Neoliberalism

Definition

Neoliberalism is an economic and political philosophy that promotes free markets, deregulation, and a reduction in government intervention in the economy. It emphasizes individual entrepreneurship and market-driven growth, shaping global economic policies since the late 20th century and profoundly influencing social and political structures worldwide.

5 Must Know Facts For Your Next Test

1. Neoliberalism gained prominence in the 1980s as a response to perceived failures of state-led economic policies, with leaders like Ronald Reagan and Margaret Thatcher championing its principles.
2. It has been associated with increased income inequality and uneven development, as benefits often accrue to wealthier individuals and regions while marginalized communities may be left behind.
3. Neoliberal policies have led to significant changes in labor markets, often resulting in precarious work conditions for many individuals, especially in the Global South.
4. The rise of the informal economy can be linked to neoliberal policies that prioritize flexibility over security, pushing workers into less stable jobs without formal protections.
5. Critics argue that neoliberalism undermines public welfare systems and exacerbates social inequalities, leading to calls for alternative economic models that prioritize social equity.

Review Questions

• How does neoliberalism influence globalization and its effects on economic geography?
  • Neoliberalism significantly influences globalization by promoting free markets and reduced government intervention, leading to increased trade and investment across borders. This economic framework encourages countries to open their markets to foreign competition, impacting local economies and labor markets. As a result, globalization often exacerbates inequalities both within and between countries, reshaping economic geographies in ways that favor wealthier nations and regions over poorer ones.
• In what ways has neoliberalism contributed to uneven development as described in the core-periphery model?
  • Neoliberalism reinforces the core-periphery model by prioritizing investment in economically advanced regions while neglecting peripheral areas. Policies that encourage deregulation and privatization often lead to the concentration of resources and opportunities in core regions, widening the gap between these areas and their peripheries. Consequently, peripheral regions may struggle with underdevelopment as they lack the necessary infrastructure and support for growth, perpetuating cycles of inequality.
• Evaluate the impact of neoliberalism on labor markets and the rise of precarious work in the Global South.
  • Neoliberalism has transformed labor markets in the Global South by prioritizing flexibility over job security, leading to a rise in precarious work. Many workers find themselves in informal employment situations without benefits or protections due to deregulated labor practices. This shift has profound implications for social stability and workers' rights, creating a workforce vulnerable to economic fluctuations while also limiting their access to social safety nets. The challenge remains for policymakers to balance market efficiency with the need for equitable labor practices.

Related terms

Deregulation: The process of removing or reducing government rules controlling how businesses can operate, often aimed at increasing competition and encouraging economic growth.

Globalization: The process by which businesses and other organizations develop international influence or start operating on an international scale, often tied closely to neoliberal policies.

Privatization: The transfer of ownership of a business, enterprise, or public service from the government to private individuals or organizations, frequently advocated in neoliberal frameworks.