Neoliberalism Economic Marxist

Is neoliberalism the new economic common sense?

Sheikh, A., (2005), 41.

The foundations of neoliberalism derive from what Stilwell (2006) considers as “an intriguing blend of technical analysis and ideology” (148) which is characterised by a number of prominent features. In contrast to Marxist economics that suggest the role of capitalism is relatively limited, neoclassical views of the economy tend to be optimistic about the role that capitalism has to play in it, and are especially concerned about notions of competition, the individual, and the business.

While Marxist economics is concerned about the study of historical processes, neoclassical theory uses a deductive methodology when approaching a problem; Marxist theory focuses on the class system, neoclassical theory concentrates on the individual; significantly, Marxist economics defines capitalism as something characterised by conflict. Contrarily, neoclassical economists suggest that markets lead to harmony.

Naturally, the ideological potentiality of a system which supports the free market to the extent to which neoclassicism does is likely to assert itself as a dominant ideology in a propagandistic age. Stilwell (2006) argues that the origins of the predominance of neoclassical policies derive from two things. Despite poor economic performance in the late 19^th century, the dominant neoclassical views on the economy were still prevalent.

This was because of “the extension of markets” (151). Stilwell argues that “it was better to emphasise the invisible hand of the market than the iron fist of imperial domination” (151). More sceptically, the problems seemingly inherent to capitalism created dominant fears among the political and social elite that the ‘dangerous doctrines’ of Karl Marx and John Stuart Mill would be enabled by workers dissatisfied by the present system of government.

As such, the alternative doctrine of neoclassicism became the prevalent ideology of the ruling classes and was used as a means of preventing revolution or civic unrest. More cynical critics of the neoliberal experiment suggest that the same embodiment of pro-business, pro-capitalist ideology is occurring with orthodox theory in the present time.

As well as providing a useful tool for establishing dominant control over dangerous Marxist ideology, neoclassical economists also tend to flatter their consumers with notions of individual freedom of choice. Central to neoclassical theory is their belief in consumer rationality. Indeed, while Marxism focuses on investigating the class system, neoclassical theory offers a series of equally problematic appraisals of the consumer.

The individual consumer, it is argued, acts rationally based on the information that is given to him or her. This, in theory, regulates the market because, by and large, demand meets supply as a result of the rational consumer’s purchase. Of course, problems emerge when one begins to look at the specificities of consumer choice: what is rationality? Neoclassical economists use a process of utility maximisation in an attempt to cut through these difficulties. Stilwell (2006) suggests that “Consumers have varying personalities and preferences, but they are assumed to pursue a uniform objective: the greatest utility (or satisfaction) that is attainable with their disposable income” (158).

This, in theory, serves to balance the market and maximise wealth. It also tends toward the common sense notion that individual actors in a market and their consumption decisions are based upon their own autonomous consumption decisions. It is assumed by neoclassical economists that actors operate in a rational manner, albeit one where the pursuit of individual happiness or satisfaction is the main goal. Stilwell (2006) comments that “we see and hear commercials, but we generally prefer to feel ourselves sufficiently selective, critical, and maybe just downright cynical about them” to have our personal autonomy compromised (157).