Background and Definition of Neoliberalism

Neoliberalism refers to resurgence of ideas of the 19^th century that is associated with the aspect of economic liberalism. Neo-liberalism is inclusive of the economic liberalization policies like deregulation, privatization and free trade. It reduces the aspect of government spending that can help in increasing role of private sector within economy and the society. The market-based ideas pertaining to neo-liberalism constitutes a paradigm shift from that of post-war Keynesian consensus that lasted from the year 1945 to that of 1980 (Barnett et al., 2014).  This essay discusses that neoliberalism will continue to act like an important economic paradigm. This essay talks about the fact that neoliberalism will have a major effect on that of international business. The essay talks about the current affairs and states examples in relation to neo-liberalism in the society.

Concept in relation to neoliberalism suggests the developing of liberal thought in the world. According to Smart (2016), liberalism at one point of time was a political ideology that was influential but with the passage of time it lost its significance. It has however revived in the recent age in an innovative form. Liberalism has been dominating the normative political thought along with practical politics of West in last sixty years. It became the shared inheritance among the political theorists and the professional politicians. Neo-liberalism can however be stated to be an ideology that is opposed to the aspect of ‘liberalism’. Classical liberalism is related to the belief that state should be minimal and it states that everything except that of armed forces along with law enforcement should be left to that of free dealings of the citizens. This state can also be described as ‘night-watchman state’. It was held that the purpose of the minimal state would be upholding fundamental aspects in relation to public order. John Locke believed in the fact that state was a freely established association in between the individuals. It states that members of the state can rebel in the event of state seizing more power as compared to what has been originally given to the citizens. Modern liberalism on the other hand talks about the willingness of letting state so that it becomes active participant within economy. There occurs the tendency of regulating the market place and in the case of modern liberalism state supplies the essential goods along with services.

It has been argued by Allen (2018), neoliberalism states that legitimate purpose of state is to protect individual along with commercial liberty. Neoliberalism highlights the idea that transgression of state beyond that of the legitimate purpose would be unacceptable for the people. According to Morley (2016), the ideas of neoliberalism acts as an important political paradigm as it talks about the significance of free markets that helps in the regulation of international trade. Neoliberalism is important in the present age as it talks about the safeguarding of commercial liberty along with strong property rights. Neoliberalism believes in the notion that free adoption of the market mechanisms helps in the optimal organising of exchange of goods along with services. It has been argued by Lash (2018) that neoliberalism acts as an important component in the present age as it helps in setting free creative potential along with entrepreneurial spirit that is built into that of spontaneous order of the human society. Neoliberalism sets the stage for individual liberty along with well-being and it helps in the efficient allocation of the resources of a nation.

Neoliberalism as an Alternative to Classical and Modern Liberalism

Neoliberalism can be said to be significant economic paradigm as it has perspective on that of moral virtue. Neoliberalism helps in setting the path that helps in organising relationship between state and that of external environment. According to Becker, Beveridge and Naumann (2015), practical implementation of the neo-liberal process can help in relocating power from the political to the economic process. Neoliberalism involves the reduction in the aspect of protectionism that is an important component of globalization of the present age. The neo-liberal theory states that the state-owned enterprises should be dismantled owing to the constraining effect that it has on the freedom of the individuals for conducting business. The neo-liberal policies has helped in making the countries move closer that facilitates the prevalence of the aspect of globalization. It has been argued by Davies (2014) that taxation along with redistributive policies in relation to neo-liberal policy is viewed as the infringement on the aspect of personal freedom. According to Mirowski and Plehwe (2015), economic liberalism helps in supporting the aspect of Foreign Direct Investment that helps it in supporting international trade. It can help in ensuring individual freedom and it helps in increasing the choices in relation to conducting of business.

Neo-liberalism has emerged as a significant economic paradigm as it proposes the fact that human well-being can be carried out by the liberation of the individual entrepreneurial freedoms. It states that function of state would be to preserve institutional framework that would be appropriate to the practices. It has been stated by Giroux (2015) that neo-liberalism is important in the present age as state guarantees quality along with the integrity of the money. Neo-liberalism helps in the setting up of military, defence along with legal structure that can help in securing rights to that of private property. It states that markets should be created with the help of state action if it is deemed to be necessary. According to Kinderman (2016),  neoliberalism is significant in the present age as it gives priority on individual freedom along with right to that of private property. The neoliberal policies like deregulation, tax cut along with private tax cut can bring about positive consequences. The neoliberalism policy states that the human beings are social and this social nature helps in the organising of society. It gives importance on that of ‘spontaneous order’ in relation to social life that can help in securing the rights of the individuals.

The Moral and Economic Virtues of Neoliberalism

Neoliberalism has a great effect on the aspect of international trade as it has facilitated international trade. Globalization refers to increase in volume of the economic interactions that helps in producing qualitative shift in relations between the national economy and that of the nation-states. According to Picciotto (2017) neoliberalism has enabled large volumes of the capital from being moved across that of the national boundaries. Globalization has resulted in producing economic interdependence and the individual nation-states do not have power of regulation of capital. It has been suggested by some that global interdependence can create difficulties in relation to state regulation but it can be said that this effect is greatly exaggerated. The nation-states enjoy a good deal of potential power with the help of capitalist firms. Globalization has made the system of capitalism more competitive in various ways. It has been argued by Burton, Yamin and Young (2016) that rapid growth in relation to trade has been able to change the situation that is faced by the large corporations. The large corporations that used to operate within oligopolistic domestic market is facing competition from the large corporations that are based abroad. Neoliberalism has facilitated the aspect of globalization which has helped in transforming business from supporter to that of opponent in relation to interventionist state. Neoliberalism was able to gain force in 1970 and it helped in propelling the aspect of globalization. Globalization was hampered owing to the economic events in inter-war period but it started right after that of World War II. Globalization helped in eroding monopoly power in relation to large corporations that helped in the growth of neo-liberalism.

Neoliberalism has been able to conquer the aspect of macroeconomic policy-making owing to the less impact of the state interventions. Efficient allocation in relation to resources is an important purpose in relation to economic system and the market mechanisms can help in allocating the resources that is proposed with the help of economic theories in relation to neo-liberalism. It is held under neoliberalism that the intervention of the government is undesirable as it can cause imbalance within that of the market. The less participation of the government in relation to neoliberalism helps in safeguarding individuals along with the property. The minimal participation of government in regulation of economy helps in boosting the aspect of international business. Import-substitution industrialization restricts the trade and offers subsidies that can promote that of home-grown business but it does not bolster the growth of international trade. The propagation of neo-liberalism has been carried out in the global arena with the help of neutral organizations like IMF along with World Bank. They help in regulating flow of the capital throughout the world. Neoliberalism policies that were advanced with the help of Structural Adjustment Programs has helped in concentrating power in hands of small minority and it has provided them with the new opportunities that has helped them in the exploitation of the natural resources.

Neoliberalism’s Effect on International Trade and Globalization

The use of the aspect of neoliberalism can be understood with the help of examples that highlights its importance in relation to international business. Within Australia, the neoliberal economic policies were embraced by both the Labour Party along with the Liberal Party. Labour governments of Bob Hawke along with Paul Keating pursued the policy of economic liberalisation along with various micro-economic reforms. The governments involved itself in privatising the government corporation and carried out de-regulation of factor markets that helped in floating the Australian dollar. The federal treasurer, Keating was instrumental in implementing superannuation guarantee system that helped in increasing the aspect of national savings of the country (Silva, 2018).  It reduced the incidence of future government liability in relation to the old age pensions. Neoliberalism paved the path for de-regulation of financing of the Universities that helped in the aspect of contribution to the fees of the University. It was carried out with the help of repayable loan system that was called Higher Education Contribution Scheme. It provided encouragement to the Universities to increase the income by the admission of the full-fee-paying students that included the foreign students. Admitting the domestic fee-paying student to the public universities got abolished in the year 2009 by that of Rudd Labour government. Neoliberalism has paved the path for immigration to mainland capital by the refugees as in the case of Lebanon along with Vietnam.

Neo-liberalism has paved the path for reducing trade barrier like tariffs along with quotas. Worldwide trade has increased at a phenomenal rate in relation to that of GDP. This was facilitated with the help of efforts that were made by General Agreement on Tariffs and Trade (GATT) that emerged to become World Trade Organization in the year 1995. Economic neoliberalism helps in supporting the aspect of Foreign Direct Investment that helped in supporting the aspect of international trade. Neoliberalism has paved the way for the growth of MNC’s that has increased dramatically after end of that of Second World War. Outward direct investment of US started in 60s and in 1980 there was sharp increase in relation to Foreign Direct Investment (Barnett et al., 2014). This trend got strengthened in 1990 when the other countries like China along with India became the large recipient in relation to foreign funds. Neoliberalism helped China in becoming the largest recipient in relation to foreign funds. U.S foreign investment was evident at the time of Reagan administration that showed signs in relation to neoliberal inclination. China was able to acquire a position of global importance with the help of the principles of neo-liberalism that helped it in becoming strong interventionist state. Neoliberalism paved the way for the emerging of ICT that helped in facilitating co-ordination pertaining to international business transaction. It has been argued by Silva (2018) that technology did not rise owing to that of neoliberal transition. He has stated that technological innovations resulted due to commitment of the neoliberals for expanding the business transactions. On the contrary, it has been stated by some that the ideological commitment of the people helped in expanding companies which was driven by desire of altering world order. It can however be said from the point of view of intuitive perspective actions are driven by the factor of opportunism and desire of increasing revenues of the companies. Economic policies that have emerged due to influence of neoliberalism have help in increasing the international business of various companies that has increased the economic gains of a country. Neoliberalism helped in the devising of economic policies that have paved the path for increasing globalization. Policies of that of Reagan along with Thatcher during 1980 can be said to have neo-liberal underpinning as it sought the privatisation of the state-owned industries. Neoliberalism helped in growing the business in relation to these two countries.

Neoliberalism and the Role of the State in Economic Policy-Making

Conclusion

Neoliberalism is indicative of emerging of ideas in 19^th century which is related to economic liberalism. It includes the policies related to economic liberalization like that of deregulation and that of privatisation. Liberalism has acted as a dominant force that has influenced political thought in West in that of last sixty years. It has evolved to become shared inheritance among political theorists. Neoliberalism talks about the importance of free markets that regulates the aspect of international trade. Neoliberalism helps in protecting the aspect of commercial liberty and the property rights of the people. Neoliberalism proves to be of great use that has helped in connecting the different business in the world. Globalization has paved the path for economic transactions that has led to qualitative shift pertaining to relation between national economy and nation states. Neoliberalism helps in moving capital across that of the national boundaries. Neoliberalism can conquer policy-making related to macro economy due to less amount of impact of that of state intervention. The allocation pertaining to resources is significant pertaining to economic system. Market mechanisms can perform useful role in allocating resources that acts as a boon of neo-liberalism.

References

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