MGF2351 - International business

Running head: NEO-LIBERALISM AND ITS EFFECT ON INTERNATIONAL BUSINESS
Neo-liberalism and its effect on International Business
Name of the student
Name of the University
Author note

NEO-LIBERALISM AND ITS EFFECT ON INTERNATIONAL BUSINESS1
Introduction
Neoliberalism refers to resurgence of ideas of the 19th century that is associated with
the aspect of economic liberalism. Neo-liberalism is inclusive of the economic liberalization
policies like deregulation, privatization and free trade. It reduces the aspect of government
spending that can help in increasing role of private sector within economy and the society.
The market-based ideas pertaining to neo-liberalism constitutes a paradigm shift from that of
post-war Keynesian consensus that lasted from the year 1945 to that of 1980 (Barnett et al.,
2014). This essay discusses that neoliberalism will continue to act like an important
economic paradigm. This essay talks about the fact that neoliberalism will have a major
effect on that of international business. The essay talks about the current affairs and states
examples in relation to neo-liberalism in the society.
Neo-liberalism an important economic paradigm
Concept in relation to neoliberalism suggests the developing of liberal thought in the
world. According to Smart (2016), liberalism at one point of time was a political ideology
that was influential but with the passage of time it lost its significance. It has however revived
in the recent age in an innovative form. Liberalism has been dominating the normative
political thought along with practical politics of West in last sixty years. It became the shared
inheritance among the political theorists and the professional politicians. Neo-liberalism can
however be stated to be an ideology that is opposed to the aspect of ‘liberalism’. Classical
liberalism is related to the belief that state should be minimal and it states that everything
except that of armed forces along with law enforcement should be left to that of free dealings
of the citizens. This state can also be described as ‘night-watchman state’. It was held that the
purpose of the minimal state would be upholding fundamental aspects in relation to public
order. John Locke believed in the fact that state was a freely established association in

NEO-LIBERALISM AND ITS EFFECT ON INTERNATIONAL BUSINESS2
between the individuals. It states that members of the state can rebel in the event of state
seizing more power as compared to what has been originally given to the citizens. Modern
liberalism on the other hand talks about the willingness of letting state so that it becomes
active participant within economy. There occurs the tendency of regulating the market place
and in the case of modern liberalism state supplies the essential goods along with services.
It has been argued by Allen (2018), neoliberalism states that legitimate purpose of
state is to protect individual along with commercial liberty. Neoliberalism highlights the idea
that transgression of state beyond that of the legitimate purpose would be unacceptable for
the people. According to Morley (2016), the ideas of neoliberalism acts as an important
political paradigm as it talks about the significance of free markets that helps in the regulation
of international trade. Neoliberalism is important in the present age as it talks about the
safeguarding of commercial liberty along with strong property rights. Neoliberalism believes
in the notion that free adoption of the market mechanisms helps in the optimal organising of
exchange of goods along with services. It has been argued by Lash (2018) that neoliberalism
acts as an important component in the present age as it helps in setting free creative potential
along with entrepreneurial spirit that is built into that of spontaneous order of the human
society. Neoliberalism sets the stage for individual liberty along with well-being and it helps
in the efficient allocation of the resources of a nation.
Neoliberalism can be said to be significant economic paradigm as it has perspective
on that of moral virtue. Neoliberalism helps in setting the path that helps in organising
relationship between state and that of external environment. According to Becker, Beveridge
and Naumann (2015), practical implementation of the neo-liberal process can help in
relocating power from the political to the economic process. Neoliberalism involves the
reduction in the aspect of protectionism that is an important component of globalization of
the present age. The neo-liberal theory states that the state-owned enterprises should be

NEO-LIBERALISM AND ITS EFFECT ON INTERNATIONAL BUSINESS3
dismantled owing to the constraining effect that it has on the freedom of the individuals for
conducting business. The neo-liberal policies has helped in making the countries move closer
that facilitates the prevalence of the aspect of globalization. It has been argued by Davies
(2014) that taxation along with redistributive policies in relation to neo-liberal policy is
viewed as the infringement on the aspect of personal freedom. According to Mirowski and
Plehwe (2015), economic liberalism helps in supporting the aspect of Foreign Direct
Investment that helps it in supporting international trade. It can help in ensuring individual
freedom and it helps in increasing the choices in relation to conducting of business.
Neo-liberalism has emerged as a significant economic paradigm as it proposes the fact
that human well-being can be carried out by the liberation of the individual entrepreneurial
freedoms. It states that function of state would be to preserve institutional framework that
would be appropriate to the practices. It has been stated by Giroux (2015) that neo-liberalism
is important in the present age as state guarantees quality along with the integrity of the
money. Neo-liberalism helps in the setting up of military, defence along with legal structure
that can help in securing rights to that of private property. It states that markets should be
created with the help of state action if it is deemed to be necessary. According to Kinderman
(2016), neoliberalism is significant in the present age as it gives priority on individual
freedom along with right to that of private property. The neoliberal policies like deregulation,
tax cut along with private tax cut can bring about positive consequences. The neoliberalism
policy states that the human beings are social and this social nature helps in the organising of
society. It gives importance on that of ‘spontaneous order’ in relation to social life that can
help in securing the rights of the individuals.
Effect of Neoliberalism on International Trade