing world. The phenomenon of globalisation - in particular, the advent of rapid global communication and the spread of new technologies - is altering the way people live their own lives and relate to each other. Globalisation has many facets - economic, political, social, cultural and technological. This paper concerns itself with just one of those facets, neoliberal economic globalisation, which has significant negative impacts on people and their environment right around the world. Neoliberal economic globalisation encourages the pursuit of profit regardless of social and environmental costs(Cronin Goddard, Dash 2005). It is associated with increasing levels of inequality, both between and within countries; the concentration of resources and power in fewer and fewer hands (resulting in an erosion of democracy); economic, social, political and economic exclusion; economic instability; spiralling rates of natural resource exploitation; and a loss of biological and cultural diversity(Mayumi 1999).

It prevents the maintenance and development of locally-appropriate and sustainable systems of commerce; and leads to weaker international agreements in other key areas (on the environment and development, for example). Furthermore, the 'global North', using the resources of the 'global South' at rockbottom prices, has incurred an ecological debt to the South. Yet it is still those impoverished countries in the South that find themselves compelled to play the neoliberal game - exporting more and more - in order to pay off the only debts that seem to count: the financial ones. Ironically, this leads to oversupplied world markets, falling commodity prices and decreasing returns on Southern exports. These worsening terms of trade make it ever more difficult for the South to pay its financial debts(Balaam and Veseth 1995). Overall, the key issue that needs to be addressed is ...