- THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." It's like Reagan's "supply-side" and "trickle-down" economics -- but somehow the wealth didn't trickle down very much.
- CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role. Of course, they don't oppose government subsidies and tax benefits for business.
- DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environmentand safety on the job.
- PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.
- ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy."
- That the ‘individual,’ and competition, be granted supremacy over all else.
- That ‘work,’ ‘production,’ nature, and even time, be measured in monetary terms.
What is Neoliberalsm?
While the usage of the term neoliberalism varies considerably, for the purpose of this post i use the term to refer to that set of economic policies which have become popular in economic development over the last 30 years (since the late 1980s) – namely increased privatisation, economic deregulation and lowering taxation.
Neoliberalism replaced modernisation theory as the official approach to development in the 1980s. It focuses on economic policies and institutions which are seen as holding back development because they limit the free market. The agreement by the World Bank and IMF that neoliberal policies were the best path to development is referred to as the Washington Consensus following a meeting in Washington by world leaders in 1989.
Overall Criticisms of Neoliberalism
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A report from the CEPR compared the period from 1960 to 1980, when most countries had more restrictive, inward looking economies to the period 1980 to 200 the period of neo liberalism and found that progress was greater before the 1980s on both economic and social grounds.
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Those countries that have adopted free market polices have developed more slowly on those countries that protected their economies
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Dependency theorists argue that neo-liberalism is merely a way to open up countries so they are more easily exploitable by Transnational Corporations. We will see this in the next handout!
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Transnational Corporations do not tend to invest in the poorest countries, only in LDCs and NICs
What is Neoliberalism? - The Guide for Educators
It is neither easy nor always fruitful to define neoliberalism. This is
because neoliberalism has been used to describe diverse kinds of
socioeconomic and political projects, practices, and institutions in
advanced capitalist societies: over time it has become a sort of general
descriptor for everything that is wrong with global capitalism. Thus,
rather than attempting a single and cogent definition, it is usually
preferable to associate neoliberalism with a loosely connected set of
ideas that can be articulated in diverse ways depending upon the
theoretical perspective one is partial to. However, if there is one thread
that connects all the ideas usually associated with neoliberalism it is
the sociopolitical positioning of individualized, market-based competition
as the preferred governing principle for shaping human action in all areas
of life both at the individual and collective, societal levels.
Perspectives on Neoliberalism:
The key ideas of neoliberalism arose in the 1940s and 1950s in small corners of academia in Europe as a conservative, intellectual response to progressive, social welfare efforts by the governments in Western Europe and the United States. Perceiving a threat to the capitalist social order from state-led socioeconomic planning and progressive ideas, a few economists, historians, and philosophers, including Friedrich von Hayek, Ludvig von Mises, and Milton Friedman, came together to build a new liberalism for the 20th century.
Founders of neoliberalism believed that the market is not just a platform to exchange goods and services. But, more importantly, it is the only way society can come to have objective knowledge of the world and can determine the true value of entities that could be exchanged in our society. In other words, these theorists believed that market-based economic rationality is key to arriving at the best decisions about all matters – economic or otherwise. Further, it was thought that economic freedoms should have precedence over all other kinds of freedom, as it is the most fundamental freedom and guarantees other kinds of freedoms. Only a society that is organized around the market can be the one that promises both individual liberty and societal prosperity. In such a society, the state exists only to make sure that the markets function and remain central to the organization of social life.
These ideas largely circulated among the conservative think tanks supported by the economic elite, such as the Institute of Economic Affairs in the United Kingdom and the Heritage Foundation of the United States, and the economics departments in a few universities, such as the University of Chicago. The ideas of these intellectuals remained on the margins of academic thought and public policy until the 1970s. However, with help from the moneyed elite and compliant policymakers, these institutions were able to take advantage of the oil and budgetary crises of the 1970s to push their ideas center-stage in the economics departments as well as public policy. As a result, governments reduced their commitments to social welfare and markets came to be seen as the key mechanisms for organizing societal affairs. The last few decades have only seen a deeper entrenchment of the cultural hegemony of neoliberal ideas in most advanced capitalist societies. This change has been very beneficial to the rich strata of society, while income and wealth inequalities have worsened with each passing decade...
What is so Neo about Neoliberalism?
As a new invention in the art of government, liberalism ushered in profound changes in the relation between the government and society in 18th century Europe and North America. These changes began with the emergence of a new compact between the rulers and the masses in which, perhaps for the first time, the rulers agreed to limit their exercise of power over the masses. It was recognized that citizens had certain inalienable human rights that cannot or should not be infringed upon in normal circumstances. For instance, it was recognized that all citizens had equal rights to life, liberty, and to own private property. This development led to an era that saw liberalism as the dominant paradigm for governance in many European and North American societies till the early decades of the 20th century. Societally speaking, liberalism translated as the rule of law, constitutional government with limited powers, guarantees of civil and political rights, freedom of opinion and expression, and religious tolerance. In the economic sphere, liberalism became associated with a strong belief in a laissez-faire unplanned economy based on free and competitive markets and private ownership of property and means of production.
The failures and horrors of the first half of the 20th century, such as the stock market collapse of the 1930s and the second world war, shook the dominance of liberalism as the leading socio-economic philosophy of the era. As a result, two countervailing sets of ideas about governance began to compete for revisions to liberalism to make it better suited for peace and prosperity in modern times. On the one hand, democratic socialist ideas favored by the political elite in the United States and Western Europe in the decades following the second world war called for a greater public safety net to protect the working class from the vagaries of the market, progressive taxation, and state planning of the economy. While, on the other, a small group of nonmainstream economists and philosophers led by Friedrich von Hayek, Ludvig von Mises, and Milton Friedman made the case for a revised, renewed liberalism that we now recognize as "neoliberalism". Since 1908s, it is this new form of liberalism that managed to eclipse democratic socialist ideas of the post-war decades to become the dominant art of government in most advanced, capitalist societies.
Neoliberalism updates classic liberalism of the pre-second world war era in the following ways:
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End of the decoupling between the economic and political spheres:
Agreeing with the overall scholarly consensus that laissez-faire capitalism of the 19th century fell far short of its promises, neoliberal scholars acknowledge that free and competitive markets cannot exist on their own. That is, without governmental intervention free markets are likely to devolve into corrupt, inefficient markets dominated by monopolies. Thus, neoliberalism envisages a strong state that remains constantly vigilant about and regularly intervenes in the economy to ensure that markets remain free and competitive.
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Society for the market:
Further, rather than acting as a screen or buffer between the markets and the society, the government now becomes the key instrument for the reshaping and governance of the society for the sake of the market. This is a radical departure from classic liberalism because the state is now expected to embed the society in the market rather than the other way around.
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One rationality to rule them all:
Classic liberalism recognized that the society may need different forms of rationality, such as instrumental rationality, value rationality, and traditional rationality, in different spheres. Thus, for instance, it was assumed that while it would be reasonable to focus only on outcomes in certain kinds of activities, it might be preferable for our reasons to be guided by traditions or values in other spheres. In neoliberalism, however, we see the emergence of economic instrumental rationality as the preferred rationality for deciding the reasonable course of action in all kinds of spheres both economic and non-economic. Here economic rationality implies deciding how to optimally allocate scarce resources to alternative ends to achieve maximum outcomes with minimum costs. For example, in noneconomic spheres, such as education, the dominance of economic rationality may encourage educators to focus more on those students that give them the greatest increase in average student learning achievement scores than on students that deserve more attention on grounds of equity and justice.
The dominance of economic rationality is also reflected in the recognition of economy and economic reason as the grounds for legitimacy of the government and governmental action. Increasingly, we see that governments in advanced capitalist societies are forced to defend their actions largely on the economic grounds of efficiency and assessed on their performance in maximizing economic growth and economic freedoms.
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Competition is central to capitalism:
In societies guided by liberalism, markets are heralded as sites where people get to exercise their economic freedoms in acts of voluntary exchange. In neoliberalism, the key motif characterizing markets is competition. This is because following Frederick Hayek it is believed that competition is the "best discovery procedure" for arriving at the true value of anything. But, with the marketization of the entire society, we now see competition fast emerging as the key relation between fellow citizens and central societal mechanism for arriving at both collective and individual decisions. We see this amply reflected in the dominance of audits, rankings, coaching, and sports metaphors in popular culture.
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Economic Freedom trumps all:
Neoliberalism privileges economic freedom over other kinds of freedom. For instance, Milton Friedman believed that only economic freedom was key to a free and just society as it was the basis for other kinds of freedom, such as political freedoms of association, dissent, and free exchange of ideas. Thus, in a neoliberal society promotion of economic freedom becomes the central basis for the state's political representativeness and legitimacy. Other kinds of freedom are thus either considered to be secondary and derived from economic freedom or not worthy enough for state action. For instance, while the United States ranks very high in ensuring economic freedoms, it does not abide by the Universal Declaration of Human Rights when it comes to the right of an adequate standard of living that includes food, shelter, and healthcare, as a fundamental right guaranteed to all its citizens.
What is Neoliberalism
Neoliberalism is a political and economic policy model that emphasizes the value of free market capitalism while seeking to transfer control of economic factors from the government to the private sector. Also incorporating the policies of privatization, deregulation, globalization, and free trade, it is commonly—though perhaps incorrectly—associated with laissez-faire or “hands-off” economics. Neoliberalism is considered a 180-degree reversal of the Keynesian phase of capitalism prevalent from 1945 to 1980.
Key Takeaways: Neoliberalism
Neoliberalism is a model of free market capitalism that favors greatly reduced government spending, deregulation, globalization, free trade, and privatization.Since the 1980s, neoliberalism has been associated with the “trickle-down” economic policies of President Ronald Reagan in the United States and Prime Minister Margaret Thatcher in the United Kingdom.Neoliberalism has been criticized for limiting social services, overly empowering corporations, and exacerbating economic inequality.
Fundamental Concepts
Neoliberal economic policies stress two fundamentals of capitalism: deregulation—the removal of government control over industry—and privatization—the transfer of ownership, property, or business from the government to the private sector. Historic examples of deregulated industries in the U.S. include the airline, telecommunication, and trucking industries. Examples of privatization include the correctional system in the form of for-profit private prisons, and interstate highway system construction.
More simply stated, neoliberalism seeks to transfer ownership and control of economic factors from the government to the private sector, and favors globalization and free market capitalism over the heavily regulated markets common in communist and socialist states. Additionally, neoliberals seek to increase the private sector’s influence on the economy by achieving deep reductions in government spending.
In practice, the goals of neoliberalism depend to a great degree on the government. In this manner, neoliberalism is really at odds with the “hands-off” laissez-faire economic policies of classical liberalism. Unlike classical liberalism, neoliberalism is highly constructivist and demands strong government intervention to implement its market-controlling reforms throughout society.
Market Fundamentalism
Critics argue that neoliberalism’s advocacy for the application of free market policies in certain areas, such as education and healthcare, is inappropriate since, as public services, they are not driven by profit potential, as are the traditional commercial and industrial markets. Neoliberalism’s across-the-board free market approach, say its critics, can increase inequality in the provision of essential social services, resulting in long term damage to the overall economy.
Corporate Dominance
Neoliberalism has been criticized for promoting economic and political policies that bless large corporations with nearly monopolistic powers while shifting a disproportionate share of the benefits of production to the upper class. …this effect allows overly empowered corporations, rather than the people themselves to dictate the basic conditions of daily life.
Dangers of Globalization
…neoliberalism’s promotion of globalization for the emergence of a “precariat,” a new world social class of people forced to live precariously without any predictability or security, to the detriment of their material or psychological welfare. …the desperation of the precariat’s “life on the edge” existence could be the cause of as many as 120,000 excess deaths per year in the U.S. alone.
Inequality
Perhaps the most common criticism of neoliberalism is that its policies lead to class-based economic inequality, while allowing—if not exacerbating—global poverty. While persons with low income lose spending power, the rich grow richer and develop a greater propensity to save, thus preventing the wealth from “trickling down” to the lower classes as neoliberals suggest. …neoliberal policies implemented since the late 1980s have resulted in the greatest disparity in wealth distribution in U.S. history, leaving the modern middle class barely distinguishable from the poor.
Lack of Concern for Human Wellbeing
A more recent criticism of neoliberalism is that it leads to a lack of concern for actual wellbeing of humans. Related to criticisms surrounding socio-economic inequality, this criticism argues that, in prioritizing privatization and ever-increasing profits, neoliberalism disincentivizes practices that would improve the human condition but potentially cut into profits.
For instance, neoliberalism might disincentivize more sustainable, environmentally-friendly practices because they cost more, leading to environmental crisis after crisis (which, in turn, is felt more heavily by the poorer and working classes). It also might incentivize actions that increase profits, even when those actions do harm to actual humans, such as raising the cost of life-saving medicine or equipment during a time of heightened need and demand.
The neoliberal model is concerned only with economic success without caring about the wellbeing of the people or the environmental damages related to neoliberalism’s inherent pursuit of endless growth.
What Is Neoliberalism? Definition and Examples
https://www.thoughtco.com/what-is-neoliberalism-definition-and-examples-5072548
