Essay on "Economics the Dominant Economic Theme"

Essay 4 pages (1262 words) Sources: 1+

[EXCERPT] . . . .

Economics

The dominant economic theme of the late 20th century and early 21st century has been globalization. The movement has been described in a number of terms, not all of them flattering. The doctrine of globalization has its roots in neoliberal ideology, in which the emancipation of the individual is equated with smaller government and greater economic freedom (Harvey, 2007). Over the past thirty years, this doctrine has been implemented both a large scale, through international trade agreements and global financial institutions such as the World Bank and International Monetary Fund and on a small scale, with the gradual unwinding of government-run social services in many jurisdictions.

The effects of globalization are hard to dispute. Economic liberalization has dramatically increased world trade, which in turn has generated a fantastic amount of wealth. Critics point to the inequalities in the distribution of this wealth, but even where such arguments have merit, it is worth also recognizing that it is not just the GDP of wealthy countries that has improved, but of all countries that have joined in this new, global economy. Thomas Friedman points out that while the groundwork for this transformation of the world economy has been laid since the end of the Second World War, it has only been since the fall of the Eastern bloc that globalization has truly taken hold. Since that time the nations -- primarily in Asia, Eastern Europe and the Middle East -- that have participated most enthusiastically in the global economy have seen their standards of living rise.

These are precisely the benefits that have long predicted, as far back as Milton Friedman, of increased liberalization. It stands to reason, then, that such benefits will also accrue to our societies if we continue along the liberalization path as well. We are at something of a crossroads with regards to social policy, as evidenced for example by the health care debate. The role of government as envisioned in neoliberalism is to facilitate the markets. The current philosophical debate is with respect to defining the optimal level of government intervention in the markets. Liberal economists like Paul Krugman have set the level of needed government intervention relatively high, accepting that freer markets will lead to better outcomes but actively guiding the distribution of wealth towards the public domain. Friedmanites, by contrast, take the view that distribution of positive outcomes will in the long run reach a natural equilibrium. The optimal outcomes, therefore, will be achieved not through selective intervention but through full liberalization. As the example of world trade shows, even if the distribution of the benefits of economic liberalization are not entirely equitable, the amount of additional wealth that is created will result in gains among all who choose to participate in the market. Those that do not choose to participate will see no benefit at all, which surely cannot be the most desirable option for any reason other than misguided principle.

Indeed, when one considers the challenges faced by the world in the coming century, it is little wonder that neoliberal ideology has taken such a powerful hold on global economics. Wealth creation is essential to meet the basic human goals -- the eradication of disease, providing safe drinking water, feeding what will be upwards of nine billion people, and providing the opportunity for leisure to all classes. The freer the markets, the more wealth is created. The role of government in shaping the global economy of the 21st century needs to one where the creation of wealth -- the facilitator of positive outcomes -- is paramount. The market will distribute that wealth, if not as equitably as some might imagine ideal, then at least enough to take care of a swollen humanity's basic needs.

The converse of this is that wealth is not… READ MORE

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