Keynesianism, Neoliberalism And Authoritarianism

Public policy is enormously impacted by the importance of economic beliefs about the political world. Throughout history, there have been two prominent models of economic policy; Keynesianism and Neoliberalism. The increase of authoritarianism intermingled with the rise of communism essentially started World War 2. After this, the government instituted Keynesianism until the late 1970’s. After the stagflation of the late 1970’s, the political and economic movement of Neoliberalism began.

The Keynesianism movement centered on politics as its main goal was to revive the economy through the stimulation of ensuring full employment in order to achieve economic growth. The monetary policy needed to be accommodating and rates of exchange were

The primary goal of Neoliberalism is to increase economic completion between companies in order to improve the well-being of society. Neoliberalism believes that in order to grow, you have to invest money. Simply put, “Neoliberalization has meant ,in short, the financialization of everything. There was unquestionably a power shift away from production to the world of finance (Brief History of Neoliberalism).This belief means that this side growth originates from corporate profits instead of a fully employed labor force. Essentially, wealthy corporate companies make the money in order to invest in new industries, which then provide jobs for people. However, like Keynesianism, Neoliberalism believes that by expanding production and employing more people, profits can indeed be made. However, unlike Keynesianism, Neoliberalism believes that this type of profit can be risky. It is much easier for businesses to make profits by cutting back labor costs by hiring cheaper labor or downsizing a labor

In terms of distribution of income, neoliberalism states that labor and capital, or factors of production, get paid what they are worth. As stated in the book A Brief History of Neoliberalism by David Harvey, “The main substantive achievement of neoliberalization, however, has been to redistribute, rather than to generate, wealth and income…” This market structure is achieved throughout the supply and demand process due to the fact that payment depends on scarcity and its productivity. Neoliberalism does not allow these production factors to go to waste through the belief that all prices/economies self-adjust to full employment and that the use of monetary and fiscal policy to permanently raise employment merely generates inflation. Therefore, regulation leads to inefficiencies. This idea contrasts greatly with the Keynesian which, as stated above, believed that the success of the economy depended on level of aggregate