(Neo)liberal Terms Flashcards
Key elements of Friedman’s theory include: (neoliberal)
Monetarism
Laissez-Faire Capitalism
Free Trade
Globalization
maximise their revenue and increase returns to shareholders.
Key elements of Adam Smith’s theory include: (liberal)
Division of Labor
Invisible Hand
Free Markets
Value and Wealth
Moral Sentiments
Key elements of Pierson and Keynes’ theory include: (liberal)
Government Aid only in mandatory circumstances
History matters (ripple effect)
Multiplier Effect
Cash Preference
4 Core principles Thorsen discusses
Market liberalization
Privatization
Deregulation
Reduction of government spending
Friedman’s Criticisms of Keynesianism
Moral Hazard: provision of welfare programs and bailouts during economic downturns can create moral hazard
Crowding Out Private Investment: government spending “crowds out” private investment.
9 core policies
- Deregulation
- Trade liberalization
- Fiscal Responsibility
- Monetary policy
- Tax cuts
- Labor Market Flexibility
- Privatization
- Decentralization
- Property rights
What are the goals of neoliberalism
social issues
limited government intervention
nationalism (global perspective)
Retrenchment of the public sector
process where the government reduces its spending, workforce, or services in the public sector
Dependency theory
advanced nations continue to flourish at the expense of underdeveloped nations
Rostow’s Five Stages of Economic Growth (Take Off Model)
- Traditional Society
- Preconditions for Take-Off
- Take-Off
- Maturity
- High Consumption
Criticism of Rostow’s 5 Stages
- Eurocentrism
- Linear Progression
- Determinism
Eurocentrism
Assumes all countries follow the same path as Western nations like Britain or the U.S.
Linear Progression
Overlooks unique historical, cultural, and institutional differences among countries.
Determinism
Assumes that all countries must industrialize to achieve economic growth and does not account for alternative paths or failures in development.
Center-periphery thesis
stays underdeveloped and economically dependent on the center, while the center becomes richer and more powerful.
Import Substitution Strategy (ISS)
a strategy under trade policy that abolishes the import of foreign products and encourages production in the domestic market.
G77
a team of countries that helps smaller nations work together to get better deals and more help from the rest of the world
Non-Aligned Movement (NAM)
a club of countries that didn’t want to pick sides between the U.S. and the Soviet Union during the Cold War. They chose to stay neutral and focused on peace and cooperation with other countries.
Top-down ‘Shock Therapy’
quickly changing a country’s economy in a big and often harsh way
Social Capital
refers to the importance of relationships and community in economic and social analysis.
Washington Consensus
refers to a set of economic policies that emphasize free markets, privatization, and deregulation, which were popular in the 1980s and 1990s
Modernization Theory
Asserts that economic development leads to democratization (according to Cheibub)
Criticism of Modernization Theory
The theory oversimplifies the relationship between development and democracy.
Not all countries that experience economic growth transition to democracy (e.g., China, Singapore).
Political institutions and social structures may play a more significant role in democratization than purely economic factors.
Core countries
Dominate the global economic system through capitalism and exploitation.
Peripheral countries
Rely on the export of raw materials and are dependent on core countries for finished goods.
The Mechanisms of Dependency
Unequal exchange in global trade
Foreign investment and multinational corporations exacerbate dependence.
International institutions (e.g., World Bank, IMF) reinforce dependency through structural adjustment programs.
Criticism of Dependency Theory
Overemphasizes external forces and overlooks internal factors such as governance and policies.
Ignores cases where countries successfully broke out of dependency (e.g., South Korea, Taiwan).
Too deterministic, implying periphery countries are always destined to remain dependent.
Structural Adjustment Programs (SAPs)
Economic policies imposed by the IMF and World Bank in exchange for loans to developing countries
(Key Components: Privatization of state-owned enterprises, trade liberalization, deregulation, and reducing government spending (austerity))
Purpose of SAPs
To stabilize economies, reduce fiscal deficits, and promote growth by integrating into the global economy.
often benefited elites and multinational corporations.
Criticism of SAPs
Economic: Failed to generate sustainable growth or alleviate poverty in many countries, especially in Sub-Saharan Africa and Latin America.
Social: Increased social unrest due to cutbacks in public spending and loss of jobs.
Political: Imposed without considering local contexts, undermining national sovereignty.
