Day 25 – Q 5.What do you understand by ‘neoliberalism’? What are its characteristics? How is it different from socialism? Discuss.
5. What do you understand by ‘neoliberalism’? What are its characteristics? How is it different from socialism? Discuss.
नवउदारवाद ’से आप क्या समझते हैं? इसकी क्या विशेषताएँ हैं? यह समाजवाद से कैसे अलग है? चर्चा करें।
Neoliberalism is an ideology that emphasize the value of free market competition. It is closely associated with the ideology of Laissez-faire economics with minimal state intervention in economic and social affairs, and its commitment to the freedom of trade and capital. It emerged due to the failure of communist and socialist policies which resulted in high public debt.
Characteristics of neoliberalism:
The philosophy of neoliberalism is usually considered as a modern alternate of classical economic liberalism. It is centered on a conviction in the self-regulating capacity of the market and correlatively the need to restrict the scope of action of the state. Its characteristics include
- Liberalization and privatization: Opening up sectors for private participation where government regulations are relaxed and hitherto banned sectors are opened up for private sector.
- Government as a business enterprise: Government at all scales under neoliberalism is turned into a business and citizens are consumers of public goods.
- Free flow of capital and labour: the foreign investment has limited restrictions. labour mobility is relaxed.
- Limited trade barriers facilitating free flow of goods and services with least tariff and non-tariff barriers.
- The increasing replacement of the Citizen with the Consumer as the most important and respected identity and mode of communication with both the State and the Market.
- The public has a choice in goods and services due to competition as multiple players are involved in production.
- Trickle down philosophy: Under neoliberalism, the belief and rhetoric of “trickle down” economics runs strong and alongside it the belief that everything would be better off if it were a private business.
- personal responsibility doctrine: all emphasis on individual. Every transaction happens at the individual level.
Difference from socialism:
- Government role:
- it has the role of facilitator with limited role in neoliberalism where as in socialism, the state has a major role responsible for the welfare of its citizens.
- The role of the state is to regulate the markets, in the public interest in socialism, whereas the role of the state is in service of the markets, in the interest of market players in neoliberalism.
- The government impose trade barriers in interest of the domestic producers where as in socialism, there is limited trade barriers in interest of domestic consumers.
- Labour is mainly domestic and there is limited flow of labour as well as capital in socialism where as in neoliberalism, labour and capital mobility is relaxed.
- Citizen welfare and well-being is the responsibility of the state in socialism whereas in neoliberalism it is contingent on market forces and individual.
- The citizens are viewed mainly in passive welfare perspective in socialism whereas in neoliberalism, they are seen as active consumers.
A general characteristic of neoliberalism is the desire to intensify and expand the market which act as a balancing force. Neoliberalism has overcome the problems of socialism by the rightful mix of market and state role in providing efficient and effective goods and services to citizens.