The fall of communism symbolized the triumph of capitalism and free market over protectionist economics. Resultantly, the world has experienced the concepts of free trade and free government pushed as the most effective means of combating and alleviating poverty, disease, and various plights suffered in greatest numbers in the least developed parts of the world. In terms of economic prosperity, the United Nations classifies the world into two categories: the developed world, which includes the industrialized countries of Western Europe, the United States, Japan, Canada etc. The rest, where four fifths of the world’s population resides, is known as the developing world. Neoclassical economics has become so institutionalized and embedded into our way of thinking that countries are defined as being either a ‘Least Developed Country’ (LDC) or a ‘Developed Country’ before it is viewed in terms of culture, components of its economy, or its existing political institutions. Among the loudest cheerleaders of the globalized system of capitalism are the neoclassical economists. In neoclassical economics,
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The triumph of capitalism and the free market society was altogether unsurprising for neoclassical economists. The reason for this is because the individualistic and independent element of the free market best complements their views on human nature. On the whole, individuals are rational in always viewing situations with self-interest. As a result, humans are continuously looking for ways to maximize their profits or satisfaction in their daily life, while minimizing their losses. This competitive and maximum utility characteristic in people makes a market that stresses the importance of advantage and individualism the most effective way in channeling their nature while insuring the opportunity of satisfying this human need. However, in addition to individuals and institutions attempting to maximize their self-interest in absolute terms, neoclassical economists view a large part of the equation is maximizing individual self-interest in relative terms too. Neoclassical economics sought to make economics a more grounded study by incorporating elements of mathematics, biology, politics, and social science to make it more relatable to the common worker engaged in the market. When looking at relative advantage in the market, |
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