Neoliberalism is responsible for most of the economic problems we are experiencing today. This paper concurs with the argument. Ideally, neoliberalism refers to a new form of liberalism. Neoliberalism was popularized in the 1930s with the intention of deregulating markets. It essentially refers to the reduction of government action in the market. This leads to free enterprise where private players are let to determine their own destiny with minimum government involvement. Ideally, markets need an amount of regulation and the consequential deregulation has seen a stretch that is too thin than what implementers bargained for. This paper seeks to argue that neoliberalism has occasioned economic failures in today’s economy. In that context, it is the paper’s position that a certain amount of regulation is necessary for purposes of cushioning the populace from the extremes of a free enterprise.
One needs to first appreciate the main premise of neo-liberalism. Neo-liberalism embraces the concept of the rule of the market. Under the rule of the market, free enterprise is facilitated to the best extent possible. However, free enterprise must be enjoyed responsibly. This essentially demands for a legal and ethical framework of operations. However, on the ground players in markets have little to no regard for the law. Ethical considerations which remain merely persuasive have remained only on theory rather than receiving practical application. The rule of the market has been reduced to what Marx referred to as the exploitation of the proletariats by the bourgeoisie. The haves continue to amass wealth while the poor remain confined to offering their services for lip pay. The concept of give to the market what the market demands has traditionally aided the owners of factors of production to exploit the laborer. This angle of neo-liberalism has seen laborers exploited by the owners of factors of production. Interestingly, what Marx had predicted has come into play. Owners of factors of production have taken advantage of free enterprise. They only provide remuneration that is able to maintain laborers but cannot improve their economic positions. However, an even more interesting angle about these developments is the pyramid structure of the haves and the have not. The poor fall at the bottom of the pyramid and are the majority while the rich fall at the top of the pyramid making the minority. Related to these state of economic affairs are social problems. Some of the ways in which such problems have been manifested include the increasing levels of crime, the general disregard for the law and the apathy towards political processes.
Neoliberalism has occasioned a culture of deregulation. By deregulation government has been reduced to a mere observer. In extreme cases government has equally become a participant in the exploitation of the populace. Deregulation reduces the government’s teeth. It incapacitates the government making it unable to act even when the market players blatantly disregard the law and ethical foundations. Absence of government regulation has replaced the public good principle with the individual good principle. Public good entails the protection of public interest. The common good of the society was looked into previously by government in through regulation. However, with the onset of deregulation, government handed over control of major resources to private players whose main motive is profit. As some scholars have observed, conflict of interest occurs when players with self-interest are placed in charge of the cherry. Ideally government was best placed to oversee the interest of the public through consideration of the triple bottom line. Indeed, it is a little naïve to expect the private players to secure the interests of the planet and the people at the expense of profits. Deregulation, therefore, has exposed the market to selfish vultures out to secure their own interest. What has consequently been witnessed is the regrettable exploitation of resources without consideration of environmental effects. Indeed, the debate continues on what industrial players should give priority between sustainability and development. While the long term solution would have been sustainability, what the market players would prefer to solve their short term interests is development. However, this development has occasioned numerous problems that have in turn worsened the state of the economy. It is, therefore, necessary to give regulation its rightful position. Advanced economies such as the United States of America have appreciated the need for sustainability and included in the mandatory obligations imposed on market players the need for sustainable decision making.
One inevitable product of neoliberalism is privatization. Neoliberalism has not only advocated for deregulation, it has compelled government to surrender ownership of corporations to private hands. The argument advanced for privatization of entities was that through privatization, the government was able to achieve a tripartite goal of revenue collection, efficacy through leaner government and enable full regulation. These arguments on the surface sound sensible. However, a deeper analysis reveals the flippancy in believing the arguments. Foremost, privatization has been abused by government officials who collude with private players to hand over the control of the market. What privatization has created is a conduit for corrupt practices. This has only facilitated further depletion of government coffers to the extent that it has been unable to effectively disburse its services to the citizenry. Secondly, privatization has handed over control of essential resources into private hands. As mentioned before private bodies are motivated by their interests which remains that of profiting. This has exposed the citizenry to exploitation especially through the provision of basic services necessary for all humanity. Neoliberalism has consequently intensified competition for resources without consideration for the public good.
Closely related to privatization is the concept of a lean government. Lean governance demands that government must be as small as possible. However, this concept has in various ways occasioned unemployment. The government in its spirit of remaining lean has been compelled to retrench and or not employ workers. This has had a negative effect on the economy. The government as the biggest consumer and spender, by failing to absorb a proportional amount of workers, take credit for the unemployment menace. In addition, neoliberalism is directly responsible for the government’s hesitation to incur expenses for the public good. The policy has seen the reduction of public expenditure and opened doors for an approach in line with economic austerity.
Through neoliberalism, Garret Hardin’s argument of the tragedy of the commons has come to be. The public goods have been exploited without regard for the future consumption. Each player seeks to maximize their own gains from the commons. This has occasioned the depletion of commons. On the other hand, neoliberalism has facilitated the tragedy of the anti-commons as propounded by the likes of Michael Heller. The privatized resources have not been exploited exhaustively because of the legal hurdles. A good example can be seen in the now blossoming patent industry. The creation of patents for every little innovation has discouraged the exploitation of the discovered knowledge for the overall public good. In addition, the tragedy has been worsened by the fact that privatization has only favored the rich. The quantum of wealth required to be able to own property has eliminated the poor who remain subjects of destitution and begging.
This has further been compounded by the elimination of the welfare systems. Neo-liberalism advocates for the free for all without any government interventions. While the approach facilitates a blossoming free enterprise, it fails to cater for the small yet swelling poor sections of the nation. Without sufficient welfare systems, the poor have had to beg in the treats for help. Others have been compelled into vices such as crime and prostitution.
However, the baby must not be thrown out with the bathwater. It is imperative to appreciate the noble results of neoliberalism. Despite a litany of failed economic policies and outcomes, it is essential to note a few developments that have been borne by neoliberalism. Foremost is the culture of public austerity where public expenditure has been reduced to the bare minimum. This approach if implemented to the letter would have the effect of easing the burden on the taxpayers since the overall government expenditure would be lower. In addition, neoliberalism advocates for government to minimize its interventions in the market. Through this, free enterprise affords market players a fair playing ground which is ideal for competition. With competition comes efficiency and efficacy by market players in turn advantaging the consumers. Some of the advantages that come with the competition in the free market include a variety of commodities, lower pricing and better quality of commodities.
In addition, neoliberalism eliminates the big man mentality that government often has in the market. Government by its nature and resource base is a big player that is difficult to compete. A system that reduces the government’s roles to the least extent possible eliminates this negative competition. The government has equally been able to concentrate in its regulative roles rather than sit in among players then purport to regulate itself. Arguments have been advanced that neoliberalism is the best among the worst. This can be seen if compared to centrally controlled systems where property ownership remains with the government. Statistics point to a direction of worse economic challenges in such central systems. In that vein, neoliberalism needs to be appreciated not as a perfect system but a better solution to economic problems bedeviling nations.
In conclusion, neoliberalism was embraced for purposes of reducing government intervention in the economies. However, when the government withdrawal is overboard, it leaves its citizens in the hands of private players whose motivation remains profiting. This arguably is the biggest limitation of neoliberalism and has occasioned current economic problems. In the long run, the government needs to play essential roles such as maintaining a welfare system for the populace, provision of basic services, among others. The debate today has been reduced between development and sustainability. As mentioned before the private players in a neo-liberalized economy would prefer development against sustainability. The government must avert economic crises by intervening accordingly.
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