Economic Liberalism & Neo-Liberalism and its effect upon International Trade in the face of Globalization

For nearly 20 years neoliberalism has dominated British and American economic policymakers. Neoliberalism has strong support in continental Western Europe and Japan, but substantial popular resistance there has limited its influence so far, despite continuing US efforts to impose neoliberal policies on them. In much of the Third World, and in the transition countries (except for China), the US has been successful in dictating neoliberal policies, acting partly through the IMF and World Bank and partly through direct pressure. Neoliberalism is an upgraded version of the classical liberal economic thought that was dominant in the US and UK prior to the Great Depression of the 1930s. From the mid 1930s to the mid 1970s a new interventionist approach replaced classical liberalism, and it became the 

accepted belief that capitalism requires significant state regulation in order to be viable. In the 1970s 

the Old Religion of classical liberalism made a rapid comeback, first in academic economics and 

then in the realm of public policy. Neoliberalism is both a body of economic theory and a policy stance. Neoliberal theory claims that a largely unregulated capitalist system (a A free market economy) not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. The state is assigned a very limited economic role: defining property rights, enforcing contracts, and regulating the money supply.

 State intervention to correct market failures is viewed with suspicion, on the ground that such intervention is likely to create more problems than it solves. The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulationist welfare state.These recommendations include deregulation of business; privatization of public activities and assets; elimination of, or cutbacks in, social welfare programs; and reduction of taxes on businesses and the investing class. In the international sphere, neoliberalism calls for free movement of goods, services, capital, and money (but not people) across national boundaries. That is, corporations, banks, and individual investors should be free to move their property across national boundaries, and free to acquire property across national boundaries, although free cross-border movement by individuals is not part of the neoliberal program. How can the re-emergence of a seemingly outdated and outmoded economic theory be explained? At first many progressive economists viewed the 1970s lurch toward liberalism as a temporary response to the economic instability of that decade. As corporate interests decided that the Keynesian regulationist approach no longer worked to their advantage, they looked for an alternative and found only the old liberal ideas, which could at least serve as an ideological basis for cutting those state programs viewed as obstacles to profit-making. However, neoliberalism has proved to be more than just a temporary response. It has outlasted the late 1970s/early 1980s right-wing political victories in the UK (Thatcher) and US (Reagan). Under a Democratic Party administration in the US and a Labor Party government in the UK in the 1990s, neoliberalism solidified its position of 

dominance. in my opinion If neoliberalism continues to reign as the dominant ideology and policy stance, it can be argued that world capitalism faces a future of stagnation, instability, and even eventual social breakdown However, from the factors that have promoted neoliberalism one can see possible sources of a move back toward state-regulated capitalism at some point.

http://people.umass.edu/dmkotz/Glob_and_NL_02.pdf

Andrean Rendra 1701350714