On the evening of May 15, RDCY Seminar Series No.113 was held in Chongyang Institute for Financial Studies at Renmin University of China (RDCY). Lei Da, a professor at the School of Economics at Renmin University of China, was invited to give a lecture. He focused on the development of neo-liberalism and the international economic order, providing a profound and unique analysis for the historical development and interrelationships of neo-liberalism, financial liberalization, and economic globalization in the past few decades.
Professor Lei said that in the field of pure economics, neo-liberalism is essentially the classical liberalism, together with the evaluations and value judgments for the Western free markets. It is in fact a new "revolution" for the “Keynesian revolution".
He said that the neo-liberalism experienced a process of from the periphery to the center, from recession to prosperity in the international economic order. In fact, the rise and fall of neo-liberalism is not only a trend, but also relates to the cyclical process of the real economy. Neo-liberalism declines rapidly during the economic recession, and when the economy is in a long period, the neo-liberal theory also prospers.
He said that with regard to the rise of neoliberalism, the first event was the emergence of the European market, which marks the formation of globalization. The capital began to flow, the global mergers and acquisitions, as well as the FDI investment booms in 1958 and 196, making the East Asian economic miracle come true. Foreign exchange can be accumulated through trade and then placed on the international financial market, and invest in the world through international financial markets.
It is also due to the emergence of this market that China appears the miracle of reform and opening up. The international financial markets is conducive to the multinational corporations participating in the process of globalization with their technology and even markets. Therefore, the real globalization emerged after the formation of this kind of market, with the marks that a large number of peripheral countries entered into the center of the world, and Many countries, such as Japan, South Korea and China, have developed fast in just a few decades.
He noted that the second major event in the revival of neo-liberalism is the US government`s deregulation for the capital. In the 1970s, international capital controls began to be loosed and the flow promoted, which had an impact on the US and European economies. Therefore, the neo-liberalism, based on the unification of industrial capital and banking financial capital interests, rose in the US, which boosted the thriving of the US financial industry. And then the US international capital flow drove the expansion of foreign investment in the manufacturing industry, and also promoted the development of US industry.
Due to the high level of financial liberalization made the international capital flow to the United States, and the US has the ability to allocate global financial resources. Meanwhile, unlike the trade, the financial liberalization does not require coordination with other countries. Once the United States has achieved its financial liberalization, other countries will follow suit. While for the trade, one country lowered its tariffs unilaterally can not bring interests for itself, he said.
He emphasized that the current anti-globalization activities actually opposed to the globalization of the trade. But the globalization is actually the result of financial liberalization. Therefore, the anti-globalization has not focused on the real point. Anti-globalization tends to oppose to the globalization of the trade, not the finance, which ignores that the root of the globalization is the liberalization of the finance.