The Dangers of Neoliberal Monetary Theory (Essay Sample)

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The Dangers of Neoliberal Monetary Theory
In his understanding of neoliberalism, Harvey explains that governments should have minimal intervention in the market economy if human well-being is to be advanced significantly (2). Consequently, he highlights that in neo-liberalism approach, after instituting frameworks that can almost guarantee free entrepreneurial freedoms and skills characterized by free trade and free market, the state’s mediation in the market should be at the lowest point ever (2). While well put, neoliberal monetary theory has its risk that its enthusiasts should deliberate.
Different scholars and institutions offer varied meaning of neo-liberalism monetary theory. There is, however, a general consensus of minimal state control in the monetary policies, and this has not always been true. There is a tendency by a state or government to reserve itself the right to arbitrate in the market. It does so mostly through monetary policies and anti-trust legislations, besides other avenues, with an aim to achieve price stability and ultimately preserve the market economy (Thorsen & Lie 10). And there lies in one of the dangers of neo-liberal monetary theory. While the main point in neoliberal thought is minimal government control, and as Harvey points out, their duty is to set institutional framework to make the theory work, the question is whether this does work. It could be argued out that in an ideal environment where the theory can be implemented, more than minimal state intervention should be expected. Frankly, a critical evaluation could un-cover fluctuating levels of state control beyond the set limits. As result, neo-liberal monetary theory would be branded a failure whose ultimate is absolute instability in the market.
Harvey argues that the government intervention would not be for the interest of all parties involved as they usually will lack correct information and often will be misled by powerful groups to do their bidding (2). Besides, regardless of where the policies come from, both the victims and the beneficiaries will always lobby to alleviate loses or increase their benefits. Knowing that governments are not in whole run by noble administrators but a majority of individuals who, despite their competence or lack thereof, have competing interests, many neoliberal economists could question the integrity of their models to work. In every government, there usually is a misunderstanding between the state departments in regard to the money allocated to them for their programs. While the ministry of finance is entrusted to act in the interest of the public, occasionally it does not. In essence, it is difficult to trust the state.
Another danger of neo-liberal monetary theory is that it leans too much strongly to laissez-faire economic policies and the laissez-faire failures could be inherent upon its utility. Many proponents of laissez-faire hold that government interventions for instance in price controls, have most times being inefficient. Opponents on the other hand point out that more of a government regulation is critical to stability in unstable market and they illustrate the textbook ‘market failures’ to their being lack of state control. Borrowing from this idea, it is jus...