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What is neoliberalism ? How 's this model different from liberalism ? How does this model generate economic growing ?

2006-07-12 03:58:23 · 5 answers · asked by arturoas7 1 in Politics & Government Politics

I am particularly interested in the effects of neoliberalism on the third world

2006-07-12 06:31:45 · update #1

Good, olcay. I wonder whether you could elaborate a bit more on how this generates economic growth. Cheers.

2006-07-12 12:41:24 · update #2

5 answers

Theoretically: shrink governemnts and leave everything to the markets.

If everything is left to the market, then everything is profit driven. What makes a profit will be undertaken and what does not will not. Resources will be shifted from declining areas into areas where there is growth. hence factors of production will be more productive, the labour market will hit an equilibrium at full employment (unhindered by minimum wages and collective bargaining) and the economies of the world will be running away like locomotives.

Now throw in free trade, and the goods (and services to a lesser degree) will be produced where they are cheaper to produce, capital will shift as wages across the world will be equalised since eventually everyone doing the same job will be paid the same. So free trade enhances the opportunities for growth by adding in the global dimension.

In a sentence: economic growth via unfettered optimal resource allocation across the world causing full employment and consistent wages and prices.

Ok, that was for the text book theory.

Now for a few glimpses of real life.

1 Little mobility of factors of production
Factors of production are quite immobile, physically - there are costs of moving from London to Berlin plus you might not speak good German, legally - even higher costs in the forms of barriers to moving from Lagos to Berlin.
2 Assumption of Perfect Competition
The implicit assumption above is close to perfect competition. But we all know the power of huge corporations, transfer pricing... The markets are not competitive. This leads to distortions in the pricing, employment...
3 Long Run
Sure in the Long Run eerythig is possible. But remember that an industry leaving a region to move where it is more competitive fires people, and people have votes; else whyso much noise with outsourcing for example. These cause political pressure that 'democratic' governments have to take into account, and therefore be protectionist. For example the subsidies to agriculture in the US and Europe, the issue of Chinese-made t-shirts in Europe recently...
4 Income and Price Equalisation
In general, incomes are equalised faster than prices: people are fired, but prices tend to stay high. This again, is due to lack of oligopolistic markets: costs of production drop but prices remain high, more profits.
Eventually the income gap will widen, and I am not sure the whole system would be viable.

2006-07-16 16:15:13 · answer #1 · answered by ekonomix 5 · 0 1

Neoliberalism=Pinochet, Reagan, Thatcher

2006-07-13 10:27:13 · answer #2 · answered by Conservative 5 · 0 1

Neoliberalism? It means gay parades, gay marriages, everything anti-God, abortion, blood-sucking of the already poor nations by the so-called developed nations/USA in particular/ in the name of globalisation, blood-for-oil, double standards/ George Bush/, Israel's right to confiscate, commit genocide against the Palestines, etc...

Everybody can feel the negative effects of this model, in short, it is a bad experiment failing even before it can take off. It is a wonder governments in South America are going Socialist?

Word compounded and founded in the USA of course /maybe New York?/

2006-07-12 04:22:26 · answer #3 · answered by philip y 2 · 0 1

http://en.wikipedia.org/wiki/Neoliberalism
http://web.inter.nl.net/users/Paul.Treanor/neoliberalism.html

yet another attempt by the economic fascist right to co-opt and hide behind the lefts moral center.. these people have only one objective, global dominance..

2006-07-12 04:21:55 · answer #4 · answered by hardartsystems 3 · 0 1

Never heard of this one, but it sounds just like its Conservative counter part.

2006-07-12 04:05:48 · answer #5 · answered by DEEJay 4 · 0 1

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