Question

"Neo-liberal and managerial ideologies have been forces for good in society". Critically evaluate this statement with particular reference to Berle's (1960) arguments.

Answer 1

Criticisms of the concept of neoliberalism-

• Market fundamentalism- It is argued that advocating the utilization of free markets in areas,like education & medical care is misplaced as by their very nature these are public services, which aren’t subject to a similar profit motivation. Additionally, the free market overlooks the externalities of health education & health. Using a free market approach can result in inequality augmentation & under-provision of an institution essential for long run investment in the economy.
• Monopoly power- A largely neoliberal policy has experienced a broadening inequality of both income & wealth in the Western world. This is due to many factors, like skilled laborers in a position to command greater wages, however, low-skilled laborers in flexible labour markets more likely to experience stagnant wages. Companies enjoying monopoly power can escalate producer surplus at the expense of customers.
• The growth in financial flows – due to capital deregulation haven’t necessarily aided economic development, but rather have contributed to augmented financial instability, which has caused broader economic shocks, for example- after the 2007 credit crunch.
• One size fits all- An essential issue for neoliberalism is that strategies which may work in one nation don’t necessarily work in all nations. For example, a nation with the capability to lessen interest rates may benefit from lessening the size of governmental borrowing (fiscal austerity). However, if interest rates are 0 in an economy like in the UK, the cost of austerity may be much greater than the benefits.
• Inequality- Neo-liberal strategies tend to raise inequality. However, this inequality can harm long run growth prospects. People with low-income have restricted spending power and people who become richer have a greater MPS, so wealth does not “trickle down” as some hope