Classical Liberalism and Neo-liberalism - Essay Example

Classical Liberalism and Neo-liberalism Introduction: Human beings enjoy the concept of freedom whether from control by foreign powers or from within their own governance mechanisms. There have been instances in history where people have been subject to strong state control in the name of political or social ideologies. There are also instances where societies and governments have provided relative or even absolute freedom for individuals and groups to operate as employees, or businessmen or provide any other task required for the growth and survival of both the individual and the society as whole. Over the years many political and social ideologies have evolved like communism, socialism, realism, constructivism, and capitalism that have put different levels of control on the freedom enjoyed by individuals as imposed by the government or rulers in a particular society. This paper looks at the various aspects of the concept of liberalism whose proponents and developers argue that freedom of choice is essential for the development and growth of a society, the one area of disagreement being the level and scope of this concept of freedom. The paper also seeks to explore the difference between classical liberalism and neo-liberalism, and tries to address the crisis of neo-liberalism. Theory of liberalism and neo-liberalism and their origins: Many social and political lines of thought have evolved over the years in human societies. They include such concepts and communism, capitalism, liberalism, and conservatism. Each of these lines of thought or approaches has had both positive and negative influences in a particular society, country ore region where they have been implemented. For instance, the concept of pure communism has apparently failed with the collapse of the erstwhile Soviet Union and also the market oriented policies followed by communist China. Taking another point of view, views such as freedom or restriction or conservatism of liberalism have also influenced human societies over the years. These words in their simple sense are self-explanatory. For example, conservatism could mean a society where individual are governed or controlled by certain laws and practices that have evolved over the years. People are expected to act within the parameters set by these laws and practices. In other words, it curtails the freedom of the individuals and organizations in a society depending on the extent of the parameters. Another view that people and organizations should not be restricted in their activities has been existence for many years and can be classified under the term liberalism. Liberalism offers freedom to the individual within a society to act in any manner, the only consideration being that it should not be harmful to other members of the society as propounded by John Stuart Mill (Held 1995, p. 212). Freedom can denote such conditions as personal freedom, limited government, and equality of rights and consent of the governed (Dickerson, Flanagan & O'Neill 2010, p. 126). The liberal view of personal freedom includes the right to speech, the right to own property, the right to choose one’s religion and political affiliations. This point towards limited government interventions (state essentially being a servant of the people and not a controller), equality of rights with regard to laws and statutes, and the consent of the governed indicating a certain level of control. In any instance the above outlook is seen as a part of classical liberalism which indicates that another form, namely neo-liberalism has also evolved. Even though the concepts associated with liberalism have existed in different forms and levels over the centuries, it is John Locke who is credited with developing the concept into a concrete form. “In his ‘Two treatises of government’ (1690), Locke argues in favour of limited government and protection of individual rights. He builds a logical case for both propositions by extensively discussing human nature, the state of nature, laws of nature and the origin of states” (Grigsby 2009, p. 99). It should be noted that Locke’s work must have been groundbreaking since it was a period where monarchy and their divine rights to control was seen as normal part of governance. Grigsby argues that Locke’s’ work was to contradict the views provided by Robert Filmer who had argued on the principle of divine rights of rulers. Locke bases his views on studies of ancient primitive societies. None of the individuals born in such societies were bound by any real man-made laws. In other words, all individuals are born equal and hence enjoy the same level of freedom as any other person. Grigsby then goes on to provide several characteristics of classical liberalism in comparison with neo-liberalism. In the former case, the individual is considered more important than the rulers or government of a country. People on the whole are capable of making rational decisions and hence intervention of a state is seen as unnecessary. Under such circumstances, inequality in economic status between individuals or groups living in a society is inevitable and acceptable. Finally, the freedom to take up a profession or business that may result in the above mentioned inequality is more relevant than a state controlled governance that aims to bring about economic equality. This can be seen as a direct attack or opposition of socialistic or Communist policies that restricted individual freedom in the place of collective good. As mentioned earlier a modern concept of freedom has evolved under the term neo-liberalism. Most authors find it difficult to define the concept of both the types of liberalization namely the classical and new (neo) approaches. This could be because the concepts of freedom or liberty can be understood or grasped in different ways. In any case the basic difference between the classical and new liberalization is the increased governmental intervention for the overall economic benefit of a region or country. In other words, neo-liberalization focuses more on the development of market economies on the premise that development of business will in effect result in the overall development of the individual and society as a whole. The focus is more on ensuring freedom policies aimed at protection of free markets and free trade (Harvey 2005, p. 2). The author indicates that the state can take any steps including intervention in order to provide free market and trade. While most of the concepts of classical liberalism are present in its new form, the power of the state to ensure economic progress can be seen as contradictory to the concept of any form of state intervention. As in the case of the classic instance, authors are divided on the origins of ne-liberalism. Some say that it originated after the great American depression of the 1930s (Ritzer 2010, p. 110). Others see its origins during the 1970s and 1980s dominated by such political leaders like Margaret Thatcher, Deng Xiaoping, and Ronald Reagan (Highmore 2010, p. 165). In any case liberalism is there as an ever present factor in a highly dynamic and globalized world. Difference between Classical Liberalism and Neo-Liberalism: The difference between classical liberalism (utopianism) and neo-liberalism has given rise to serious discussions and debates in political studies, because these approaches to economic and social policy have influenced international political theories significantly. The relevance of both classical liberalism (utopianism) and neo-liberalism in the recent international environment of politics necessitates a serious analysis of the difference between the two. In the modern international environment, liberal optimism has contributed to some of the basic issues in political, economic and social matters. An analysis of the change and the continuing vitality of political realism has been, as R. B. J. Walker maintains, one of the focal points in the recent studies in the international political theory. Walker argues that “the philosophical dilemmas posed by the concern with change and by the claim to political realism are intimately related. The argument is pursued in the context of contrasting traditions of political realism, of the antithesis between structuralism and historicism in contemporary social and political theory, and of recent tendencies and controversies in the literature on neorealist theories of international politics” (Walker 1987, p. 65). According to Walker, political realism is essentially a place for several interesting claims and metaphysical disputes. One can realize the connection between different political theories by an investigation of how international political theory is influenced by the relationship between identity and difference. Therefore, the difference between classical liberalism (utopianism) and neo-liberalism should be comprehended in this background. In a reflective analysis of the difference between classical liberalism (utopianism) and neo-liberalism, various essential aspects of both the political theories become lucid. The arguments made by Emerson M. S. Niou and Peter C. Ordeshook offer a reasonable idea of both the theories. According to them, the classical liberalism and neo-liberalism differ in the two basic issues: “(1) delineating the goals that best account for the actions of states, especially patterns of cooperation and conflict; and (2) assessing whether institutions of different types can ameliorate conflict in an otherwise anarchic environment.” (Niou & Ordeshook 1994, p. 209). Whereas Realists maintain that the states focus on the absolute welfare in due course, Neoliberals believe that the states are not inevitably concerned with relative gain. Michael W. Doyle (1986), in this respect, deals with the theoretical backgrounds of liberalism and offers some fresh insights regarding how liberalist ideals are at work in modern world politics. The researcher tries to “reexamine the traditional liberal claim that governments founded on a respect for individual liberty exercise" restraint" and "peaceful intentions" in their foreign policy” with special reference to such theorists as Schumpeter (democratic capitalist who advocated liberal pacifism), Machiavelli (classical republican who advocated imperialism), and Kant (liberal republican who is best known for his theory of internationalism) (Doyle 1986, p. 1151). The author holds that while liberalism exerts great influence on the foreign policies and foreign affairs of liberal states it is a fact that they are also prone to wars as they want to create a separate peace for the nation and its citizens. The argument that Liberal states value individual rights, free speech, civil liberties and equality before the law seem to be quite paradoxical when one can a notice a number of instances in political science and history where liberal states display aggression and violence. One feels confused at the large number of wars fought by Liberal states such as the U.S and its European allies in the pretext of preserving international freedom and preventing terrorist upheavals. An in-depth understanding of liberalism necessitates theoretical base on such related concepts as liberal pacifism, liberal imperialism and liberal internationalism. Liberal Pacifism: One needs to have a thorough understanding of the concept of liberal pacifism. While Liberal states are characterised by factors such as “individual freedom, political participation, private property, and equality of opportunity,” it was Schumpeter who argued that the foundation of liberal pacifism stemmed from ‘the interaction of capitalism and democracy’ (Doyle 1986, p. 1152). As such, liberal pacifism is often regarded as antithetical to imperialism; while imperialists and monarchies sought dominion over others through imperialist expansion, capitalism and democracy tend to promote peace. Similarly, with the rapid growth of liberalism imperialistic nations began to disappear. The emergence of free trade in democracies has facilitated international relations and interventions even without any forcible expansion. It has also been identified by Schumpeter that Free states that enjoyed political and economic freedom displayed less of conflicts compared to non-free states. However, one can find great discrepancy between Schumpeter’s assumptions and the history of wars in the 20th and 21st century; the colonial wars such as the Boer War, the Spanish-American War and the Mexican intervention offer the best testimony to this pronounced discrepancy. Liberal Imperialism: Machiavelli, on the other hand, believed that democracy would ultimately end up in tyranny and for him “establishing a republic fit for imperial expansion is, moreover, the best way to guarantee the survival of a state” (Doyle 1986, p. 1154). He also held that for liberalism to be permanent it should result from the popular veto which would in turn preserve the liberties of the state. Thus, as per liberal imperialism a free citizen is to fight for the common good of the nation and it is his duty to see that the nation’s liberty is never encroached by an external force. Thus, Machiavelli considers Rome as an ideal republic rather than Sparta or Venice. The historical record of numerous U.S. interventions in the post-war period supports Machiavelli’s argument. Liberal Internationalism: Liberal internationalism is another offshoot of liberalism whereby liberal states globally engage in international treaties and alliances. The United States’ alliances with the liberal powers and the North Atlantic Treaty were the results of liberal internationalism. There is no doubt that liberal internationalism “offers the promise of a continuing peace among liberal states, and as the number of liberal states in-creases, it announces the possibility of global peace this side of the grave or world conquest” (Doyle, 1986, p. 1156). Authoritarians and totalitarians are very often blamed for warfare. Advocates of liberal internationalism argue that absence of war among liberal states will lead to continuous peace; however, the first and second World Wars have shattered such hopes of many. Similarly, one can come across a number of instances in world history where liberal states have waged war against non-liberal states and vice versa. The colonial wars fought by France and Britain in the 19th century are instances of such wars fought by liberal states and the United States’ war with the Mexicans can also be categorised under aggression brought out by liberal internationalism. Kant here tries to break the notion that liberal states always display pacifism; on the other hand, liberal states tend to show aggression and imperialistic attitude towards non-liberal states. In other words, it can be stated that the pacific federation or union formed by the liberal states help only to maintain peace among themselves. Neo-realism and Neo-liberalism: As already discussed, the liberal tradition fostered international relations and interdependence among liberal states and paved way for many international institutions. Similarly the two World Wars had shattered the hope that international laws and organisations will promote collective peace and security. Realism often fails to define how state’s interests are formulated or undergo changes; for Joseph S. Nye, “Realist theories maintain that states learn by responding to structural changes in their environment” and that “they adjust their behavior to changes in the payoff matrix” (Nye, Jr, 1988, p. 238). The realists hold that domestic and international factors interact to change the state’s interests. As trans-national coalition opportunities increased, it has become imperative for nations to redefine their national interests so as to cope up with the changed institutional frameworks and regimes. The development of integration theories emphasised on pluralistic security communities characterised and united by international economic interdependence. Following the liberal tradition Rosecrance advocates the states to follow ‘an open trading system’ which can “transform their positions through economic growth rather than through military conquest” (Nye, Jr, 1988, p. 240). For him, this free trade and open trading system among world nations will promote international cooperation rather than conflicts or military conquests. Thus, it can be seen that Rosecrance stresses only on commercial liberalism whereas the potential components of neoliberal theories such as democratic realism, regulatory realism and social realism are not dealt with in his theoretical formulations. However, one can notice a shift from liberalism to neoliberalism in Waltz’s observations on power politics, pursuit of power, and balance of power where he undermines economic interdependence, the influence of international economic processes and institutions. Waltz emphasises on the Unit level structure (bipolar or multipolar) of nations where each one needs to focus on its own internal characteristics. However, one has to keep in mind that “factors such as the intensity of international interdependence and the degree of institutionalization of international rules do not vary from one state to another on the basis of their internal characteristics” (Nye, Jr, 1988, p. 249). Neorealist-neoliberal debate: The Neorealist-neoliberal approaches dominate contemporary international relations theory and there have been debates as to which approach best suits contemporary political, social and economic relations among world nations. Neo-realists headed by Kenneth Waltz have laid theoretical principles as to ‘the origins of the states’ preferences, the agent-structure problem’ and of the political structure. For Robert Powell, three issues lie at the centre of the neorealist-neoliberal debate: the meaning and implications of anarchy, the problem of absolute and relative gains, and the tension between coordination and distribution” (Powell 1994, p. 314). For the neo-realists, the problem of absolute and relative gains depends on the strategic environment and the offence–defence balance maintained by the nation rather than the level of international cooperation received by it. Similarly, the problems of coordination and distribution are resultant of joint gains where distributional disputes can often result in lack of cooperation. Similarly, the state’s preferences may not always be in tune with the political structure in which they interact. The disparity between these two types of preferences has prompted Robert Keohane to “criticise neorealism as a weak theory of behavior (that is, a weak theory of preferences over actions) but describes neorealism as a weak theory of preferences over outcomes” (Powell 1994, p. 319). One can comprehend that the Neorealist-neoliberal debate has very much to do with the questions of anarchy and cooperation. It has been widely disputed by political theorists whether cooperation prevails in anarchy and whether institutions facilitate cooperation. Whereas the neo-realists maintain that “cooperation will be difficult in an anarchic system composed of units that prefer survival over extinction,” the neoliberalists hold that these preferences are exogenously unimportant (Powell 1994, pp. 320-21). Similarly, Waltz’s claim that functional differentiation or non-differentiation of the units governed the political structure and that such changes in the political structure are only unit-level changes fails to answer the influence of institutionalization and international interdependence on the nation’s political structure. For him sovereign states have the ultimate power and authority to make laws and settle disputes and the absence of such supreme power can lead to anarchy. On the other hand, the neo-realists claim that “international institutions play a minimal role in shaping international politics and that the prospects for cooperation in anarchy are bleak” (Powell 1994, p. 326). They also hold that states will be competing each other over economic issues just as they had been competing for security during the Cold War eras. Thus, it is clear that the state’s concern for relative gains vary from time to time depending on various situations and necessities. The strategic environment maintained by the state play a pivotal role in the state’s preferences over its relative gains and it can also exert great pressure over the amount of cooperation gained by the state. Thus, one can observe that the neorealist-neoliberal debate poses a number of questions regarding the role played by international institutions and regimes, the effects of anarchy and the degree of concern about relative gains etc. Both the theories hold that the effects of anarchy and the degree of concern about relative gains are quite conditional. To conclude, it can be stated that the broad and important set of issues that arise out of the neorealist-neoliberal debate are questions related to “the absence of central authority, the potential for joint or cooperative gains, the distributional conflict these potential gains engender, and the roles of coercion and institutions in realizing and allocating these joint gains” (p. 344). Constructivism and Neoliberal Institutionalism: Jennifer Sterling-Folker makes an elaborate discussion on the points of comparison and differences between constructivism and neoliberal institutionalism and the author argues that both the theories “depend on the same mechanism of functional institutional efficiency in order to account for social change” (Sterling-Folker 2000, p. 97). It can be noted that neoliberalism employs constructivist theories to maintain cooperation and the neo-liberalists tend to view social change employing the same functional-institutional logic of constructivism. On the other hand, neoliberal institutionalism focussed on institutional preferences, capitalist pursuit of profit, promoted multilateralism rather than unilateralism and tried to obtain collective interests in the given environmental circumstances. However, both constructivism and neoliberal institutionalism make use of a common process-based ontology. To quote Sterling-Folker’s own words, “Their common process-based ontology is another way in which constructivism and neoliberal institutionalism are similar. Here the focus is not on constructivism per se but on how neoliberal institutionalism explains international cooperation” (Sterling-Folker 2000, p. 110). Following constructivist pattern, the neo-liberalists seek to gain cooperation through interaction among collective identities who share collective characteristics in international relations. Interaction lies at the core of both the theories and in international relations these interactions can have a transformative effect on interests and identities whereby successful acts of cooperation can be ensured. Thus, it can be claimed that both the theories share very much in common as far as international relations are concerned. Hobbes and international relations: It is also worthwhile to consider Hobbes’ observations on international relation theories. It was Hobbes who stressed on the ultimate powers as well as the duties of a sovereign state. For him, even though the sovereign state can command the obedience of its citizens and has ‘the right to act in any way it chooses’, it is imperative that the sovereign has to keep away from such “actions that too obviously threaten the interests of the citizens for fear that it will lose their acceptance of its authority and foment dissension and rebellion” (Williams 1996, p. 221). However, Waltz considers Hobbes as a classical realist who employs reductionist theories whereby he challenges Waltz’s fundamental neorealist position on liberal internationalism. However, it can be stated that Hobbes international theory stresses on the laws of nature based on which each sovereign states need to frame domestic and international standards. Conclusions: To conclude, it can be stated that freedom is an essential factor in growth and survival of a society as history proves that regimes that totally restricted individual and group freedom in any area of human endeavour had either collapsed or forced to take a stance towards some form of liberalism. The classical stance on this area was that individuals are capable of taking care of themselves and that there should be minimal governmental intervention into their activities. This is seen as an example of classical liberalism. But experiences over the years like the 1930s depression in the United States, the failure of the erstwhile Soviet Union and new policies in emerging China has proved that total freedom or restriction will generally lead to economic collapse. The paper has also reviewed other aspects of liberalism in order to arrive at a conclusion. Taking the above factors into consideration, a prudent economic policy that is aimed at general freedom, but with focus on overall economic development is seen as the new face of neo-liberalism. It can be concluded that neo-liberalism which promotes individual and group freedom is a concept that is still emerging. Countries, as a result should develop policies that can promote liberalist freedom along with prudent governmental controls. No doubt, the emergence of free trade has facilitated international relations and interventions and one can also see that neo-liberal tradition has fostered international relations and interdependence among liberal states and paved way for many international institutions. As trans-national coalition opportunities increased, it has become imperative for nations to redefine their national interests so as to cope up with the changed institutional frameworks and regimes. However, one can notice that political and economic debates regarding anarchy and cooperation surround the neo-liberal theories, opening up new dimensions for further research and evaluation. References Dickerson, MO, Flanagan, T & O'Neill, B 2010, An Introduction to Government and Politics: A Conceptual Approach, Cengage learning. Doyle, M.W 1986, ‘Liberalism and World Politics’, American Political Science Review, Vol. 80, No. 4, pp. 1151-1169. Grigsby, E 2009, Analyzing Politics: An Introduction to Political Science, (4th edn.), Cengage Learning. Harvey, D 2005, A brief history of neo-liberalism, Oxford University Press. Held, D 1995, Democracy and the global order: from the modern state to cosmopolitan governance, Stanford University Press. Highmore, B 2010, Ordinary lives, studies in the everyday, Taylor and Francis. Niou, E. M.S & Ordeshook, P.C 1994, ‘'Less filling, tastes great': The realist-neoliberal debate,’ World Politics, Vol. 46, No.2, pp. 209-234. Nye, Jr, J. S 1988, ‘Neorealism and neoliberalism,’ World Politics, Vol. 40, No. 2, pp. 235-251. Powell, R 1994, ‘Anarchy in international relations theory: The neorealist-neoliberal debate,’ International Organisation, Vol. 48, No. 2, pp. 313-344. Ritzer, G 2010, Globalization: a basic text, Wiley. Sterling-Folker, J 2000, ‘Competing paradigms or birds of a feather? Constructivism and neoliberal institutionalism compared,’ International Studies Quarterly, Vol. 44, No. 1, pp. 97-119. Walker, R. B. J 1977, ‘Realism, Change, and International Political Theory’, International Studies Quarterly, Vol. 31, No. 1, pp. 65-86. Williams, M. C 1996, ‘Hobbes and International Relations: A Reconsideration’, International Organization, Vol. 50, No. 2, pp. 213-236. Read More