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ASSIGNMENT COVER SHEET

Student ID Name Course code Submitted to Assignment title Word count

Seti Gautama Adi Nugroho POGO8072 Sharon Bessell Critical Review - Final 1 099

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I have: followed the referencing rules set out in the Crawford Style Guide ............................... Y followed the formatting rules set out in the Crawford Style Guide ................................. Y submitted the final version of this assignment to Turnitin .............................................. Y

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Seti Gautama Adi Nugroho ____ Signature

23 April 2013 __________________ Date

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Sheppard, E & Leitner, H 2010, Quo vadis neoliberalism? the making of global capitalist governance after the Washington Consensus, Geoforum, vol. 41, no. 2, pp. 185-94.

Critical Review
The 1998 and 2008 global financial crises brought questions concerning the relation between neoliberalism government and market. Neoliberalism believes that pure market competition will give great benefits for economy because market would automatically and efficiently adjust the allocation of resource and achieve markets equilibrium (Aikins 2009, p. 403). However, free market could fail because it is difficult to acquire enough information to cope with uncertainties (Barr 2001, p. 15). Moreover, free markets system could results income and wealth inequalities (Aikins 2009, p. 404). Therefore, state should be involved to reduce uncertainty and risks (Bell & Hindmoor 2009, p. 22), and also should provide social security (p. 72). To analyze this phenomena, Sheppard and Leitner (2010, p. 186) argue that there is a shift in global governance, which Hayekian neoliberalism is being set aside to give way for global Keynesianism. Moreover, they propose alternative interventions as capitalisms supplement to close the gap in capitalisms incompleteness. They show that state should find alternative for the supplement depending on or taking into account context of a country. Sheppard and Leitner (2010) does not show clearly what is the best alternative in the capitalisms supplement and alternative to cope government failure, but this paper argues that their argument is convincing because free market cannot forecast future crisis and provide proper social security during crisis. In addition, they provide good arguments concerning the need for reform in international financial organizations should reform them self to adapt in contemporary governance as well as the fact that state should foster its role in economy. This paper will summarize salient element of the Sheppard and Leitner (2010) paper, and followed by discussion of its weakness and strength, and closed by a conclusion. In brief, Sheppard and Leitner (2010) demonstrate global neoliberalism governance transformation, which start from the Washington Consensus, post-Washington Consensus, and beyond post-Washington Consensus. They also refer to the neoliberal governance debates between Stigliz, Sachs, Rodrik, Easterly, and the World Bank.
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Sheppard and Leitner indicate that competitive market remains necessary to deliver and encourage development in capitalism governance. Sheppard and Leitner found that capitalisms supplement could play a vital role to reshape capitalism in the future. Moreover in the all of debates, everyone agree that should be determined based on the national context. For this reason, Sheppard and Leitner suggest that the search for capitalisms supplement can take a long time and capitalisms supplement could use various alternatives. Sheppard and Leitner fail to address two issues. First, they do not provide a final answer for the best capitalisms supplement. They outline that capitalism is an incomplete ideology, as indicated by periodical financial crisis. In addition, they recognize that government can play its role as capitalisms supplement, which can close the gap between capitalism and reinvigorating the socio-spatial imaginary. However, the debate in the paper does not answer the suitable supplement for capitalism. Furthermore in their conclusion, they suggest that it will takes more time to find out the suitable capitalism supplement while they also believe that state will find their own alternatives, which are just and sustainable (p. 193). Therefore, the paper argues that capitalism supplement should be based on a national context, but does not provide a more specific argument, such as which types of capitalism supplement is suitable for certain types of national context. Second, they tend to undermine the possibility of state failure. Sheppard and Leitner (2010, p. 186) examine that market-based economy can fail. Sheppard and Leitner (2010, p. 190) mentioned governance failure and corruption in government, but they do not give detail alternative in capitalism supplement. State could be ineffective; corrupt; inefficient; and driven by its bureaucrats to serve bureaucrats benefits (Barr 2001, p. 19). Contrary, they believe that politicization of the supplement alternative is essential to give way for transformative rather than affirmative remedies (Sheppard & Leitner 2010, p. 193). Therefore, political decision in the supplement does not necessarily mean the best economic rationale. The paper has three strong arguments. First, they bring six different perspectives in the debates that provide more comprehensive information on the issue. Sheppard and Leitner (2010, p. 192) show that all of the involved scholars in the debate agree that it is difficult to calculate radical uncertainty. They also agree economic system as only way for capitalism; and necessity to intervene the market. In the debate, scholars
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describe that the intervention should address local societies, individuals, nations, and donor-recipient issues. The paper therefore provide more comprehensive information related to intervention in the market. Second, they found the weakness of Washington Consensus approach to solve economic problem in various type of countries. They also suggest that international finance organization should reform them self (Sheppard & Leitner 2010, p. 187). The experience of the Asian crisis in 1997 undermines the reputation of international financial organizations since these organizations promote a one-size-fits-all neoliberal remedies to developing countries as a solution for their economic problem (p. 186). However, donor-recipient relation has been reform to better understanding between donor and recipient relation since Paris Declaration on Aid Effectiveness. Although donor still determines development indicators as stated in the Declarations, they have acknowledged, country ownership is key particularly in determining its priority, and deliverance of aid. (Organisation for Economic Co-operation and Development 2005,

2008, p. 15). For this reason, the new norm in transformative developmental aid exemplifies that capitalism supplement should be tailored to the specifics national context (Sheppard & Leitner 2010, p. 190) . Third, they show that fostering states role in social security could be considered as capitalisms supplement and would provide benefit to the society (Sheppard & Leitner 2010, pp. 186-7). State remains important in poverty reduction and redistributing income and wealth because state provides social security (Feduzi & Runde 2011, p. 614). Thereby, states protection encourage people to involve in market and give confidence to cope risky activities such as moving jobs, increasing their human capital, and opening new businesses. In contrary, market cannot provide such security because, for example, insurance company can protect from risk but not from unknown probabilities (p. 614). Hence, state involvement as capitalisms supplement can empower its citizen to engage free market and in turn vitalize economic capitalism itself. In conclusion, although Sheppard and Leitner does not specifically prescribe the best capitalism supplement and tend to undermine states failure risk, they give convincing explanations that it is important for capitalism supplement to complete capitalism and increase its benefit for all. They also suggest that states intervention as market regulator fosters the capitalism system. They also recognize that there is no single model of capitalism supplement, which could be applicable to every country.
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U5293752 References

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Aikins, SK 2009, Political Economy of Government Intervention in the Free Market System, Administrative Theory & Praxis, vol. 31, no. 3, pp. 403-8. Barr, N 2001, The welfare state as piggy bank: information, risk, uncertainty, and the role of the state, Oxford University Press, Oxford. Bell, S & Hindmoor, A 2009, Rethinking governance: the centrality of the state in modern society, Cambridge University Press, New York, USA. Feduzi, A & Runde, J 2011, The uncertain foundation of the welfare state, Journal of Economic Behaviour and Organization, vol. 80, no. 3, pp. 613-27. Organisation for Economic Co-operation and Development 2005, 2008, The Paris Declaration on aid effectiveness and the Accra Agenda for action, Organisation for Economic Co-operation and Development viewed April 18th 2013, <http://www.oecd.org/dac/effectiveness/34428351.pdf>. Sheppard, E & Leitner, H 2010, Quo vadis neoliberalism? The making of global capitalist governance after the Washington Consensus, Geoforum, vol. 41, no. 2, pp. 185-94.