Since the emergence of a state, there has always been a struggle for control and nation-state authority that influences commercial relations and economic stability in the country. Advanced capitalist economy often contradicts free ideas about private sector and a necessity to provide more freedom to private business activities. The priority given to free enterprise, price mechanism, and competition principle is the key to current trends in the world market. While identifying influence of neoliberalism on the world, it is essential to understand that these economic policies are aimed at reducing crime controls, decreasing trade barriers, and deregulating capital markets, thus eliminating influence of the government on the privatization process. In the global context, neoliberalism has given rise to expansion of free relations among corporations, establishment of international partnership, and development of international standards of quality and safety of products and services.
It should be admitted that influence of neoliberalism in the world has both beneficial and adverse effects on the global economic development. While deliberating on adverse consequences, attention should be paid to the hegemony of neoliberal ideas. To be more exact, it has been stated that neoliberal ideas have ascended since the 1980s. However, the detailed case study shows how many countries in the world have differently perceived this phenomenon. This fluctuation can be predetermined by interaction between diverse material interests and neoliberal concepts in various economic contexts. According to Roy, Denzau, and Wilett (2006, p. xix), “… the influence of neoliberalism often depended heavily on its compatibility with other kinds of shared mental models”. For instance, in the EU community, neoliberal principles have been changed because they have assimilated with other European ideals. However, in post-Communist countries and East Asian regions, nationalist ideas were triggers of the development of a new neoliberal clause. In other context, the phenomenon of neoliberalism has defined its compatibility with local religious, cultural, and civilized values. With regard to this issue, neoliberalism could not be analyzed as an isolated phenomenon because it exists in a broader environmental context with the political emphasis on relations between values and identified reality.
The advent of free trade in the 1980s was predetermined by the ideational environment, which embraced the values that were beyond neoliberalism. The insight relies on the explanatory nature of economic policymaking (Campbell & Pedersen 2001). To be more exact, it states that relationship between neoliberalism and other economic models should be considered in more detail to understand whether different economies are affected differently. Social mechanisms create the basis of economic and social processes and they contribute to the creation of economic ideology. Therefore, emergence of neoliberal frameworks has imprinted certain changes, which were assimilated to create a completely different system. Therefore, it should be admitted that neoliberal system is a sophisticated phenomenon that has been created in different countries, engaging shifts in ideas, politics, and institutions throughout economic, social, and political dimensions. One could introduce different approaches while explaining neoliberalism. However, institutional changes require specific analysis because of the privatization process.
Before the development of neoliberal networks, the economic landscape experienced several changes. Specifically, export profits declined significantly due to a dramatic decrease in domestic investment. The adverse effects of reduced domestic investment were predetermined by the decrease in foreign investments because of the credit crisis. Economic recession caused serious social frictions because of the significantly lowered income (Campbell & Pedersen 2001). In the light of these conflicts, all stakeholders of the crisis were concerned with the governmental response to the problem, as well as the question how they could confront this problem.
In the context of the economic recession, the state authorities decided to spread neoliberal frameworks aimed at organizing economy to distribute resources in a reasonable way and to report to the government about financial decisions. The change in economic system included a tangible transition in the economic sphere from state-induced projections and planning that decentralized the commercial and economic environment. In order to introduce changes, governmental authorities had to address both long-term and short-team concerns. In regard to this issue, the government applied a range of policies aimed at stabilizing economies, such as current devaluation, consumer subsidy, price control, and worker protection programs (Olssen & Peters 2007). The policies and programs imply foundational neoliberal shifts in major economic institutions. To begin with, institutional foundations of a market economic should be enhanced to include such changes as dismantling of bureaucratic procedures, enhancement of domestic market system, liberalization of investment practice and trade relations, and reduction of power and influence of governmental authorities on private sectors. The influence of corporate monopolies could have an adverse impact on the development of a strong economy because these monopolistic institutions were largely controlled by the government. The second change referred to shifts in property rights in different spheres, which had previously been controlled by the government. As Campbell and Pedersen (2001, p. 30) explain, “state officials were also trying to shore up the financial status of the state by decreasing public expenditures and increasing government revenues”. The sale of public corporation, therefore, was a crucial aspect of the described efforts.
Neoliberalism is premised on the systemic use of governmental power to create a hegemonic impact of decomposition of capitalist rules in different areas of social life. Controversies and tensions embraced with global neoliberal framework are displayed vividly in middle-income countries. In a domestic economy, neoliberal transition has experienced radical changes in the material foundation of social reproduction in these states (Saad-Filho & Yalman 2009). These changes include significant changes in social and economic policy. They also embrace the structure and dynamics of poverty, modality of insertion in the international economy, domestic forms of exploitation, and social prevalence. The political opposition to these processes includes limitation in the domestic sphere via integration of markets and institutions and their isolation from social accountability with the emphasis on a stronger control of labor force (Saad-Filho & Yalman 2009). The latter is implemented for protecting international competitiveness. Economic and political shifts have limited the scope of global welfare provision, leading to regressive changes and higher rates of unemployment in the majority of countries. They have also promoted changes in income dynamics, which resisted reformists and Keynesian interventions. More importantly, political development could be distorted as well because of the emphasis placed on global practices, as well as on their greater importance. Localization and privatization have also diminished roles of the government in shaping economic and trade relations and, as a result, many business activities as held at a global level.
While considering neoliberalism as a final institutional capitalist form, it is possible to employ social construct of accumulation theory to analyze shifts in the capitalist institutional system. The theory of social structure of accumulation is considered to be a long-lasting capitalist structure that offers new forms of profit-making and creates a framework of capital accumulation. According to the theory, each structure performs the role of profit-making promotion, but at certain phases it stops promoting this function, which leads to a crisis and gives rise to a new social structure of accumulation. As McBride and Teeple (2011, p. 2) argue, “that SSA was characterized by active state regulation of economic activity both within states and in the global system, well-developed welfare states, significant capital-labour cooperation, and co-respective or restrained from a competition among large corporations”. At the same time, the neoliberal dimension of the SSA was organized in 1980s when the theory represented a rapid deviation from previous social systems. Its major traits included removal of obstacles of free movement of services, goods, particularly the capital, across global economies. Withdrawal of the government from the function of controlling and guiding the economic activity was also among major changes typical of neoliberal movement. Privatization of governmental institutions and public services, shifts in state social problems, and transmission to regressive forms of taxation were signs of neoliberal prevalence. There was also a shift from cooperation to capitalist relations between the capitalist and the labor force.
A rapid transformation from monopolistic socialism to market relations was the main feature of neoliberalism. This could also be considered as a logical outcome of changes in the capitalist regime, a more restricted policy aimed at maintaining new features of the accumulation regime. There are at least two main kinds of liberalism that are associated with approaches to reorganizing, restructuring, and rescaling of accumulation and control in advanced societies. They rely on such phenomena as neocorporatism, neoliberalism, neostatism, and neocommunitarianism (Jessop 2002). The neoliberal direction has also introduced changes to different regions in the world. For instance, Bohle and Greskovitz (2007) discuss main features and nature of transnational capitalism as a neoliberal type of economic policies. Regions are distinguished by performance, industrial development, marketing, social inclusion, and economic stability. Justifications for regime diversity are created at two major levels. The first one focuses on legacies of previous regimes that pose threat to these countries and have a potent impact on regime types. Initial choices and legacies are crucial for construction of democratic inclusion, as well as development of different patterns of protection in regard to new regimes. The second level relates to significance of transnational influences in social inclusion and transformation.
As it has been briefly mentioned, neoliberalism has become a hegemonic phenomenon with destructive effects on political and economic practices to the extent when it has become an inherent foundation for understanding and explaining current economic development of the world. Harvey (2007) asserts that although neoliberal ideas have not been effective in advancing economic growth, they have promoted channeling wealth from subordinate frameworks to prevailing economies. The process implies isolation of governmental institutions, giving rise to egalitarian distributive measures.
Neoliberal tendencies can also relate to the 9/11 events, particularly to the program called NEXUS, which reveals a changing political landscape in North America. The program offers a high-tech solution to competing demands for border security and business movement. According to Sparke (2006), attention should be paid to economic liberalization and national security that could provide new privileges for business activities. While examining these reforms, it should be expressed that neoliberal policy could be proposed via integration of NAFTA and microscale production. By examining these transnational aspects of civil rights development, it is possible to conclude that neoliberalism could produce new perspectives for developing relationships with transnational mobility rights and other exclusive counterparts. With regard to the above-proposed campaign, it can be admitted that a shift in economic relations can positively impact social and political development. In studies by Yeates (2002), there are many deliberations and examinations of how neoliberal movement can contribute to shifts in globalization and social processes, emphasizing inevitable nature of globalized processes, as well as external obstacles imposed on local governments by development of international markets (Crotty 2005). In this respect, the scholar argues that a more effective way of analyzing the relation between social policy and globalization is to define how it can be improved through neoliberal ideas. Additionally, the researcher highlights ideas connected with globalized strategies such as consumerism, free trade, corporation development, and emergence of a world-known brand.
On the one hand, globalization triggered by neoliberal movement has a positive influence on the development of commerce. On the other hand, the neoliberal hegemony can impose certain limitations on development of local products because more and more developing countries suffer from increased competition in the international market that exports higher quality goods (Mansfield 2004). In this respect, it should be admitted that social and economic status should depend on the context in which these relations are negotiated.
In conclusion, it should be stressed that several decades of neoliberal expansion has had a tangible impact on the economic, political, and social order in the world. Neoliberalism has ignited globalization that has led to emergence of international corporations, free trade, and international relations. Such a phenomenon has minimized the role of monopolistic economy and has encouraged privatization of certain commercial sectors. The latter has led to the spread of differentiated products. Such tendency could also have an adverse effect on small and developing economies that cannot compete with other powerful economies because of the competition. Therefore, they should still rely on domestic products. In general, integration of new forms of economic relations has led to the global hegemony and has changed the social order.