Absolute and Relative Gain

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International Relations Week 3 Liberalism and Neo-liberalism Question: What is the difference between relative and absolute gains? What role does this concept play in neo-liberal thinking? Contents What is the difference between relative and absolute gains? 3 & 4 Bibliography5 What is the difference between relative and absolute gains? -What role does this concept play in neo-liberalist thinking? Introduction This essay addresses the question about the difference between relative and absolute gains within the neo-liberal body of thought.

The terms ‘relative ’and absolute gains will be explained, and there will be examples given between absolute and relative gain. Furthermore there will be a description and analyze of relative and absolute gain in global society. This will be done with a link to the main thinkers of neo-liberalism. In the conclusion I will give my own opinion on the topic and a short summary of the facts stated before. What are relative gains and absolute gains Absolute and relative gain are two principles that appear when the international relation theories neo-liberalism and neo-realism are discussed.

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According to Feina Cai (2011) the biggest differences between neo-realism and neo-liberalism can be indicated from the biggest differences between absolute and relative gain. According to neo-liberalists, states are per definition egoists and measure their interests by individual gain, my gain is the only one that counts (Grieco, 1988). In international cooperation a neo-liberalist will always look if he is getting the most out of the situation. States will not enter in a certain action or agreement if they are not sure they will become the biggest benefiter.

Opposed to the ideas of absolute gain, you can see relative gain, this key term is, as stated before, commonly associated by neo-realists. Relative gain means that states act with keeping in notion to respect the balance of power between them. Relative gain means that international cooperation cannot increase wealth, the only way to do so, is to take it from another state, through war for example. Both Neo-liberalist and Neo-realists claim they are both on complete different sides, there still are some comparisons that cannot be ignored.

Obviously, both “absolute gain” and “relative gain” theories are derived from the context of international anarchy, in which states have incentive to cheat and fear being cheated. They both agree with the importance and necessity of international cooperation. However, realists are pessimistic and argue that it is much harder to achieve and maintain cooperation than alleged (Grieco et al, 1993). What role does it play in neo-liberalist thinking. When one tries to explain what neo-liberalism is , they will come across that in fact caused by the different version of it, neo-liberalism is quite difficult to define.

According to David Harvey(2007) neo-liberalism originated when in 1947, thinkers like Friedrich Hayek, Milton Friedman started the Mont Pelerin society. This is where the term neo-liberalism was born, their school of thought was perceived as ‘neo’ because the Mont Pelerin society took the liberalist thought of the 1800’s , whilst they combined with neo economic thought such as freedom of the individual the free market and the privatization of collectivist properties. One could state that; besides being a political theory neo-liberalism is in fact a political/economical theory.

Although the school of neo-liberalist thought originated from the 1940’s the theory became actual in the begin 80’s. According to David Harvey(2007) Margaret Thatcher, was the first to implement the neo-liberalist theory to be used in real life. To this day on, the influences of neo-liberalism are very clear, the free market, global trade agreements, individualism. Even seeking it closer to home, one could see that the European Union has implemented a neo-liberalist system, where all the countries are free to trade, there is a high aim for human welfare and economical growth.

As stated before the neo-liberal school of thought puts the focus on individualism and this reflects on the role absolute and relative gain plays. I think that the individualistic soul of neo-liberalism defines their aim for absolute gain. In a neo-liberalist society one is forced to make it on your own, it is competitive and no sympathy for others than thyself. Conclusion In my opinion, neo-liberalism is a theory that existed out of American imperialism. When going back to the cradle of neo-liberalism, it shows a clear majority of U. S thinkers.

The ideology of neo-liberalism is spread by American imperial intervention, for example the Gulf war and the war in Iraq, where the USA intervened Iraq, a middle eastern country under false pretenses, illegal under the geneva convention, to steal their natural resources, and forced them into a liberalist society where they could be implemented in the global banking system, open to the foreign investors and ownership under the guise of ‘freedom’. Due to agreements such as NATO and the United Nations, other countries were obliged to join this hegemony.

However X years later one can question, who was the one who benefited the most? This, besides showing an imperialistic root, also shows the absolute gain in the neo-liberalist society. As I came to the end of my essay, I must say that it can be clearly stated that a neo-liberalist society as it is today can be doubted. It seems not to work anymore. I believe that neo-liberalism was once build on idealism and the aspirations towards individual liberty and freedom however these ideals are being realized through consumerism and one is only to question if that really is freedom?

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