It seems that the mutual influence between the intellectual economical contributions and the ideological factors is clear. Where we find the philosophical - ideological reflection in the world economic thought run its course over time . In addition ,there is another dimension which has a great effect on the economic thought , that is the current political system or the ruling class which is defending its economic interests.
The neo-liberals set out from the key principles confirmed by the predecessors, in particular the classical ideas, which came in the forefront of the ideas of Adam Smith , the leader of classical capitalism theory , who spoke about the economic freedom and the achievement of equilibrium through market mechanism .This theory was a reflection of the social content, which then make it more closer to reality.
But the neo-liberals have employed what Smith emphasized through the confirming of market efficiency and the rejection of any interventions in the financial policies .This led to an increase in the fiscal deficit, and strict adherence to a fixed rate of monetary expansion , where these policies return to the liberalization of markets to exercise its self-corrective tendency in the face of various economic trends.
Capitalist economy has been in a chronic recession over two successive decades in the past century after the collapse of the international monetary system, " Bretton Woods system ". So that the inflation and unemployment rates have increased , the growth rates have slowed and the crises rolled in , as crises of (1974-1975) and 1982 and 1987. That's why we can ask the following question:
"How can we overcome all these accumulations - the economic crisis- by which global economy has suffered ?"
So the neo-liberal thought emphasizes the globalization of the world economy through increased trade ,the rapid movement of capital ,the exchange of information and ideas . the growing movement of labor , the proliferation and expansion of multinational corporations work and reducing the economic role of the State as well as the passing of geographical boundaries and developing international institutions work.
The neo-liberal thought based on a document issued in Washington in 1989 and became known under the name of the "Washington consensus" , which includes ten commandments, including:
o Privatization
o Global trade liberalization
o Movement of capital
o Reduce the procedures and restrictions imposed on markets work
o Fiscal discipline, especially reducing budget deficits Some economists have shortened these commandments by the triad :
"prove - decide- privatize"
The collapse of the Soviet Union and the emergence of the one-polar in the world system as well as the leadership of the global economic system by United States have represented the incentive for liberal thought spread . in addition , this resulted in the globalization of the world economy where large companies do not know states or nationality or borders, particularly western companies, which has spread in most parts of the world especially in China and India ,as well as the spread of investments of some countries with distinct economic force in most parts of the world and the financial interdependency between financial institutions and banks in terms of loans or debt … etc . The monetary policy is not subject to the local monetary authorities which have not been able to defend exchange rates ,interest rates and stock prices in stock markets . So that , the world's economies become a mere decisions at the hand of speculators who trade in currencies and securities without the intervention of a foreign or a local authorities
In the view of some economists , the current financial crisis is attributed to the nature of the capitalist system which is based on open space for the current capitalism that constitutes an important milestone in the market economy, which is the mainstay of globalization. The globalization of the capital market led to a boom in the real estate mortgage market globally. Without the open market and financial speculation by the globalization policies , the problem hasn’t developed to the global crisis spread horizontally and in amazing speed in all States. The worst result from this spread due to globalization is the vulnerability of originally integrated marginal economies to the crisis . It could be a substitute vessel for any disruption appears in the reality of market laws and relations in the capitalist centers . |