Neoliberalism Essay Sample

The Neoliberal theory drawing largely from classical political economy gained prominence as an IR theory during the 1980’s and has proved to be effective as a theory and in practice in changing the politics and economies at the national, international and individual levels. The end of the cold war and the reforms in Russia such as Glasnost and Perestroika helped fuel this theory to the mainstream and since then most countries have been following a neoliberal political and economical model. Following of the neoliberal model by previously communist and dictatorial governments and the adoption of a modified neoliberal policy by China are examples of the effectiveness of this theory. In spite of its strengths such as recognizing the role of a hegemon and the importance of political and economic cooperation among different states, the existence of institutions and international organizations as arbitrators and tools of cooperation, providing institutional mechanism to monitor compliance of international agreements and providing a space for use of sanctions and non-military options to deal with non-compliance of agreements or treaties, the theory suffers from certain weaknesses too that has led to major protests around the world. The weaknesses of the theory include its favoring powerful and rich states over poorer countries, neglecting other levels of explanation other than the international level, failure to accept the limitations of international organizations in conflict resolution and compliance and the implementation of a division between economic and military interests as there lies a deep correlation between the two. Since the neoliberal theory focuses largely on free markets and its ability to direct international relations and state behavior, it fails on certain levels to explain dimensions of powers that are at play and that are important in International relations. However it succeeds in explaining who the major international actors are.
The main strength of the neoliberal theory is that it calls for and believes in the cooperation of states in the international arena. Although it believes in the existence of a hegemon, the conditions also mandate that the hegemon act in cooperation with other states and does not function on its own. Although detractors of the theory maintain that in an anarchic international system states do not necessarily deem it necessary to cooperate, the opposite occurs in a neoliberal world. Countries in spite of their different political ideals and affiliations are sometimes forced to cooperate in a world where the markets are increasingly open and interrelated. Since the housing bubble crash in the United States and the Greek economic crisis affected not only the economies of the respective countries but brought a majority of the world’s economy into a crisis, the importance of cooperation is much more felt by the states. Even though there is no natural inclination to cooperate conditions bring or force the countries to sign international trade agreements that would protect and enhance their standing.
Another strength of neoliberal theory is the acknowledgment of the role of international organizations such as the United Nations, the International monetary Fund, the World Bank, Non-governmental organizations and other transnational companies in playing the role of arbitrators and financial helpers. Since each state will look to further its own interests at the cost of other states, there is a need for some kind of mechanism that would act as a check and balance and international organizations serve this function. Although not completely effective, there have been instances when they have played a role in preventing from a hegemon acting on its own. The veto powers that is held by the permanent members of the security council is an example of how the international organizations still have an important role to play in international organizations. Russia and China have together vetoed the decisions of the USA to go into war. This is just one instance where through an international organization other states can check and balance the power of a hegemon. Advocating trade and other economic sanctions against certain states are also a strength of the theory. Instead of going into a costly and protracted war, states get together to implement sanctions on another state to bully it into submissions. The recent economic sanctions against Russia imposed by the US and some European countries are examples of how a group of countries can cooperate to make another country toe the line. These sanctions also ensure that the certain countries comply with international trade and climate agreements. The signing of the Kyoto protocol by many countries and numerous climate conferences to deal with global warming are also examples of the role of international cooperation as espoused by the neoliberal theory.
The theory however is not without its weaknesses. The system of open markets and reduced role of the state in the economics of the world has led to a system where the rich and the powerful states are favored over the smaller developing states. This divide between the have and have nots happens not only at the international level but also at the national level with income inequalities shooting up ever since the implementation of neoliberal policies in many countries. the opening up of the economies of some states either willingly or due to coercion also make the domestic industries vulnerable to foreign competition. The theory is also known to neglect other levels of explanation for the behavior of states in the international arena. States are not only motivated by their economic interests as there are other factors such as geopolitics, culture and individualistic tendencies that make them act the way they do. A narrow explanation and analysis of the working of the international system and a one glove fits all approach taken by the neoliberalists have in fact led to numerous protests across the world at the individual, national and international level. There are protests by representatives of non governmental organizations, individuals and countries at the different economic forums that are conducted on an annual basis.
Although the neoliberal theory favors the role of international organization as arbitrators and a dispute resolving mechanism, it also over rates the role of these organizations in conflict resolutions. If the Security Council and the UN had played their roles properly the war against Iraq and Afghanistan would not have happened. Since the system also favors the rich countries which fund these international organizations they are also susceptible to impose policies that benefit them. The IMF and World Bank have been accused of many instances of lending to developing countries only when they open up their economies and implement neoliberal economic policies. Contrary to the belief of the neoliberal theorists the market has not solved anything by itself and the state still has a large role to play. Military apparatuses of the states have not yet disappeared and there is still conventional war being waged around the world. Following the neoliberal theory also blurs the lines between the national and foreign policy in many smaller developing countries. Many countries which are weaker will be forced to modify their domestic as well as their foreign policies to suit the needs of the stronger and richer states.
Neoliberal theory was one of the more successful theories in International relations as it was implemented and pushed through with much gusto during the 1980’s. A large number of countries still follow neo-liberal policies. New markets have been created with many countries opening up their economies. This has also led to many inequalities at different levels. The dimensions of power of an actor are also not adequately explained by this theory. Although the purchasing power of a country and its military might can be explained there are other power dimensions that are at play and that is not adequately explained. The economic might of a country alone cannot ensure that it is a major player in the world politics. The United States is a powerful nation in spite of having heavy trade deficit and imbalances as it has a powerful military and this is not adequately explained by the neoliberal theory. It however explains what makes a state a major player in international relations and who the major players are. China and the Unites States are major actors as they have huge economies and the economic and military might to carry forward their individual decisions without much opposition from other states.
In spite of having been implemented throughout the world and having been one of the successful political and economic theories, neoliberal theory is not completely effective as it has only exacerbated the problem of inequality around the world. Although it successfully explains how economic might makes a state a powerful actor, it fails to take into account other factors that also play a role in making a state an important player in international relations. However in spite of its weaknesses the neoliberal theory continues to prove to be an effective guide to statesmen around the world. Part of it to do with the fact that it is based on sound economic theories and also because the results of the implementation of the theory are testable. A successful implementation of the theory in one country is enough to take it as an example in other countries. Increased GDP's in many countries are also another reason why neoliberalism is the most sought after economic and political policy around the world.