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This article provides information about the factors that led to the emergence of neo-liberalism:
In the post-War period, even as the western states were realising the importance of welfare as an element in public policy, there was recognition of the need for slackening the role of the state in order to facilitate free movement of technology and capital. The most prominent neo-liberals are libertarians, enthusiastic advocates of the rights of the individual that are sometimes against those of the coercive state.
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The chief protagonists are Milton Friedman, Friedrich Hayek, and Robert Nozick. Friedrich A. Hayek, for example, is known for his anti-Keynesian monetarism. A strong advocate of laissez-faire economics, Hayek argues that centralised economic planning threatens liberty and therefore creates conditions for serfdom. He later explains that collectivism is a threat to individual freedom.
The ideals of classical liberalism, based on the idea of laissez-faire, reappeared in the 1980s in the form of liberalisation or globalisation of production, distribution and consumption arrangements. Over the past couple of decades, there has been some retrenchment in state welfare in a range of western societies, particularly after Reaganism in the USA and Thatcherism in the UK in the 1980s, with increasing privatisation of welfare services and support for private provision dependent on the ability to pay, rather than upon need.
Towards the end of the twentieth century, much as in the nineteenth century, one of the major battle lines of politics has been between the apostles of economic liberalism and those who favour intervention to “protect society” Lately the proponents of protectionism have become more influential again. This is the substance of the so-called “third way” which came to be much talked about at the end of the 1990s.
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It stands in the position that was once occupied by socialists and it has brought together newly elected left-of-centre leaders in Europe Tony Blair in Britain, Lionel Jospin in France, Gerhard Schroeder in Germany, and Clinton in the United States. The “third way” could be interpreted as a balancing act to take care of the backwash effects of a great leap forward of capitalism. Industrialisation is a precondition of development, which is understood in terms of economic progress, end of traditional values, rise of rationality, removal of mass poverty, spread of liberty and citizenship.
The social scientists are worried about the negative impacts of the neo-liberal phase of development. Castells argues that in the new era of capitalist growth the focus would shift from industrialisation to the network of information and knowledge. The 1998-99 World Bank report mentions that the “differences in some important measures of knowledge creation are far greater between rich and poor countries than the difference in income.” Certainly, the decline of the manufacturing sector and the rise of service and knowledge-based sectors in industrialised countries will pose new questions for development analysts and policy makers in future.
Extending the critique of neo-liberal development, Kitching comments that “development is an awful process”; for Cowen and Shenton development means “ameliorating the disordered faults of progress”. Much of development efforts go into ameliorating the problems of poverty, environmental degradation and social disorder.”Development” is often equated with programmes for the relief and welfare of poor communities or displaced populations.
The international agencies monitoring globalisation are now increasingly laying stress on the integration of poor communities into the global system. Social scientists are engaged in suggesting means to achieve global integration. Chambers, for example, suggests a participative approach to facilitate the involvement of people in the developmental plans made for them and to empower them in the process.
Chambers has been largely responsible for promoting what is now a large global network or movement concerned with “Participative Rural Appraisal” (PRA) or “Participative Learning and Action” (PLA), including idealistic precepts such as “handing over the stick” to poor communities to allow them to design and run their own development projects. In the Indian context, we see that processes like economic liberalisation, democratic decentralisation and participatory development are being experimented at the same time.