Neoliberalism is an economic policy model that seeks to transfer control of economic factors from governments to the private sector through free market capitalism, deregulation, privatization and reductions in government spending. It is associated with leaders like Thatcher and Reagan and emphasizes free trade, globalization and minimal government interference. Critics argue it can increase inequality and financial instability, and its application to public services like education and healthcare is misguided.
2. What Is Neoliberalism?
Neoliberalism
is a policy model that encompasses both politics and economics
seeks to transfer the control of economic factors from the
government to the private sector.
often associated with the leadership of Margaret Thatcher, the
prime minister of the U.K. from 1979 to 1990 (and leader of the
Conservative Party from 1975 to 1990) and Ronald Reagan, the
40th president of the U.S. from 1981 to 1989.
3. Understanding Neoliberalism
is a political and economic philosophy that emphasizes free trade,
deregulation, globalization, and a reduction in government spending.
It's related to laissez-faire economics, a school of thought that
prescribes a minimal amount of government interference in the
economic issues of individuals and society.
4. Characteristics of Neoliberalism
Free enterprise, competition, deregulation, and the importance of
individual responsibility
Opposition to the expansion of government power, state welfare,
inflation
Minimizing government control of industry and boosting private sector
ownership of business and property
Free market capitalism and the efficient allocation of resources
Globalization rather than heavily regulated markets and protectionism
5. A reduction in government spending and lower taxes
Less government control over economic activity to enhance the
efficient functioning of the economy
An increase in the impact by the private sector on the economy
A reduction in union power and greater flexibility in employment
Government intervention when it's needed to help implement,
sustain, and protect free market activities
6. Criticism of Neoliberalism
Misguided Free Market Approach to Public Services
advocating for a free market approach in areas such as health and
education is misguided because these services are public services.
Public services are not subject to the same profit motivation as
other industries.
Monopolies
The adoption of neoliberal policies in the Western world has run
concurrent with a rise in inequality in both wealth and income.
While skilled workers may be in a position to command higher
wages, low-skilled workers are more likely to see stagnant wages.
7. Criticism of Neoliberalism
Increased Financial Instability
Contrary to what proponents of neoliberalism typically claim, capital
deregulation has not necessarily helped economic development.
Rather, capital deregulation has led to an increase in financial
instability including economic events that, at times, have sent
shockwaves around the world.
Inequality
Neoliberal policies have been proven to increase inequality. This
inequality can hinder the long-term growth prospects of an economy.
8. Criticism of Neoliberalism
Globalization
neoliberalism's emphasis on economic efficiency has
encouraged globalization, which opponents see as depriving sovereign
nations of the right to self-determination.
9. What Are the Effects of Neoliberalism?
Some effects might be freer markets, access to more products and
services to meet consumer demand, greater revenue and higher
profits. Price reductions due to greater competition can also be an
effect. Savings can result from a more efficient allocation of
resources.
