Joseph Stiglitz in ‘The End of Neo-liberalism?’ writes how “For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top. This mixture of free-market rhetoric and government intervention has worked particularly badly for developing countries. They were told to stop intervening in agriculture, thereby exposing their farmers to devastating competition from the United States and Europe. Their farmers might have been able to compete with American and European farmers, but they could not compete with US and European Union subsidies. Not surprisingly, investments in agriculture in developing countries faded, and a food gap widened.”
We can see today what the decision of colonizing has done to the colonized countries. From psychological issues like image distortion or what I’d like to term as the ‘Gora Complex’ to self esteem issues. And today we find out that it was just so that the European and American economies could flourish that they decided to colonize, because in order to flourish it was necessary to maintain the power and exploit labor power; while all along we thought they were trying to ‘civilize’ the so termed ‘uncivilized nations.’
Taking into account all of the above, and seeing as the cons seem to outweigh the pros. We can clearly link what has been mentioned as the drawbacks and see them in action in our very own country, Pakistan. Due to free trade we see how the local industries are suffering, the poor have only gotten poorer and the rich seem to keep minting money. We live in a capitalist society, where there is no level of equal distribution of wealth, where unemployment is at a rise and the workers that are employed are being exploited by overtime work or being paid less than what they deserve.
Our labor being cheap is taken advantage of by powerful countries and because of our lack of care for our citizens we let these countries take advantage in the greed for money, that which too goes to benefit the elite class in the end.
We see McDonalds taking over Mr. Burger, Coke taking over Pakola and Doritos taking over Slims. We see that thanks to Nestlé’s pure water the government could care less about the tap water which the poor drink from, which is full of germs. Sad thing is, there is a lack of the dirty tap water too. We have these designers using cheap labor for embroidery purposes and making a profit of twice the cost.
So really, neo-liberalism has done no wonders for our country. It can’t be practiced in developing countries because of its lack of consideration of what globalization may do to the local industries and in general the masses which in developing countries are the poor.
Hence seeing the condition of Pakistan, the Keynesian approach needs to be applied. In this approach restrictions are put on trade, and there is sufficient amount of intervention from the public sector. Instead of a market economy, it promotes mixed economy and even though it seems that we have a mixed economy, we really don’t. Also, believing that an economy is capable of self regulation is very 19th century, in today’s day and age, regulation of an economy has to be made and that is something that was introduced by the Keynesian approach.
Joseph Stiglitz from his article on ‘The End of Neo-liberalism?’ states that “Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.”
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