Neoliberalism and the paradoxes in economic theory

This chapter develops the theoretical framework that will be used to analyze how neoliberalism and globalization affected the economic miracles in Chile and Taiwan. The first section focusses upon our two central concepts of neoliberalism and globalization, presenting their definitions and the major controversies about them. The second section then summarizes a series of paradoxes in economic theory and demonstrates that they raise fundamental challenges for both the advocates and critics of neoliberalism. In the third section, we move from the level of abstract economic theory to an empirical description of the pattern or sequence of development, again showing how this analysis creates problems for arguments about neoliberalism. Finally, we provide an introduction to institutionalist theory which, we believe, explains the major differences between Chile and Taiwan and strongly suggests that neoliberalism is not the economic panacea that its advocates claim it to be.