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Neoliberalist Perspectives on the Economy Essay

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Updated: Oct 13th, 2021

Neoliberalist perspectives on the economy tend to lean towards as little government involvement in the economy as possible. This approach is aimed at transferring the economic control from the government to private companies and creation of free markets. Australia since the 1980s has undergone a restructuring process characterized by the privatization of major areas in public service. These developments have been a sort of microeconomic reform whose aim was to make Australia’s economy more competitive at an international level (Gramberg and Bassett, 2005).

It has been argued that most economists do not pay much attention to geography. Sachs et al (2001) argue that if the economists would pay more attention to the geography they would learn that regions in coastal areas and those near great rivers have more wealth than those countries in the interior. Further, they would also learn that most developed countries are those in the temperate zone. Proponents of the connection between wealth and geography often make a connection between various variables. These are the absence of deserts, being close to a river or sea, the temperate zone, and socio-economic development (Camacho. 2002). This may not be true since most developed countries do not share traits. For Australia, some of these facts apply especially being a coastal region.

The economic rationalist approach certainly does not consider geography in its efforts of explaining economic development. The definition of development by Amartya Sen as a process whereby human choices and decisions are enlarged places little importance on the role of geography (UNDP, 1990). The approach favors an individualistic focus on the market with the objective of increasing competition so that there can be better prices and more productivity.

This makes the economic rationalist perspective to be one that sees demography as the greater issue. In a population where the majority of the people are elderly, the projections for the economy using the neo-liberalist approach would be poor because it means that these are a group of people who are mainly dependent and cannot be relied upon to compete in the free market. The neo-liberalist approach supports the idea that all social welfare should be done away with.

The link between geography and economic activity is certainly present with evidence of such things as many people being found on coasts and very few people on ice sheets. This makes Australia a country likely to increase in wealth in the future due to its geographical position and the fact that its climate allows for the practice of agriculture. Most macroeconomics, state-interventionist economics included focus more on factors like policies like the formation of capital, technology, and education to make economic projections, thus leaving out the role of geography.

State interventionist economics favors the involvement of government in the delivery of public services and the maintenance of the welfare state. This is so that it can continue to take care of the unemployed and the elderly. Population policies favored by state-interventionist economists place more emphasis on the society rather than on individuals. For a state-interventionist economist then, demography is destiny. Most state-interventionist theorists emphasize certain features of social change which are related to the economic future of Australia. These include a policy that addresses measures that will ease the political, social, and economic tensions which occur when there is a period of temporary high increase in the growth of the population (Findlay and Borgegard, 1995)

Another issue that is emphasized is the creation of models that are more sensitive so that they can provide a good account of the uneven patterns of mortality and fertility. The policy here should focus on the socioeconomic and cultural context. Thirdly the approach also predicts an increase in pressures of migration due to the increased immigration rates of people from poor to rich countries.

Discussions of the future of Australia which are focused on demography have led to the conclusion that most people will generally adapt fast to new measures and attempt to apply the new policies as effectively as possible in their own lives. The commonly proposed reason for the failure of policies is the failure to incorporate sufficient research into the behavior and values of people who are most affected by economic policy. State interventionists proponents are more common users of such terms as domestic migration, natural increase, population change, and immigration as factors that describe how demography leads to shifts in markets, changes in patterns in real estate, and issues of the labor force as well as job creation.

Australia’s position in the South Pacific region is one that places it a great advantage economically(Mercer, 2003). So far it is the superpower of the region and both economic rationalists and state interventionists alike agree that the most likely situation is that Australia will still be the superpower in the future.

This can be attributed to both the geography and demography of Australia. Intervention by Australia in the issues of countries in the Pacific region could increase the influence of Australia in the region. This intervention is more likely to be through the aid that has strings attached rather than through military muscle. With an increase in influence in the region also comes greater economic and political power for Australia.

Demography and geography are destiny in the sense that even though they do not feature much in microeconomic policies and ideas, they are two issues that cannot be divorced from economic activity. The economy of Australia is such that geography has for a long time enabled the practice of agriculture which has brought revenue to farmers. The social transformation has occurred in the population due to the policies enabling farming activity to be carried out (Gray and Lawrence, 2001).

Farmers form a large population of people that feel frustrated by exploitation by large manufacturing companies who are mainly the large profit makers. Due to their large numbers their anger and disappointment will most likely lead to a change in policy with provisions being made to decrease the exploitation of the farmer, demography again comes into play. Neoliberalism has had the effect of introducing decay in the environmental, social, and economic aspects of regional Australia. While the goal of neoliberalism is to achieve real-world effects that will enable globalization, the economic policies stemming from neoliberalism produce more harm than good since they tend to ignore the demography and geographic factors that are of great importance in economic activity.

The privatization of electricity is another illustration where neoliberalist economic policies have not been able to deliver the benefits it has promised due to a failure to pay attention to demography and geography. Neo-liberalism alone cannot be the only economic theory from which economic policies and projections for the future of Australia can be made. Privatization of electricity has entailed a state which is interventionist, has led to the institution of new forms of governance and ways of securing capital. Many neo-liberals predicted that the state would wither away with the application of neoliberalist principles (Beder and Cahill, 2005).

This however has not happened; rather a free economy and a strong state have been created. This has been done through the encouragement and facilitation of privatization and deregulation by the government and agencies of the state. The workers in the electricity sector and the consumers in rural and residential areas have borne the costs of these changes. In two states this public service is now controlled by a private company and in other states, the cost of electricity can be manipulated easily by suppliers whose ultimate goal is profit. Structures set up for purposes of regulating the market have been unable to curb the manipulation of prices and also to ensure that there is a reliable supply of electricity.

For a long time, Australia has exercised the power of the state in a context that is cultural. Often, the neoliberal ideas and axioms have been more prevalent than social democratic axioms. Time has seen the state become less and less of a control agent and also less of an empowerment agent. There is a greater sharing of responsibilities between the government and its people (Patmore and Coates, 2005).

The adoption of neoliberal ideas has led to much privatization and this is likely to be the trend in the future. The government sought to fight inflation by reducing wages and reducing the government’s expenditure. This led to the attainment of the market’s goal of full employment. The trade union leaders also gained more political influence. Demography was seen to come into play in the decision to maintain a pension for the single aged person.

An increase in the aging population leads to greater dependency in the population and therefore more public spending. In order to reduce expenditure and give a boost to the economy, the government had hopes of reducing the pensions given to the elderly with the aim of increasing national savings so that economic growth and investment could be provided for. Hopes for a National Development Fund by the trade unions were not realized.

The Fund would have been for investment purposes to increase the capacity for new industry. The role played by the state, in this case, was a supervisory one which led to the young people and those who had been unemployed for a long term having their employability increased. This demonstrates a change of policy that has had the net effect of bringing about progress and also offsetting the inequality that is rampant with the free-market reforms of the government. Here, both state-interventionist economics and an economically rational approach have been employed. Further, both have paid some attention to demography.

In conclusion, demography and geography are truly destiny. This is because in the economy of Australia economic policies all concern and affect people. In addition, they have to be implemented in the country and the country’s geography will definitely influence this. However, the history of the development of Australia also has to be taken into consideration. Implying that geography and demography alone can be used to predict Australia’s future would be an oversimplification of issues. The most notable thing is that the two, geography and demography all have a role to play in the economy and Australia’s future.

References

Bassett P and Gramberg BV, 2005, . Web.

Beder S and Cahill D, 2005, Regulating the power shift: the state. capital and electricity privatization in Australia, Journal of Australian Political Economy vol 55, pp 5-22.

Camacho Luis, 2002, Geography as destiny versus history in development. Web.

Finally MA and Borgegard EL, 1995, Demography,destiny and population policies, Applied Geography, vol 3 pp. 197-202.

Gray WI and Lawrence G, 2001, A future for regional Australia: Escaping Global Misfortune, Cambridge University Press.

Mercer P, 2003, Australia’s new taste for intervention, BBC News. Web.

Patmore G and Coates D, 2005, Labour Parties and the State in Australia and the UK, Labour History vol 88. Web.

Sachs JD, Mellinger AD and Gallup JL, 2001, The Geography of Poverty and Wealth, Scientific American, pp. 70-75.

UNDP, 1990, Human Development Report, Oxford University Press, NY.

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