Alternatives to Neoliberal Policies

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Table of Contents

Introduction
Alternative Strategies used
Redistribution
Conclusion
References

Introduction

Neoliberalism is a political organization that encourages economic liberalism as a way of encouraging economic development as well as ensuring political liberty. It can also be used to refer to the struggle to reverse some of the classical liberal economic policies that dated back to the 19th and 18th centuries. Thus, from the English language, the term can be considered to be an abbreviation of the term “neoclassical liberalism” (Pollin, R., 2003).

Neoliberalism has continuously been criticized. It’s regarded as theoretically efficient but not fair by economists. The opponents of neoliberalism site its effects on inequality, wages, working-class well-being, social mobility, health, democracy, and the environment. The critiques view neoliberalism as a political project and economic project that who’s aim is to reconfigure the relations in different classes of the society (Pollin, R., 2003).

Alternative Strategies used

Different strategies have been identified by different agencies all aimed at reducing poverty. For the effective achievement of these targets, different policies are required. It could be argued out that the choice of a central strategy would be one aiming at poverty reduction by accelerating economic growth. Some analysts have continuously held that more assets, as well as income equity from the beginning, enhances the rate of growth. This view may disqualify the view based on distribution strategy that it would work on reducing poverty by decreasing per capita growth (Dagdeviren, H., 2000). This is expected to vary by country. It could be argued out that if poverty groups are transformed into productive members within the society, there is a likelihood of raising the income of all. This could be achieved by enhancing higher wages and productivity as well as enhancing income and output for those people who are self-employed by providing access to public facilities, education land reforms, and credit. In a short while, however, this may translate to a decreased growth within certain other groups due to the investment redirection towards the poor.

Redistribution

Land and income redistribution seem to be the most important in reducing poverty. This could involve redistributive land reforms where land is redistributed from large owners to peasants. Although this is a one-off redistribution, it is expected to reduce poverty levels by enhancing equal distribution. But if income redistribution has to take place in the absence of asset redistribution, then this must be done in a process where there is continuous taxation as well as equity-biased public expenditure. This thus translates to a situation where the alternatives are not clear.

A class of poor smallholders may be generated as a result of land redistribution that is unaccompanied with expenditure on rural development. A good example is the land redistribution in Latin America, Peru that resulted in more poverty rather than the anticipated reduction. This could be so because the land redistribution that would reduce poverty would require expenditure that mostly exceeds or equal the total cost in administering a continuous tax system (Dagdeviren, H., 2000).

Taxes also are vehicles for redistribution aimed at reducing poverty. They’re mixed conclusions on this. In Latin America, tax systems have not been shown to give a significant reduction of inequalities. An alternative has been proposed where taxes such as value-added tax can be modified to enhance their equity through exclusions and exemptions.

Education has also been considered. It has been shown that expenditure on public education, primary as well as secondary, has an effect of reducing inequality but a regressive impact is seen when the expenditure is based on tertiary education. It could be argued out that when higher education is financed and the lower levels- secondary and primary are sidelined, then the impact of redistributing public spending is reduced (Dagdeviren, H., 2000).

Inequality has been considered to have a negative influence on growth by creating inappropriate capital markets that the poor find limited access to. It’s worth noting therefore that growth can be enhanced only if wealth is redistributed to reach the poor.

John Williamson’s, 1990 gave out a list of his consideration which includes:

Free trade, translates to the removal of trade barriers such as subsidies, tariffs as well as regulatory trade barriers.
Privatization. This is the shift of initially public-owned goods, enterprises, and services into the private sector.
Unaltered market prices. The government is expected not to control the market prices by avoiding policies that would encourage that.
Unless it is some kind of intervention that is expected to encourage education, infrastructural development, or export, then it should be limited.
The government should accept the competitive market-determined exchange rates and refrain from having fixed exchange rates as previously it was during the Bretton woods system.
The government is expected to cut expenditures or raise taxes to have a budget surplus (Williamson, John., 1990).

Conclusion

On top of priority development policies is poverty reduction. This cannot be achieved without enhancing the process of growth for the poor. Redistribution of assets and income is more emphasized when implementing policies aimed at poverty reduction. To enhance both equity and growth, concerns on distribution and priorities to be placed on poverty reduction should form the top agenda when formulating new policies. This could be summarized as;

Redistribution of assets and current income are among the most important means of poverty reduction.
A sustainable rapid growth can be enhanced by better distribution equality.
Since the mechanisms for redistribution are not clear for most countries, then specific policies of redistribution should be given more attention, (Dagdeviren, H., 2000).

References

Dagdeviren, H., Hoeven, R. V.D. and Weeks, J. (2000). Redistribution does Matter: Growth and Redistribution for Poverty Reduction. The financial times.
Pollin, R. (2003). Contours of Descent: U.S. Economic Fractures and the Landscape of Global Austerity. New York: Verso.
Williamson, J. (1990) “What Washington Means by Policy Reform” in John Williamson, ed. Latin American Adjustment: How Much Has Happened? (Washington, DC: Institute for International Economics

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Alternatives to Neoliberal Policies

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