Essay Sample on Neoliberalism Theory

Introduction

In economics, neoliberalism is used to imply a state of free-market economics in a given nation. According to Peet and Hartwick (2015), free-market economics includes the implementation of policies that facilitate free trade, privatization of companies, price deregulation, the reduced scope of government and labour market which flexible (Peet & Hartwick, 2015). Neoliberalism began during the early 1930s as a philosophy of economics which encouraged for state intercession and free markets economics. It was aimed to bring social democratic between the people who were perceived as fiascos of classical economics. The economic philosophy of neoliberalism stated that general well-being of human beings could be advanced through redeeming individual entrepreneurial independence, their skills, rights to own property free market and free exchange of goods across the border.

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Some economist from the west were the champions of neoliberalism philosophy. For instance, Adam Smith argued that significant wealth markets her nation and controlled by "invisible hand" and thus it should be under minimal government intervention. Most of the economist who pioneered neoliberalism advocated for individual freedom from extreme government power. They hold the view that sustainable economic growth of a nation associated with human progress can only be achieved through free markets economics. Neoliberalism ideology states that the government had failed in its mandates in realizing sustainable economic growth which would living standards of human beings.

According to neoliberalism theory, free-market economics was the primary tool to realize significant economic growth in a nation - free market competition with minimal government interference and liberty of entrepreneur to accumulate capital. Neoliberalism activist is driven by the desire for the few elites in a nation to collect money through exploitation of the people citizens using free trade and price deregulation. A free market is catastrophic because it will lead to income inequality among citizens. Frew people who have skills are paid high wages while low skilled people stay in poverty because they will be paid meagre salary. Producers who are private investor will determine the price of their products because of minimal state intervention of regulations related to production.

What is implicitly right of about neoliberalism and do not need much investigation?

Peet and Hartwick (2015) state that neoliberalism has implied the right to have free market economics in a given country (Peet & Hartwick, 2015). Neoliberalism economic philosophy advocates for the rights of privations of companies, free-market labour, minimal government intervention, and price deregulation in the market. Also, it advocates for the power to liberate individual freedom of investors in the economy by involving citizens of that country. The free market economy can be of benefit to a nation which involves her citizens fully in the entire process with close monitoring to get the right exploitation of poor citizens.

Implicitly right about neoliberalism need an intensive investigation because it can cause a lot of harm to the well-being of the general public of the country. Research should be done to find out whether neoliberalism is aimed at advancing the well-being of ordinary people. Free market economics has more disadvantages than advantages to common citizens. For instance, the right to implement policies that facilitate free trade need to be investigated because they may encourage the consumption of imported goods and services than products produced within the country. The scenario can happen when imported goods and services are cheap and of high quality as compared to locally manufactured goods. For this case, citizens will consume more of the imported products facilitated by free trade making the economy of the country not to grow as expected. If neoliberalism is not investigated very well, it can cause the economy of the country to stagnate or decrease depending on the nature of the policies about free trade. Free trade can lead to economic growth with well-structured systems.

Moreover, neoliberalism needs an investigation to bring on board the extent of the liberation of entrepreneurial freedom. When government intervention is involved in free market economics, it can encourage local entrepreneurs to grow by investing locally which translates to economic growth and consequently improved the well-being of the citizens. On the other hand, if the liberation of individual investors is not investigated, it can lead to a negative impact of elevating only the rich people and exploiting poor people in that country.

In conclusion, free market economics is a good philosophy when it involves all citizens in the entire process. The government should investigate and monitor neoliberalism to make sure that the free market advances the well-being of the ordinary citizens but not only a few rich people in the country.

What is the biggest weakness of the theory?

The main weakness of neoliberalism theory is lesser government intervention in the economy. The approach adopted by neoliberalism has reduced government power especially on policies about manufacturing and output. The government gives private firms to overall decisions about the production process and the prices of their goods and services. The theory states that government should partially get involved in matters relating to regulation, tariffs, and taxes. Lazzarato (2009) argues that permissiveness gives too much leeway to groups of few elite to accumulate wealth creating inequality in wealth distribution across the nation (Lazzarato, 2009). Elites who are wealthy have the freedom to gather capital widening gap between the poor and rich people. Neoliberalism which is characterized by inequality in wealth distribution does not have significant economic growth. Even though a country might have a high gross domestic product, but it does not translate into economic growth which is a critical factor to the well-being of the ordinary citizens. Minimal government intervention leads to many loopholes in free-market economics which include the following.

Market fundamentalism weakness whereby the free market controls healthcare and education institutions. In free market economics, these institutions are driven by the desire to make a profit thus exploiting poor people in that nation. Unlike social democratic theory where healthcare facilities are provided and controlled by the government and services are free so that the well-being of the citizens can be elevated. Also, neoliberalism theory does not advocate investment in the primary institution which has long term goals like healthcare. The method has the worst weakness to leave important institution under the control of the free market rather than under government control.

Neoliberalism theory is associated with low wages for the employees with low, inadequate skills in the flexible labour market of free market economics. Perhaps, skilled employees have command of high salaries which leads to increased cost of production, therefore, increased price of goods and services. Privates firm has control over the price of their commodities because of neoliberalism advocates for price deregulation. Price deregulation leads to consumer exploitation because producers determine the costs of their output without government regulation.

Conclusion

In conclusion, a theory has a series of weaknesses on the country's economy and negative impact on the well-being of the citizens. Neoliberalism does not pay attention to the well-being of human beings instead its primary focus is on capital accumulation leading to wealth inequality. Besides, it makes few elites to continue being productive and many poor citizens continue living in poverty. Minimal government invention has led to the main weakness of neoliberalism theory in economics.

References

Lazzarato, M. (2009). Neoliberalism in action: Inequality, insecurity and the reconstitution of thesocial. Theory, culture & society, 26(6), 109-133.

Peet, R., Hartwick, E. R., & Guilford Press. (2015). Theories of development: Contentions, arguments, alternatives. New York: The Guilford Press