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Neo Liberalism and Populism

Discuss about the Public Administration for Financial Budget and Policy.

The policy making process in the economics can be defined as the decision taken by the government, which provides the guidelines for the functioning of public administration of a nation. The economic policies aim to influence the behavior and the economy of the country. The major decision made by the government that include the taxation policy, financial budget and policy of the labor market in national ownership are few of the major elements of economic policy. The Neo-liberalism is one of the most popularly used economic policies in social studies, which involves the extensive liberalization of economic policies. The concept emerged during the period of 19th and early 20th century. The main concept of this policy includes the transfer of power from the public to the private sector. The concept is based on the neoclassical approach of economics that is related to the supply and demand chain circle within a nation (Harvey, Steger & Roy 2015). On the other hand the populism is a popular political concept of a nation that is intended to get the support of the people and fulfilling their demand. According to Mudde & Kaltwasser (2012), the meaning of the populism can vary depending on the demand of the ordinary people and political objective of the government.

In this report, the concept of theories relating to neo-liberalism and populism is discussed in details along with the strength and weakness of individual theories. The justification of the best models that can be applied to eliminate the level of poverty and accelerate the rate of developing countries is provided. The positive and negative aspects of these theories are also discussed. 

The concept of liberalism is one of the most popularly used political philosophies that are aimed in disturbing equal power among all section of people in the society. According to Duggan (2012), the concept of neo-liberalism is used by all the major economic scholars of early 20th century to define the economic liberalism that originated during that time. The main idea behind this concept is based on shifting of economic power from the public to the private sector. The introduction of this concept in a state can result in the lowering of the administrative control of the government. The concept of neo-liberalism is based on the basic principles of neoclassical economics, which is focused on the idea of distribution of goods with the help of the supply chain. The idea of neoclassical economics dominates the mainstream of economics in modern context.

Neo Liberalism

The use of this theory stared in the period of 1930s and was initiated by the liberals of Europe in order to identify the impact third or middle person that exist in the concept of classical liberalism. The concept of market based economy started to gain popularity that is based on the theory of laissez-faire system of economy. In the concept of market economy the critical decisions related to the production, investment and distribution of goods along with supply and demand chain is determined by free price system (Hill & Kumar, 2012). In neo-liberalism the guidance of the economic market is based on the social market economy that combines the concept of the free market and establishes policy for free and fair business competition. In free market the participants and investors get the opportunity to decide the sale and marketing policy along with the price of the products.

Mirowski (2013), believe that the concept of liberalism can be implied in political, religion and economic sector. In the United States the concept of liberalism is used to avoid all forms of social and political conflict. The application of the philosophy of liberalism has helped the working and poor class of people by improving their condition. The word “neo” means the new and modern concept of liberalism. The old concept of liberalism was based on the idea that the government of a nation must not interfere in the economic related matters. Moreover, there is no restriction in the manufacturing and production unit and all administrative barriers related to the commerce and free trade must be abolished. The aim of this application is to encourage the practice of free market within the economy of a nation. The capitalist got the opportunity to make huge margin of profit as there is no high level of restriction in doing business.


The main element of the neo-liberalism is the concept of eliminating the private enterprises from all kinds of administrative and government restrictions. This result in the lower the price of all forms service and consumer products. The implication of government regulation is diminished significantly in all major public service. The privatization results in the shifting of the ownership of all major institutions including bank, railways, electric service, hospitals, highway toll service and many more to private organizations. As the concept of public good and community is eliminated the role of individual citizen of the society increases significantly. Hall, Massey & Rustin (2013), stated that in the present days all the major institutions like the WTO, IMF, European Central Bank and World Bank uses the concept of neo-liberalism for shaping the organizational policy. Chile is the first country that implemented the principles of neo-liberalism in practice in 1973, during the time of elected Allende. On the other hand, the implication of neo-liberalism in countries like Mexico has resulted in the decrease of labor wages to an extent of 40-50% and also increased the cost of living to 80%. As more than 1000 stated owned enterprise were privatized, the small and medium scale business suffered and failed to expand.        

Populism

Populism on the other hand, is a political philosophy that defines the political movement in favor of the population of the nation. It seeks to unite all forms of uncorrupt and unsophisticated political elites. The main objective of the populism is to guide the political and social system of the nation that is capable of delivering high quality public service. According to  Kriesi & Pappas (2015), the definition of populism can vary depending upon the specific demand and requirements of the people of the nation. The economic condition of the nation depends on the implicating factor of populism. The application of the principles of populism has been implemented in the economic sector of the nation so that it possible to apply the concept of neo-liberalism. In the United States the left-sided politics believes in the policy of populism, where as in Europe the right sided populism is being applied. In both cases the applicability of the principles of Populism depends on the strength of democracy of the particular nation. Levitsky & Loxton (2013), argued that the nation, where the populist represents as the political leader of the nation, there is high chance of interaction of people belonging from different section of the society that can cause political corruption and trouble. Nevertheless, according to the all the major politicians the concept of populism is considered as one of the main driving force of democracy of the nation and also considered as the positive source of the society. The modern form of populism can be divided into two subcategories namely political and agrarian. In case of Agrariansm philosophy, the rural society of the nation is considered to be higher in power compared to that of the urban society. The movement of the farmer with the demand of radical economic growth was initiated by the US people’s party during the late 19th century. Other examples of agarariansim are the Eastern European Green rising militias that occurred during the period of post World War I.

According to Wodak (2013), the right-winged kind of populism is significantly different from that of other trends of political system. The inability to transfer the coherent ideology in the practice is one of the main drawbacks of the right-winged populism. However, the main advantage of the right-winged populism is its power to exploit sharp dichotomization that is constructed along the national, regional and religious and ethnic lines. In Europe the radical form of populism is based on the opposition towards the radical Islamic belief and on the other hand, the radical populism in United States mainly focuses on the opposition towards the immigrants from the Latin American countries. The recent case of popularity of populism in the United Sates can be seen in the concluded presidential election. The republican candidate Donald Trump’s win over his rival Hillary Clinton is an unprecedented example of the popularity of populism in the nation. Moreover, the recent events of mass migration of the people of Syria into the European nations has triggered huge populist from the Philippines to Greece. According to the prediction of the experts the concept of populism will aim to take place in the countries like Austria, Germany France and Netherlands (Liang, 2016).

The concept of Neo-liberalism is guided by the principles of capitalism that believes in the equal distribution of wealth of the nation and it is implemented by the system of free-market. The neo-liberalism theory forms the basic economic structure of a nation that helps in the development of the free market that is aimed in removing the margin of poverty within a nation. The idea of neo-liberals can help to improve the use of modern technology in the business process and also implement innovative marketing ideas to establish the political and economic stability within the free market. This will subsequently help to improve the GNP and increase the level of profit margin of business. The wages of the labor can also be improved along with reducing the price of all types of consumer products.

However, Block, Gray & Holborow (2013) argued that in the developing countries the implementation of neo-liberalism will result in un-fair relationship with other developed nations. As the state has minimum power to interfere in the business dealings of private organizations, the businessman get the opportunity to implement unfair practice in business and therefore compromise the ethics of business. Moreover, as there are no guidelines for minimum wage of the labors, in many organizations the workers do not get the minimum salary. As free market allows international trade with lesser amount of restrictions, like trade tax and other government protocols, the foreign companies get the opportunity for marketing of their products in the developing nations that could result in compromising the industrial infrastructure of the respective nations.

One of the most important impacts of the neo-liberalism is that it enhances the effect of the globalization. Due to the high level of competition in the global market the companies are forced to lower the prices of their products and enhance the working capability of the product. This ultimately led to increased productivity of a sector and thus there is lesser chance of crisis in the market.

Mudde & Kaltwasser (2012), believes that the main advantage of the populism is that it promotes the importance of sovereignty of a nation along with the implementation of democracy. It also helps to restore the reforms that are aimed to improve the social condition. The concept of populism also challenges the formal structure of the society, where the elite section enjoys more power over the weaker section of the society. Nevertheless, it is a challenging task to ensure that the distribution of the power is done uniformly, which is one the main drawbacks of populism.

Latin America is the region, where the political neo-liberalism is applied and imposed. Nevertheless, in countries like Chile, the rejection of the current political system resulted in increased level of poverty and widens the margin of social inequality of the nation. There is also high level of destruction environment and weaken the condition of the working class. In UK the application of the neo-liberalism resulted in the rejection of public policy. However, the concept of neo-liberalism is the prime cause for the failure and fall of the Soviet Union and the socialism in the Eastern Europe. The neo-liberalism movement also resulted in the emergence of Left governments. The neo-liberalism is based on the idea that the society can be best served by transferring the power of the lower section of the society. The diffusion of the social and economic factor of the in a single cell is one of the prime cause of improvement of economic status. The cultivation of individual post is another important part that helps the labor class of the society to gain more responsibility. According to Röpke (2014), the globalization of the present days is helpful in removing the poverty of a nation that is achieved with the help of market-friendly policies and increasing the flow of business. The nations, which have faced economic crisis has received loans from World Bank and International Monetary Fund, which is based on the structural adjustment policy of neo-liberalism. The liberalization of market can help to deal with price mechanism by reducing wage. This will in turn help to raise the funds for public development of the nation. The linearization of market will help to encourage the flow of foreign direct cash within the developing nations. The application of structural adjustments in the economic policy of the World Bank has helped to reduce the poverty level since 1990s.    

The World Bank has introduced the policy of poverty focused loan that will help in the weaker section of the society to remove to improve their condition. The World Bank also actively encourages the policy of the trade that improves the policy of global business condition. As the policies of Neo-liberalism is imposed over the African nations, that help to boost the export business of the region and thereby improving the economic status. The neo-liberalism helped in the policy of the World Bank that ultimately led to the development of the African nations. Even during the time of global recession and economic crisis, the neo-liberal policies are applied as one of the main agenda of the central bank for maintaining stability (Grugel & Riggirozzi, 2012).

The main issue that is associated with the populism is that the political leaders can exploit the power and create restrictions for the free flow of business that is easily associated with the concept of neo-liberalism. The state even has the official power to impose penalty on the traders. Hence, the traders do not enjoy the opportunities that the free market can offer. According to Gray et al., (2015), till now there is no government policy that has been more effective than the policies of economic liberty and free trade market for removing poverty and minimizing the gap of society. The huge amount of business and trade tax that is implied over all forms of trade can increase the piece of the consumer products. The only major advantage of populism over the implication of neo-liberalism is that in earlier case there is a fixed rule for minimum wage of the labor. The minimum wages ensures that the people belonging from the poor section of the society are able to meet their basic daily requirements and also get the deserving wage. On the other hand in case of neo-liberalism, as the private enterprise and owners enjoys more power and the administration do not have the right to interfere in personal trade related matters, there is no fixed rule for the wages of the workers. Moreover, the private owners also get the chance of misusing the power they get and start adopting unfair practice.  The government also does not have the opportunity to monitor the free trade and business policies that are adopted by the entrepreneurs (Jackson & Sørensen, 2016).    

In case of the populism of there is a high risk of political conflict between the elite and the weak section of the society and that can affect the economic growth of a nation. The chain of mechanism that are under the policy of the populism offer the political opportunity to the political leaders, which allows the populist movement to reach in certain power level and can even face critic from the people, who are in the opposition group. This conflict between the two rival political parties will ultimately compromise the development process of a country and the economic growth will suffer significantly. Nevertheless, the economic crisis in the free-capital market during 1980s and 1990s, when the neo-liberal movement failed, the left-winged populism gain significant popularity within few of the western nations (Stavrakakis & Katsambekis, 2014).

Conclusion

The neo-liberalism and populism are few of the most popularly used economic and social models that are applied by the government of a nation for the improvement of common people. Both the policies are implied for the well-fare of political and economic condition of nation. The neo-liberalism policy is based on the transfer of power from the public to private domain. The main advantages of this policy are that the traders get the opportunity to practice free trade in the free economic market. The common people also enjoy the opportunity of getting lower cost products. Nevertheless, as there is no interference made by the government, the traders get the opportunity to exploit and adopt unfair and unethical business practice. On the other hand, the populism concept is based on the philosophy of the political system of the nation, which aims to satisfy the needs of the common people. The political conflict that occurs in both the case of right and left winged populism is one the major drawbacks of this system.

In order to eliminate poverty, the neo-liberalism is more effective than populism as the earlier case there is better chance of economic growth as it is seen in many cases in the past. The application of the polices of neo-liberalism has been highly effective in the African and Latin American region that has improved the economic status and reduce the gap of social status.

Reference

Block, D., Gray, J., & Holborow, M. (2013). Neoliberalism and applied linguistics. Routledge.

Duggan, L. (2012). The twilight of equality?: Neoliberalism, cultural politics, and the attack on democracy. Beacon Press.

Gray, M., Dean, M., Agllias, K., Howard, A., & Schubert, L. (2015). Perspectives on neoliberalism for human service professionals. Social Service Review, 89(2), 368-392.

Grugel, J., & Riggirozzi, P. (2012). Post?neoliberalism in Latin America: Rebuilding and reclaiming the State after crisis. Development and Change, 43(1), 1-21.

Hall, S., Massey, D., & Rustin, M. (2013). After neoliberalism: analysing the present. Soundings, 53(53), 8-22.

Harvey, D., Steger, M. B., & Roy, R. K. (2015). A Brief History of Neoliberalism and Neoliberalism Vsi Value Pack.

Hill, D., & Kumar, R. (Eds.). (2012). Global neoliberalism and education and its consequences. Routledge.

Jackson, R., & Sørensen, G. (2016). Introduction to international relations: theories and approaches. Oxford University Press.

Kriesi, H., & Pappas, T. S. (Eds.). (2015). European populism in the shadow of the great recession. Ecpr Press.

Levitsky, S., & Loxton, J. (2013). Populism and competitive authoritarianism in the Andes. Democratization, 20(1), 107-136.

Liang, C. S. (Ed.). (2016). Europe for the Europeans: The foreign and security policy of the populist radical right. Routledge.

Mirowski, P. (2013). Never let a serious crisis go to waste: How neoliberalism survived the financial meltdown. Verso Books.

Mudde, C., & Kaltwasser, C. R. (2012). Populism in Europe and the Americas: Threat or corrective for democracy?. Cambridge University Press.

Mudde, C., & Kaltwasser, C. R. (2012). Populism in Europe and the Americas: Threat or corrective for democracy?. Cambridge University Press.

Röpke, W. (2014). A humane economy: the social framework of the free market. Open Road Media.

Stavrakakis, Y., & Katsambekis, G. (2014). Left-wing populism in the European periphery: the case of SYRIZA. Journal of political ideologies, 19(2), 119-142.

Wodak, R. (2013). Right-wing populism in Europe: politics and discourse. A&C Black.

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