The Keynesian and Neoliberal View of Unemployment Essay

The Keynesian and Neoliberal View of Unemployment Essay

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Both the Keynesian and Neoliberal era came into existence as an aftermath of both an economic crisis and a war. Keynesianism came after the Second World War when the then neoclassical economy was in crisis. This crisis brought forth Keynesianism with the underlying disbelief in the self-regulating nature of capitalism. The Keynesian ideology believed in increased state intervention to produce economic stability. This policy rested on four policy prescription; full employment; a social safety net; increased labor rights; and investment policies were to be left to private enterprises. Keynesianism’s subsequent inability to deal with the unexpected inflation caused by two international oil crises and during the period of the Vietnam War led to the rise of the Neoliberal ideology of balanced budgets, absence of trade barriers, decreased government spending and increased international trade. Keynesianism was a failure due to the fact its focus to provide welfare to the public consequently led to lowered labor productivity and the incentive to work while the neoliberal focus is to unleash the power of the markets to drive productivity and innovation. This can be found in the current state policies.
The Keynesian era made its debut during the Kings administration after the world war and closed its curtains with the defeat of the Trudeau administration in 1984 (Course-reader 53: Lewis 2003). The adoption of Keynesianism by most western countries was a response to the deep interwar economic crisis (Course-reader 23: McBride and Shields 23). Keynesianism emerged as a result of the failure of the then neoclassical economy as seen from the great depression of 1929. This neoclassical-Keynesian paradigm shift entailed increased...

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...June 2001): 195-217. Web.
Carroll, William K., and William Little. "Neoliberal Transformation and Antiglobalization Politics in Canada: Transition, Consolidation, Resistance." International Journal of Political Economy 31.3 (Fall 2001): 33-66. Print.
Cohen, J. N. "Neoliberalism and Patterns of Economic Performance, 1980-2000." The ANNALS of the American Academy of Political and Social Science 606.1 (2006): 32-67. Print.
Eisenschitz, Aram, and Jamie Gough. "The Contradictions of Neo-Keynesian Local Economic Strategy." Review of International Political Economy 3.3 (Autumn 1996): 434-58. Print.
Holmes, James M., and Patricia A. Hutton. "Keynesian Involuntary Unemployment and Sticky Nominal Wages." .The Economic Journal 106.439 (November 1996): 1564-585. Print.
Smardon, Bruce. Introduction to Business, Government, and Society. New York: Pearson Custom, 2011. Print.

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