Neo Liberalism and Globalization

For a significant period including present days, neo liberalism has dominated the economic policymaking in several countries, especially the United States and United Kingdom. The United States is one of the countries which strongly advocate for neo liberalism, and it has been successful in dictating these policies through the IMF, World Bank, and direct pressure. Neo liberalism embodies the capitalist ideas of a free market economy that aims at achieving optimum economic performance in terms of efficiency, economic growth, and technological progress. Therefore, the States have limited economic roles and any intervention is viewed suspiciously, on the ground of causing more problems. On the other hand, globalization can be defined as the increase of interactions and flow of resources across borders. As a result, it creates economic relationships between states. Moreover, globalization has substantially increased economic activities in terms of merchandise trade flows, foreign direct investment, and cross border financial investments. This paper will explore globalization and neo liberalism in relation to their global impacts, the opportunities, and challenges they create for cross-border and international connections.

Notably, although neo liberalism is supported by the super powerful countries such as the United States, it appears to be problematic and obstructive to globalization. For instance, its survival is dependent on the ability to accumulate capital as a result of economic expansion and technological progress. Also, for states to accumulate capital, there must be increasing profits margins and rising standards of living for a significant percent of the populations. Nevertheless, neo liberalism does not appear to be enhancing the vigorous accumulation of capital in contemporary capitalist ideas. There are several reasons why neo liberal model is not promoting the rapid acquisition of capital. First, this model raises the problems of insufficient demand in the long-run because of the tendency to lower real wages and public spending. Second, it creates instability on the macro-economic level by forcing states to reduce their taxation policies, social welfare programs, and regulation of the financial sector. As a result, the states are exposed to the risks of financial crisis and depression. Furthermore, neo liberalism is a model that has the tendency to intensify class conflict, which can discourage capitalist investments. In addition, this is a policy that recommends activities such as deregulation of business, privatization of public assets, and cutbacks in social welfare programs. It also includes the reduction of taxes on business activities and investments. Moreover, in the global markets neo liberalism advocates for free movement of goods, services, and capital. This means that corporations, investors, and banks should be free to move and acquire property across national boundaries. However, this policy does not mean that there is free cross-border for individual movements.

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On a further note, neo liberalism creates dominant economic ideologies and policies that are complex and multi-faceted. There is rule that is generally accepted to ensure that such economic policies would be favorable, and the states will adopt them without challenges. On the other hand, foreign direct investment is one of the activities that have been enhanced by globalization. It is associated with the movement of technology and organizational methods. Also, the financial flows, especially deposits in foreign bank accounts have increased significantly. Thus, there is movement of capital into and out of the country. It therefore shows that globalization has created an economic interdependence between states. More importantly, despite the increased cross-border interactions, the states still retain the economic power, unlike in capitalist firms that support the ideas of neo liberalism. For example, although Malaysia is a small country, it successfully imposed capital controls following the Asian financial crisis of 1997, despite the opposition from the IMF and America. In other words, a country that has the political will to exercise control over movement of goods and capital across its borders, is not deprived of the power to regulate its businesses. Moreover, the most important effect of globalization is its ability to enhance the capacity to undertake state regulations. In this way, globalization has been crucial to changing the competitive structure of capitalism. First, there is a rapid growth of trade that has changed the situations faced by big businesses. Before the wave of globalization, large corporations operated in controlled domestic markets. But, currently, businesses face competition from international companies that operate in both the domestic and foreign markets. For example, General Motors faces competition from Toyota and Honda. Similarly, globalization has facilitated a rapid integration of an open world financial systems that has helped major banks and financial institutions in the capitalist nations to compete with each other.

In addition, globalization appears to be one of the factors that have transformed businesses. It is a process is pushing business organizations to go global in efforts to reduce their tax burdens and regulatory constraints. It has provided companies with the freedom to compete more effectively with global rivalry too. Therefore contrary to neo liberalism, globalization is effective in promoting the accumulation of capital in the long-run: it creates a highly competitive business environment and self-regulations state. In neo liberalism, industries and corporations are struggling with constraints of controlled markets. On the contrary, due to globalization, the consumers can benefit from lowered costs of transport and reduced tariffs. The producers also benefit because their exports can be sold into a wider market.  Moreover, due to competition from global markets, the producers are always ready to act and alert to ensure that their consumers will be satisfied. Consequently, the more popular the globalization becomes, the greater are the efficiency of production processes and invention of technological advances. Therefore, because globalization develops industrialized economies, the government should develop the incentives to embrace it. In this way, the globalized economies should facilitate operations such as inflows of capital to provide an opportunity for eliminating bureaucratic obstacles that hinder the economic growth.

On a different perspective, many countries are witnessing the positive impact of globalization. There are many states that are benefitting from the spillovers that are important for social and economic progress. For example, Indian firms are supplying affordable medicine, medical equipment, and other technological products and services to African countries.  On the contrary, neo liberalism in hindering the success of business activities because most of the countries are demonstrating the need to have shared values, rules, and strategies. And since neo liberalism advocates for reduction of public regulation in the financial sectors, these nations are facing challenges to have a balanced approach that will foster economic progress. They meet problems such as adopting varying policies that deals with market regulations, export promotion, and industrial development. At the same time, the government wants to promote opportunities that will protect its people from the risks of economic crisis. Consequently, globalization is given the priority at the expense of adopting the ideologies of neo-liberalism.

Although globalization has increased competition and global business interactions, there are negative impacts too. On the one hand, there is an increased market share due to the reduction in the prices and sizes of satellite dishes. Thus, the technological devices have become more affordable even for low-income consumers. However, the technological advancements have promoted terrorism. For instance, Osama Bin Laden had denounced the forces of modernity, but he used technology to facilitate operations in his al-Qaeda terror group. He had developed a chain of global interdependent networks to keep his followers informed and alert. In the emphasis, Bin Laden and his generals were hiding in remote and secluded areas; they were able to send sophisticated information and members of al-Qaeda received it immediately. Moreover, their combat dressings and weapons reflected that they originated from Russia. This means that Bin Laden had some networks in Russia that facilitated the movement of these items. As a result, globalization carries the blame for promoting the activities of organized crimes. The rising competitive pressures are another challenge created by globalization. Practically, the arrival of exports from larger countries creates stiff rivalry that can hinder the economic diversification and industrialization in smaller countries. Therefore, there is a significant growth of the middle-class; globalization may pose a threat to the economic wellbeing of third world countries.

In conclusion, neo liberalism is a model that proposes to promote the ideas of a free market economy. It also aims at achieving optimum economic performance in terms of efficiency, economic growth, and technological progress. However, there are many challenges that arise as the countries such as the United States try to impose these ideologies on other countries. These are problems such as the domination of large corporation, reduced economic growth due to decreases in profit margins, and social welfare programs. On the other hand, globalization is widely accepted by many countries, because it gives the government the priority to protect its economic interests, self-regulations, and positive competition. However, like neo-liberalism, globalization has its setbacks too. For instance, due to the formation of technological networks, it has become easier to spread sophisticated messages that promote terrorism. As a result, many states are adapting to globalization more than to the ideas that are advocated by neo liberals.

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