Question

what are some of the criticisms that have been leveled against neoliberal economic policies?

Answer 1

Free market economy, with no or very little intervention of government, is neoliberalism. The following are few arguments that are used to criticize neoliberalism -

1) Non consideration to externalities - Many economic activities like production and consumption creates externalities. It is effect on any third party, which is not involved in the activity. IT could be positive or negative but neither of it is internalized into deciding the output and price in the market. This lead to socially inefficeint outcome.

2) Exploitation of consumer in hands of monopoly - Monopoly power allows firms to expand producer surplus at cost of welfare of consumer.

3) Exploitation of labors in hands of monopsony - Similar to monopoly, in labor markets where there is only single employer, labors also get exploited often.

4) Growth of financial flow like hot money, speculative money also takes place that causes wider economic shocks