For nearly three decades, the new post-1945 internationalmonetary and trading system wasdominated by the Fordist and Keynesian traditions.
Moderate
intervention in the domestic economies was believed by Keynesians to result inhigher levels of employment and greaterlevels of welfare and wealth than without governmentintervention(Cerny, 1997: 258).
Clearly,these circumstances enabled the Keynesian state topursue relatively self-contained national economic and social policies. However, following thecollapse of the Bretton Woods system in1973, precipitated by
Nixon’s abandonment of the goldstandard in 1971, the state’s ability toisolate the domestic economy from the global economysignificantly diminished due to increased global financial market deregulation (Cerny, 1997:260).
In the 1970s, however, low economicgrowth with high inflation caused many problems,leading to a fiscal crisis and risingunemployment.
As a result, the large proportion of liberal-democratic states adopted a neoliberalorientation in order to adapt to the demands of increasedglobal market integration, triggered byfinancial capital deregulation.
Fundamentalist neoliberals such as Hayek (1960) and Friedman (1962) assert that a free marketand free will result in increased individual libertyand well-being, as well as more competent
, the free market is conceived as the best way topromote economic development.Note: Discuss about neo liberalism , followed by opinionsof hayek and friedman onliberal state and discuss about hirsh view on thestate
