![]() Neo-liberalism advocates its philosophy irrespective of whether it harms the interests of the workers and breaks the safety-net for the poor. It denotes a set of economic policies that support economic liberalization, open markets, deregulation, abolition of license and all forms of state control in trade and commerce and rapid globalization of capitalist economy. Neo-liberalism is a political philosophy that claims to understand the relation between human nature and economics and concludes that maximization of human flourishing can be achieved by maximization of profit of the capitalists. However, the crisis of capitalism over the past two and a half decades has paved the way of the revival of the previous liberalism with a greater force under the name “neo-liberalism”. ![]() By following the Keynesian theory of the Government working for the common good, the USA had witnessed substantial improvement in standard of living of a sizeable number of people. During the Great Depression of the 1930s, it was challenged by John Maynard Keynes, a renowned economist, who advocated full employment for full growth of capitalism and viewed that it could be made possible by area-specific intervention of the Government and central bank for creation of employment. ![]() It advocated the theory that free trade was the best way for developing a country’s economy. Neo-liberalismīefore discussing neo-liberalism, let us focus on its origin – liberalism that prevailed in the USA through the 1800s and early 1900s. These models do not want the socio-cultural values to be dictated by the drive to accumulate capital – the core spirit of capitalism. Some models want a society in which some aspects of social life remains non-capitalist in nature while capitalism plays its part in effecting economic growth. According to some models, state should make big investment in infrastructure and take measures to increase employment which is necessary for full growth of capitalism. This is an ethically unjustified situation and a negative feature of capitalist economy. As state has no responsibility to make any services available to its citizens, lowly paid workers may suffer inconvenience particularly where essential services such as healthcare is involved. However, this entails payment of low wages to workers who are unable to avail goods and services that are not affordable to them. Owing to stiff competition among entrepreneurs, goods are produced at the lowest possible cost in a capitalist market. It lays emphasis on the rule of law and confines state participation to administration and maintenance of law and order. This encourages profit motive and promotes entrepreneurship. CapitalismĬapitalism advocates free market economy where forces of demand and supply regulates the market without interference of the state. Yet there are differences that give each of them a separate identity. The dividing line between capitalism and neo-liberalism is so thin that many consider the two concepts as synonymous with each other. Both capitalism and neo-liberalism basically advocate free market economy without state control.
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