Neo-liberalism is mainly an economic philosophy which promoters a substantial economic liberalization policies like free trade, privatization of government and public organizations. It also demands for the reduction of government interference in private sector to advance the economy in order to make the citizens self-sufficient in terms of massive economic productions. The neo-liberal idea was emerged in early 19th century but the implementation of neoliberal policies become common in 70s and 80s when citizens were not happy with escalating dreadful performance of government. In 1970s many philosophers and economists support the implementation of neoliberal policies. According to neoliberals, less participation of government in economic policies will lead to better economic achievements and will enhance economic growth in general. (Willis) It seems that the neoliberal policies are influenced by the Adam Smith’s idea of “Invisible hand” and it also supports the bottom up development approach. Neoliberal policies reinforce the idea of let the market run by its own without any interference from government or any other controlling authority. This idea is same as the concept behind invisible hand. Here the concept of decentralization is accentuated to mobilize markets freely in order to circulate goods and services comparatively with less trouble across the borders. Free trade was endorsed by neoliberals because after World War II on several occasions it was witness that economies run by government performed poorly in economic sector. Overall economic activities in countries govern by government grow inefficiently as compare to the sectors run by private agencies. Neoliberals therefore were optimistic about the idea of free market and privatizations of economic sector for bigger good of the citizens.
Secondly, to some extent neoliberal policies also put into practice the concept of bottom up development approach. In bottom up approach individuals are working for their own good and benefit. The central authority is not involved in individual’s business. (DS class lecture) Neoliberal policies add to this idea of individuals’ investment to earn paramount amount of benefit without interference of government.
Focusing on the World Bank Structural Adjustment Approach, there are mount of evidence by researchers that the economic development and human rights are negatively affected due to imposition of neoliberal policies in developing countries. According to the article, The Human Rights Effects of World Bank Structural Adjustment, the poorest of the society always face impoverishment due to the implementation of Structural Adjustment Policies. The prerequisites for the implementation of SAAs are the reduction of public services from which the poorest of the society get benefits. For instance, SAAs demands for the “reductions in public employment, and cuts in expenditures for health, education and welfare programs.” (M. Rodwan et al) The main objective of SAAs is to enhance the economies of poor countries, reduce poverty, ensure democracy and improve human rights. Ironically the prerequisites to have support from SAAs have injurious effects on its own objectives. For instance, to get support from Bank governments need to reduce public services such as, reduction on subsidies for food commodities, subsequently, the expenditures of the poorest of a society increases without any supplementations in their income sources. It leads to financial crisis and increase domestic conflicts. Increase domestic violence cause problems for governments and to handle such situations mostly governments becomes less democratic. Ample of research studies have shown that increase domestic violence and less democratic countries have less respect for human rights and they also have poor economies. (M. Rodwan et al)
Unfortunately the apparent good will of SAAs end up with worse results in many developing countries yet the insanity is still there. Many developing countries are implementing the same policies to get different outcomes without any significant changes in them. Here some may have argue that the countries which are getting financial support from Bank have large population and have poor economies which may be cause of less respect to human rights and for broken democracies. But for this study researchers have analyzed the data after controlling for confounders and variables which may cause erroneous results. Therefore, this claim may not be valid. The finding shows that it is a failure of SAAs policies which leads to worsen of economic growth in developing countries. The enigma is that why still these policies are implemented in many developing countries in name of economic growth and to reduce poverty, even though, these policies have shown tremendously bad results in past and in present. I wonder what really makes the investors think that they will have positive results in future without any changes in the policies.
On the other hand, neoliberal prospective of SAAs is that, when economy will be more liberal everyone will have chance to start their own business. Free market will allow people to invest without any restrictions from government. This rapid economic liberalization will help people to be settable economically; as a result, countries will be more democratic. Democracy will lead to good governance, more respect for human rights and economic rights of the citizens. (M. Rodwan et al) The neoliberals prospective of economic growth through the implementation of SAAs seem valid. But unfortunately the multidimensional real life complexities can’t be resolved with such straightforward policy which deals life in a liner pattern. Firstly, the neoliberals economic prospective didn’t explains that from where the poorest of the society will arrange enough money to start his or her own business when he or she don’t have enough money to buy a food to stratify their hunger. Secondly, neoliberal prospective didn’t talk about the possible challenges face by the society because of the reduction in public services from government. In fact neoliberals don’t have any alternative to subside economic problems of the poor people. Neoliberal prospective seems like an elite thought where everyone has enough money to start their own business but due to the government policies and interference these people can’t start their own business. Therefore, they are demanding for a free market and less interference of government in private sector so that haves will use their wealth to earn a handsome amount of benefit out it.
Neoliberals are underestimating economic inequalities in the society. Their policies are only focusing on the haves of a society who can start their own business and will get benefits from the free trade policies in business. Neoliberal prospective is over-glorifying the outcomes of SAAs policies and its benefits without considering the problems of poor and lower class people.