SDS131R Lecture Notes - Friedrich Hayek, Negative Liberty, World Trade Organization

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Published on 1 Feb 2013
Course
Neo-Liberalism and Liberalism
Rise of Neo-Liberalism:
Golden age of capitalism (reformed liberalism policies) started to decline after the 1960s
Middle class was created by the state with the building of infrastructure, schools and
welfare systems
Breton Woods in 1944 created a more valuable money exchange system
Value of each country’s currency pegged to the U.S. dollar
Gold Standard: can’t print more money than gold you have on reserve
After 1970’s we lose faith in Keynesian welfare state
U.S. unpegs and abandons the gold-based system
Three Major Developments
Internationalization of trade and finance: NAFTA taking down trade barriers
Increasing power of transnational corporations: bigger corporations result in a lack of
protectionist policies (not real competition)
Increasing role of IMF, WB and WTO: started with the best of intentions now turned
neo-liberal
Neo-Liberalism
Limits government intervention in economy (small state with a specific role night
watchman state
Free markets, no limitations for business (market will balance itself out)
Privatise public enterprises because business is better at business than the government
Taxes cut for the rich by reducing public spending on social programs
Difference between classical and neo is that classical has to do with reason, humanity,
justice (freedom in every sense) and neo wants freedom seen on economic eyes
Hegemony: if you think you can move up in society you’ll accept inequality
Focus on negative liberty, not all freedom is good
Rights over utility
Meritocracy: everything you get is based on merit
Differences from Liberalism
Libertarian: freedom in all areas
Neo-Liberalist: mainly economic freedom
Friedrich Hayek
Had an issue with Russian communists and watches fascism arise
Thought to not used state money in economic down turn to boost economy, rather private
investment
State money in bad economic times creates a bubble that will eventually pop
(unsustainable growth)
Government out of the business of business
There is conflict between capitalism and democracy, corporations are only there for their
own purposes
Limit state and worry about conduct
Mancur Olson
Only a separate and selective incentive will motivate an individual to act in a group
oriented way need to get something out of doing the right thing
Rational (choice) Utility (purpose) Maximizers (most benefit)
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