2.3: Neo-liberal thought:
Principles, weaknesses and strengths
2.3.1 The main principles of
neo-liberalist thought
This movement of thought may be considered as the application
of liberal principles in the economic life of a society. Alongside freedom
which is the key concept of liberalism, neo-liberalism stresses the concept of
free-market or free trade. The concept of free-market
, essential to neo-liberalism is in fact «an application in the sphere of
economic life of the conviction that human society is likely to do best when
men are left free to enact plans of life unconstrained except by the rule of
law» ( Gray, 1986). The principles of neo-liberal thought may be
summarized as following:
- The market, which is the central element of neo-liberalism,
should be free. It is therefore defined as «a mechanism which allows
people to trade, normally governed by the theory of supply and demand, so
allocating resources through a price mechanism and bid-and-ask matching so that
those willing to pay a price for something meet those willing to sell for
it» (Hall and Lieberman, 2004) . This means that the regularization
should not be subject to any interference and it obeys only its own rules of
supply and demand.
- In contrast to the liberalist view which claims a limited
role for the State, neo-liberalism advocates the non-interference of the
government in the economic sphere. Privatization is the main consequence of
this principle. Indeed, neo-liberalists believe that the «privatization of
State production and some service provision would increase efficiency and
output growth» (Colclough, 1991: 19).
- The competition which characterizes the market should bring
creativity, good quality of products presented within the market and the
opportunity for every body to bring his or her goods and services into the
market.
- Development should not be based on poverty alleviation. It
should, however, focus on economic growth which in turn will result in poverty
eradication (see Colclough, 1991).
The main principles of neo-liberalism presented above may be
summarized in these words:
«Neo-liberalism is a philosophy in which the existence
and operation of a market are valued in themselves, separately from any
previous relationship with the production of goods and services and without any
attempt to justify them in terms of their effect on the production of goods and
services; and where the operation of a market or market-like structure is seen
as an ethic in itself, capable of acting as a guide for all human action,
substituting for all previously existing ethical beliefs» (Martinez,
2004).
Referring to the housing process, neo-liberalism with its
belief in the non-interference of the government would support SHH. However,
the non-interference of the government in economic activities raises the
question of the specific role of the neo-liberal State in general and the role
of the State in the housing process in particular.
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