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Difficulty: MediumEconomics in the Global Age

The following is an excerpt from a speech by British Prime Minister Margaret Thatcher to the Conservative Party Conference in October 1980:

"Our first task was to begin to restore the balance between the state and the individual... We have made a start on reducing state ownership. We have privatized several major enterprises and intend to do the same with others. We believe that the state should not run businesses that can be run more efficiently by private enterprise, and that wealth is created by the effort of individuals, not by government planning."

Which of the following global economic trends in the late twentieth century is most directly reflected in the passage?

  1. A
    The revival of mercantilist economic policies to maximize state bullion reserves
  2. B
    The expansion of direct colonial administration to secure raw materials
  3. The global shift toward neoliberalism and free-market capitalismAnswer
  4. D
    The adoption of Marxist-inspired state planning to distribute resources

Answer

The correct answer is the global shift toward neoliberalism and free-market capitalism, as Margaret Thatcher's speech advocates for privatization, reducing state ownership, and relying on private enterprise and individual effort rather than government planning.
The correct option is correct because the policy of reducing state ownership, privatizing enterprises, and emphasizing private enterprise over government planning represents neoliberalism and free-market capitalism. This trend spread globally in the late twentieth century, particularly championed by leaders in the United Kingdom and the United States, as well as through international financial institutions.

Step-by-Step Solution

1
Analyze the stimulus passage to identify the speaker's main arguments and economic philosophy.
Thatcher advocates for reducing state ownership, privatizing state-run businesses, and relying on individual effort and private enterprise over government planning.
This establishes the core economic policy being promoted in the source.
2
Relate these policies to late twentieth-century global economic developments.
These principles align with neoliberalism and free-market capitalism, which became increasingly popular globally in the late twentieth century under leaders like Thatcher and Ronald Reagan.
This connects the specific historical source to the broader global context tested by the learning objective.
3
Evaluate the options and identify the one that matches this trend.
The option highlighting the shift toward neoliberalism and free-market capitalism is correct, while other options describe unrelated or earlier historical economic structures.
This determines the final correct option.

Key Concept

Neoliberalism and the global spread of free-market policies in the late twentieth century.
Estimated Time:1m 30s
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Topics

Economics in the Global Age

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