This is the philosophy that underpins and drives economic globalization. At its core is a belief in the free market and minimum barriers to the flow of goods, services and capital. It is an extension of the traditional liberal philosophy, which argues for a separation of politics and economics and that markets should be “free” from interference of government. This approach is based on four principles:
- Economic growth is paramount: corporations and their agents need to be free to pursue whatever gives them an economic advantage and, in consequence, internal and global markets must be free to operate with little government constraint or regulation.
- Free trade benefits all nations - rich or poor - because every nation has a comparative advantage.
- Government spending creates inefficiency and waste: although most neo-liberals agree that not all public expenditure is wasteful, many argue that it can be reduced.
- In the distribution of economic goods, individual responsibility replaces the concepts of public goods and community.
There are four pillars to the neo-liberal approach all of which involve liberalization (the reduction of rules and restrictions): capital account liberalization, trade liberalization, domestic liberalization, and privatization.