Liberalism and Marxism In Economics

  • Explain the liberal perspective on markets and the state with specific reference to the Keynes/Hayek debate. Why are the differences between them vital for understanding contemporary international political economy?

The liberal perspective on markets and the state holds the premise that the government should minimize the interference in the development of markets but still liberalism admits the importance of the government in the regulation of the macroeconomic development of domestic economies with the focus on GDP growth, inflation rate and unemployment. However, the liberal perspective on the economic development and the role of government differs. In this regard, it is possible to refer to Keynes and Hayek views on the government involvement in the economic development. At this point, it is worth mentioning the fact that the government, according to Keynes, has to regulate the economic development focusing on the prevention of the growth of the unemployment rate because the high unemployment rate may have a negative impact on the overall economic development that leads to the decline of business activities and other negative socioeconomic effects. Keynes believes that the government can fix the mass unemployment caused by a financial crisis, for instance. Keynes stands on the ground that through changing fiscal and monetary policies, the government can encourage the rise of business activities that stimulate the creation of new jobs, while new jobs decrease the unemployment rate and steadily the economic development starts to grow.

At the same time, some proponents of liberalism, such as Hayes disagree with Keynes in his views on the ability of the government to fix the skyrocketing unemployment through the introduction of new fiscal and monetary policies by the government. Instead, Hayes believe that government efforts to tackle unemployment caused by a financial crisis are virtually useless or, at least ineffective, since the primary cause of the financial crisis remains unresolved. Instead, Hayes believes that government has to focus on the elimination of the cause of the financial crisis first to tackle the problem of unemployment. For instance, the introduction of new taxes or the decrease of taxes can have a stimulating impact on some industries or sectors. However, if the cause of the financial crisis is the shortage of some resources, like oil for instance, such fiscal changes can hardly have a positive impact on the labor market. Therefore, in terms of Hayes’ theory, the crisis and unemployment will persist as long as the problem of the supply of oil remains unresolved. As a result, Hayes believes that the government cannot fix the problem of the high unemployment, if there are other factors and causes of the financial crisis.

The difference between Kaynes and Hayes views on liberalism and economic development is crucial because they determine the difference in the government policy. For instance, if Keynes is right than governments can use protectionist measures to maintain the stability of their economies, raising fiscal barriers for instance to stimulate the growth of business activities in their economies and, thus, to decrease the unemployment rate. On the contrary, if Hayes is right, then the economic cooperation between nations is essential that opens the way for the intensive globalization, while Keynes idea reveals the possibility of the protectionist policy.

  •  According to Marxist paradigm, what are the primary causal processes that drive globalization and how do these processes differ from the mercantilist and liberal expressions? Explain with reference to the strengths and weaknesses of historical materialism.

According to Marxism, the primary causal processes that drive globalization are the accumulation of capital and the urgent need to the further growth of capital and attempts to monopolize markets by capitalists. Mercantilist and liberal expressions hold the premise that the globalization is driven by individual interests of capitalists and fair or unfair competition. Instead, according to Marxism, the globalization is the result of the expansion of the capital to the international level with the only purpose to accumulate more capital and maintain the control of the few over the global wealth. At the same time, the current process of globalization is the result of profound changes in the economic formation of the contemporary world since current technological conditions and socioeconomic relations open the way for the global business development. Capitalist can export their capital internationally and use resources of virtually all countries of the world, regardless of their physical location. As a result, the capitalism uses the elimination of fiscal barriers and development of free trade to expand their business globally. In such a situation, capital and capitalists have overcome national frontiers and conduct the global expansion to take control over the world economy using the competition between employees for their own benefits. For instance, capitalists can recruit employees in under-developed countries because the labor force is cheaper there, while employees in developed countries lose their jobs. However, capitalists do not care about employees. Instead, they just use employees as mere tools to accumulate their capitals and increase the added value which they can gain from their business.

 

References:

http://www.theatlantic.com/magazine/archive/2011/01/the-rise-of-the-new-global-elite/308343/

 

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 29, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]
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