ECONOMICS DISCONNECTED FROM ITS SOCIAL CONSEQUENCES – THE NEOLIBERALISATION OF ESTONIA

Abstract

Neoliberal economic policies focus on supply-side measures emphasising the role of the market in efficient resource allocation. Neoliberal policies advocate the case for a minimalist, non-interventionist government, stating that social welfare can be best advanced by promoting individual entrepreneurial freedoms. The role of the state should be limited to providing and protecting the preconditions for economic growth and the unimpeded functioning of the market. Neoliberalism promotes a market-driven society where every person is a homo economicus. In competitive markets, the rational decisions of utility-maximising consumers and profit-maximising producers will lead to market equilibrium.
Since 1992, the development of the Estonian economy has been guided by neoliberal economic policies. Decision-makers and policy-shapers tend to measure good business environment with the extent to which neoliberal policies have been implemented. However, Estonia’s exceptionally high economic growth rates have not been matched by substantial improvements in the quality of life. Although its economic development has been impressive from a production-oriented point of view, from a people-oriented perspective the achievements have been much more modest. It seems that corporate welfare has replaced social welfare as an economic objective.
The purpose of this paper is to critically analyse neoliberal economic policies and to demonstrate their adverse socio-economic effects in Estonia. This article addresses the issue of growth versus development.