Neo-liberalism: Emergence: As mentioned earlier, during mid 1970s to 1980s, in liberal capitalist emocracies, dissatisfaction of a welfare state and its citizens with each other led to the birth of new thought with respect to a state-called Neo-liberalism. It was also known as neo-right paradigm. Trio of Friedrich von Hayek, Robert Nozik and Milton Friedman.
Neo-right philosophy as a version of Neo-liberalism emerged in the late 1970s in the UK, under the Prime Ministership of Mrs. Margaret Thatcher. The 1970s were characterized by economic crisis calling for bold measures of administrative rebuilding and reform in advanced as well as developing economies.
The term Neo-right was first coined by a group of monetarists from Chicago University who were inspired by the writings of three eminent economic and political thinkers – Friedrich von Hayek, Robert Nozik and Milton Friedman.
Friedrich von Hayek:
Hayek was an anti-modernist who criticized planning and collectivism in his famous work-The Road to Serfdom (1944). His work is based on the following four core ideas:
Wrongness of planning: Hayek argued that centralised planning by the government lessens individual and group liberty, upsets the balance between political institutions by making the executive too strong, undermining the rule of law. He criticized planning on the basis that it was both politically dangerous and economically inefficient.
Society’s complexity: He strongly opposed the state’s intervention in various measures of social development. He supported that it would upset the ‘spontaneous natural order’ that existed in the society which was the result of human behaviour.
Primacy of the market: Hayek gave importance to the markets and prices for the allocation of resources. He believed that the spontaneous interaction of buyers and sellers was more efficient than the activities of the planners.
A framework for socio-economic activity and upholding the rule of law-Hayek emphasized that government had an important but limited role to play. He favoured the rule of law as it develops such conditions necessary for the growth and prosperity of the market.
Robert Nozik:
Robert Nozik was a leading American intellectual and one of the late 20th century’s most influential thinkers. He advocated the concepts of minimal state and low tax threshold that appeared to directly attack on issues like social democracy, welfarism, collectivism, social justice and big government’.
He felt that the rights of the individuals were primary and there should be a minimal state, just enough to ensure protection against violence and theft and ensure enforcement of contracts. This also implied that an exchange of goods was just as long as it was carried out by free, consenting individuals, even if these activities led to inequalities.
Nozik’s political and economic philosophy comprised of the following elements:
• Entitlement theory: It concentrated on regulation of free market exchange as it respected people as equals. Nozik supported that even if a free market did not produce the base-rall well-being it would be justified.
• The self-ownership argument: This emphasized that every human being is unique and an end in himself i.e., he or she cannot be treated as a means to some other end.
He has the complete capacity to choose rationally what he does. This also implies that people are different from commodities or animal.
• The absolute property rights and self-ownership: He believed that if people own themselves absolutely, then they own what they produce absolutely.
• The Lockean Proviso: This is an intellectual device by Nozik that supported the legitimacy of initial acquisition made by a person.
The Proviso means that natural resources such as land, came to be rightfully owned by first person to appropriate it, as long as it was left ‘enough and as good’ for others.
• Beyond self ownership: This meant that what further sorts of arguments are there for unrestricted property rights that go beyond mere self-ownership’.
Milton Friedman :
Milton Friedman has been a great advocator of economic freedom and free enterprise. He is popular for his contribution in the free market economy. He stressed on the benefits of low taxes, privatization and deregulation of industry and services. He also advocated abolition of rent controls, minimum wages, regional and industrial subsidies and employment legislation. All these were seen as obstacles in the efficient working of a market economy.
He also suggested that government should play a limited role as a provider of law and order, defence and other essential services. There is a need for voluntary interaction between buyers and sellers of goods and services i.e., capitalism. It creates economic freedom that is further essential for political freedom. Friedman was in favour of limited government. He, like Thomas Jefferson, also believed that government that governs the least is the best.
Each government should ideally perform three main functions, as follows:
- Country’s defence
- Enforcing contracts between individuals
- Protecting citizens against crimes against themselves or their property.
According to Friedman, When a government intentionally tries to do some good for the citizens like to rearrange the economy, legislate morality or to help weaker sections it brings inefficiency, lack of innovation and loss of freedom. The government should act as a referee and not as an active player. Thus, the trio of Friedrich von Hayek, Robert Nozik and Milton Friedman are regarded as providing the basis for the intellectual growth of new right ideas.
Thatcherism:
Neo-liberalism that emerged in the UK under its conservative P.M. Margaret Thatcher came to be known as “Thatcherism’. It advocated state’s withdrawal from both the economy and the society. It also attacked big and heavy welfare, uneconomic and over bureaucratised state. It stressed on the privatization of the enterprise and reformed the public sector through managerialism.
The promoters of Thatcherism tried to create an enabling state’ which could help in the prosperity of the business and simultaneously protect the rights of the consumer against the demand of the producer. It attacked the then prevailing socio-economic structures and the state apparatus. It favoured the regulation of free market economy that is now popular as liberalization and globalization.
Before Margaret Thatcher’s ‘Thatcherism’, it was P.M. Edward Heath of the Conservative Party who promised less goverment interference in the economy, less taxation, cutting down on public expenditure and reducing subsidies. However, unfortunately, there was a collapse in economic growth which resulted in the increase of unemployment.
The Heath adopted some ideas of New Right’s policy. In 1975, Thatcher became the leader of the opposition, monetarist, and New Right thinking, had a much more impact in party policy. It was also read as a response to the failure of the Heath era. Besides focusing on the free market economy, Thatcherism also emphasized on state reforms, especially Civil Service reforms.
For this, they initiated more privatization to increase the role and impact of markets, to de-layer management and increase the role of target selling and auditing. A particular belief about civil service reforms was that officials spent longer time on policy-making, much to the detriment of efficient management. Pay reforms were also initiated for them namely:
Thus, Thatcherism of the Conservative Party, first under Margaret Thatcher and then under John Major, gives a good insight into the Neo-liberal view of the state.
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