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Neoliberalism: Pros and Cons

Llowell Williams

In the Twenty-first Century we find our world growing increasingly smaller and more intertwined. Music, movies, fashions and especially economies are no longer as unique to national borders as they once were. There seems to be an undeniable move towards a worldwide homogenization of cultures and economies: globalization. There are many different opinions on the relationship between state and economy. This trend towards interconnected economies throughout the world is something some people believe is inevitable and should be encouraged though the creation of a worldwide free market. This free market would be free of state or government regulation and would be the purest form of capitalism. Many object to this model, arguing against it for its many flaws, many of which are very negative socially and morally.
Neoliberal is a term used to describe proponents of a free market

capitalist economy. For a market to be truly free, according to neoliberals, there must be no government or state instituted regulation (whether in the form of taxes, minimum-wage requirements, etc.) and no barriers to the natural forces of supply and demand. The belief is that having a world like this will result in a global state united by a common economy. The first, primary benefits neoliberals argue will come about as the result of a free market world includes the belief that the capital-rich will be able to offer loans to those who lack capital (i.e. developing nations) at lower rates (thus, in theory, stimulating their economy and thereby the rest of the world's) and that consumers worldwide will benefit in the form of lower product costs and more variety due to a decrease in distribution and production costs (the result of no tariffs, no taxes, etc.). The removal of the barriers to trade allows producers and companies to export their goods to more areas and in higher volume, leading to their increased prosperity (and thus, in theory, the world economy's). This increase in good distribution creates a more competitive business environment, which will in theory push producers towards making better goods while maintaining low and competitive prices (benefiting the consumer). This internationalized economy will naturally result in a wider access to commodities and technology, increasing the speed of development (Delong, 1999). It's also claimed by neoliberals that this unified economy will have a somewhat homogenizing effect, resulting in the diffusion of wealth from the upper class wealthy, to everyone.

Delong, like other supporters of the free market and neoliberalism, argue that the world is already moving towards a state of globalization. Evidence of an intertwined world economy is undeniable, when you look on the tag of your shirt and see made in China or made in Venezuela, or when you look at the negative trickle down the rest of the world is feeling after the recent plummets in the US stock markets. Advocates of neoliberalism assert that a globalized, free market world is inevitable and to put up barriers to its development is futile and only serves to retard worldwide development and social evolution. Of course there are many who disagree with neoliberal ideologies. Many neoliberals and their critics, however, agree on one important point: Corporations will do whatever they can within their means to make a profit, nothing more, nothing less. While neoliberals like argue that this is something to be encouraged, their critics, sporting many examples, claim that corporations, when unregulated and lacking governmental oversight (and sometimes even when there are those things), will work only for its own best interests, disregarding the well-being of the environment, their employers, and even their consumers. Cases of such activities are numerous: from Coors illegally dumping waste into rivers, to Nike sweatshops that employ children in Taiwan for a miniscule wage. Fundamentally, neoliberalism has been argued to be a negative, if not destructive, economic policy. When there are no incentives for a business to keep its jobs filled with the workforce from a certain country or region, they will go where they most profit, or rather, the least expense is to be made: countries with cheaper workforce. A lack of protectionism of home- based business (which theoretically creates an equal playing ground in which all businesses may compete) can run those businesses into the ground, hurting a region (through loss in jobs, flow of money). Chile's radical neoliberal policies put in place by their dictator-leader, Pinochet, proved many of these criticisms to be true. In Chile, the drastic movement towards a free market economy ended up leaving much of the country unemployed, the national currency inflating rapidly, and creating human rights violations. (Klein, 2007) So which position is right? Obviously there is no answer that can be completely backed up one way or another; experience with (real) neoliberalism is rather limited. Rather, we need to look at which stance, depending on who's affected. Neoliberalism, though claiming to benefit everyone in the long run, realistically tends to favor the wealthy upper class primarily due to the increased opportunities their corporations have for making profit in a free market. On the other hand, government regulation and control tends to help protect and stabilize economies and

(ideally) protects and creates jobs at home, something that is profoundly important for the middle and lower classes. While advocates portray neoliberalism as a universally beneficial system, any pragmatist can agree that this is, at least in some respects, unrealistic and may simply be a wishful fantasy. Sources cited: Delong, Brad 1999. 'Globalization' and 'Neoliberalism.' Electronic document, http://www.j-bradford-delong.net/Econ_Articles/reviews/alexkafka.html, accessed October 5th, 2008 Klein, Naomi 2007. Cleaning the Slate and States of Shock from The Shock Doctrine: The Rise of Disaster Capitalism.