Laissez-faire, Marxian, and Keynesian economics in the contemporary era

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Influence of Laisses-Faire, Marxian, Keynesian, and Liberal Philosophies in the Contemporary Era of Globalization and Privatization Introduction History comes to life in the enthralling Laissez-Faire, Keynesian and Marxian contrasting perspectives that continue to play a significant role in the present day politics as well as economics. The theoretic and applicable foundations of modern political economy has been and continue to be instigated by prominent individuals such as Adam Smith, Karl Marx, John Maynard Keynes, and Milton Friedman. More often than not, these individuals have been comprehensively misconstrued or even worse, deliberately taken the wrong way. This essay purposes to outline the true facts regarding them and discussing the issue of their pertinence in the 21st Century. Specifically, the paper will delineate the manner in which the philosophies advanced by these economists continue to play a significant role and are pertinent in this era of globalization and privatization. Laissez-faire Adam Smith is regarded as one of the founders of economic philosophies. Smith’s arguments in support of free trade, market competition and the ethics of private enterprise continue to be new, pertinent, and influential in the present day. In accordance to Smith’s perspectives, the government ought to have a limited role and he was in complete opposition of economic autonomy. The main endeavor for equitability in economic efficacy is linked to Smith’s significant opposition to mercantilism. This was the main argument for economic policies that would safeguard and foster revenues and profits of producers. In accordance to Smith, mercantilism was morally corrupt that advanced taxes and burdens on the poor. Moreover, he argued that such taxes are inequitable and offensive as they are in contravention of fair play as they significantly harmed the poor while advancing the interests of the rich people and those with political connections (Smith 30). It is also imperative to note that Adam Smith’s moral disapproval and denunciation of the notion of mercantilism is pertinent to the present day economics that is subjugated with politics. From Smith’s point of view, a great deal of the prosperity enjoyed by the mercantilist system was centered on nationalizing the business model of townships in the outdated system, giving rise to abundant productivity advances with the increase in market sizes. However, in this manner, the system had also nationalized the fundamental ethics of manufacturers that advanced monopolization, and sought after to lobby communally for selfish privileges and honors at the political level instead of competing in the market in an equivalent manner with others. This aspect amalgamated with political influence not only gave rise to preposterous and burdensome economic regulations that were adverse on all individuals but also nurtured a malicious political philosophy, which is the advancement of a zero-sum outlook of trade that gives rise to perceiving the success of other countries as your country’s loss and vice versa. This limits trade amongst other nations and also brings the perspective of going against the impressive rise of China. Marxian Philosophy Karl Max is a prominent 19th Century economist advocating for the classical tradition, advancing the development of the economic structure from feudalism to capitalism and therefore mirroring the far-reaching socialist model. Marxian philosophies continue to have a significant impact in the present day world dominated by globalization and privatization. Imperatively, the deteriorating sizes of the middle class people together with the economic transformation taking place today are influencing progressively more individuals. The class conflict theory that was established and advanced by Karl Marx is applicable to the aspect of the progressively declining middle class. In particular, according to Marxian philosophies, class antipathy together with the battle over resources have at all times been distinctive facets of the society. The uppermost one percent and diminishing middle class are the present day capitalist class that have ownership and possession of majority of society\\\\\\\'s wealth and production means and working class people respectively that Karl Marx expounded on in his philosophy of capitalism within the context of an industrial society (Marx and Engels 304). Karl Marx advanced the conception of pauperization of the working class, which is the state of poverty and neediness amongst individuals. In particular, Marx and Engels outline that, “accumulation of wealth at one pole is, therefore at the same time the accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation at the opposite pole” (709). One of the key aspects of modern political economy is that of privatization. More and more enterprises are being transferred and shifted from the public sector to the private sector. As a result, this is making the top rich individuals to become richer, an aspect that was advocated by Marx. With this sort of astounding division and separation of wealth within the present day society, it makes it possible for the working class to be beleaguered and oppressed and gives rise to estranged sentiments that the working poor have with respect to politics and economy in the contemporary society. Moreover, today, globalization continues to progress in a rapid rate. Marxian philosophies can clearly be applied in the present day in this regard. This is largely for the reason that through globalization, the revenues and profits generated by corporations are amplified. In this regard, corporations are able to advance their business operations from their home nations to other nations where there is cheaper labor and manufacturing expenses. This can be perceived in the sense that present day companies shift their manufacturing facilities to places such as Thailand, India, China, and Pakistan where they will utilize extremely cheap labor and overtime work hours. In addition, it facilitates the growth and development of emerging and developing economies in the world, for instance Brazil, China and South Africa. However, from the perspective of Karl Marx, the middle class within the nation continue to experience suffering for the reason that in spite of the rise in corporation profits, individuals are yet to see the same rise in terms of job prospects and income increases. In the meantime, the wealthy individuals continue to increase their wealth whereas those lavishing in the middle and lower classes are facing a decline in their wealth. The deterioration of the societal status of the middle class within the economy alludes to the theory advocated by Karl Marx where he cautions that in a society that operates in capitalism and the development of monopolies within industries, it will give rise to the rich and affluent individuals slipping downwards to the working-class levels (Marx and Engels 50). Even in instances where corporations outsource their labor, they still exploit the workers in order to generate more revenues and profits. This enables them to be more cost-effective at the expense of the workers’ economic and social progression. Keynesian Philosophy John Maynard Keynes is without doubt one of the paramount economists of the 20th Century. The Keynesian philosophy advanced by him profoundly challenged the notion that market economies will mechanically and routinely adjust to generate full employment. Keynes advocated the application of both monetary and fiscal policies in order to diminish the adverse impacts of economic periods of depression and recession. In particular, his philosophy was in opposition of the classic theory, the latter of which advocated for free markets to facilitate economic success. Keynes notions delineated the aspect of aggregate demand that would help a nation’s economy during harsh times. The Keynesian approach sought to challenge the classical model which supported the self-correcting mechanism. The Keynesian perspective focused on the failure of demand to adjust as a result of monetary impotence and the failure of supply to adjust due to wage rigidities. Basically, this theory argues that exchange can occur without establishing market clearing prices (Keynes Chapter 19). Keynesian philosophies and principles continue to play a significant role in contemporary political economy. Different from the classical theory, Keynes demonstrated that supply does not at all times generate its own demand. The inference of this is that it is imperative for the state to make interventions in order to avoid incessant underemployment. This is the notion that is applicable in the fiscal stimulus packages that are employed in the present day. In addition, Keynes basically advocated that any model of capitalism determination on outlining a quantitatively consistent account of what gives rise to both growth and value is reserved for failure and bound to give rise to a perception of capitalism that promotes the most deleterious of economic policies. This can be applied in modern economy through the financial crisis that left several economies in severe problems (Varoufakis et al. 205). Liberal Philosophy Incorrectly delineated as the exact opposite and adversary of Keynes, Milton Friedman is linked essentially with two major thoughts that continue to impact the present day political economics. One of the key philosophies advanced by Friedman is the reaffirmation and advancement of Adam Smith’s perspectives on the advantages of free markets. In fact, a great deal of the proposals backed by Friedman continue to be effective and significant. In particular, the flat tax that he promoted has propagated all across nations and the floating exchange rate is employed across the globe. Notably, in recent times, free trade has substantially risen. Friedman made the argument that political freedom and economic freedom are associated and the latter is pivotal to safeguard and reinforce democratic institutions. The overall conception of the free enterprise system contrasted with economies run and controlled by the government has proven to be without doubt effective until today. Economic growth across the world has continued to grow up until recent years. In addition, Friedman advocates for the proscription against the detailed regulation in banking. Since the inception and establishment of this philosophy, there has been a great deal of rise in the magnitude of financial regulation and this is considered to play a significant role to the contemporary stability and efficacy of the financial industry. In fact, it can be argued that to avoid the financial crises from taking place again, there is a need for greater levels of financial regulation. It is deemed that the recent financial crises was generated by the slackening of financial regulation in the previous periods (Faia et al. 318). Friedman makes the argument that a strong and robust market economy generates a commanding foundation for the decentralization of power, as the affluent on the one hand, and multitudes of residents on the other, have the capabilities in a market economy to give rise to an efficacious resistance to subjective state authority. In addition, Friedman\\\\\\\'s philosophy, founded on the efficiency of the market system instead of a conception of the unassailable civil liberties of citizens to unhindered deliberate exchange, is not only flexible but also secure. This is for the reason that it permits the state to make interventions, for example, when market failures cause market distributions to be publicly expensive (Friedman 23). Neoliberalism The abandonment of Keynesianism has led to the incorporation of neoliberalist thinking into the design of macroeconomic policies (Menz 118). Essentially, neoliberalists advocate for minimum involvement of the government in economic activity. Simply, the government’s role should be limited to policing and creation of an environment that supports competition. It is, however, important to note that the internalisation of the neoliberalism ideology differs across countries (Menz 120). For instance, Anglo-American countries (the US, UK, and Australia) are more strongly neoliberalised compared to Scandinavian countries. All in all neoliberalists argue that the removal of trade barriers and reduction of state intervention in economic and social activities at both the national and international levels provides benefits to both developed and developing countries (Crotty, 2000). International organisations like the World Trade Organisation (WTO), World Bank, and the International Monetary Fund (IMF) as well as several governments have been at the forefront in terms of promoting neoliberalism. The incorporation of liberal thinking into economic policies by countries across the world has significantly fuelled the expansion of MNCs, which have become powerful to the extent of having considerable influence on the international economic system. Unlike in the past (especially during the 18th and 19th centuries) when MNCs relied mainly on states to trade with other countries, today’s MNCs are so large that they can engage in trade negotiations with other countries in the absence of states. Over time, they have become efficient in coordinating production in the global market. They are overwhelmingly sensitive to opportunities in the global market and they have unique capabilities to capitalise on differences in state policies. This explains the increasing shift of power from states to market entities. Though MNCs operate as independent actors, the perception that they have considerable influence on state policy still endures (Kapfer). Conclusion Mainstream economic theories have played a significant part on shaping the different philosophies and economic activities that are undertaken in the present day. Marx, Keynes, Smith, and Friedman are some of the greatest economic thinkers of both the 19th and 20th centuries. Their ideas and principles continue to play a vital role in the present day period where globalization and privatization prevail. From a Marxian perspective, globalization and privatization have definitely facilitated the increase in corporation profits and development of economies. However, the downside to this is that it has also given rise to the deterioration of the middle class and as a result is bound to cause the affluent people to become richer and the poor people to become poorer. Friedman advances the liberal philosophy that is presently substantially known to advocate for increased financial regulation and is deemed to play a significant role to the contemporary stability and efficacy of the financial industry. The general notion of the free enterprise system distinguished with economies administered and ordered by the government has demonstrated to be without doubt efficacious up until the present day. The desertion of Keynesian principles has given rise to the espousal of neoliberalism. In this regard, the role of the state is restricted to solely creating policies and forming a setting that facilitates competition. In addition, presently the argument made is that the eradication of trade barriers and decreased interventions from the government are facilitating both developing and developed economies. This in turn has facilitated the institution of advancement of MNCs that substantially impact the modern political and economic realm.