Neoliberalism Is…

Neoliberalism, in theory, is essentially about making trade between nations easier. It is about freer movement of goods, resources and enterprises in a bid to always find cheaper resources, to maximize profits and efficiency.

To help accomplish this, neoliberalism requires the removal of various controls deemed as barriers to free trade, such as:

• Tariffs
• Regulations
• Certain standards, laws, legislation and regulatory measures
• Restrictions on capital flows and investment

The goal is to be able to to allow the free market to naturally balance itself via the pressures of market demands; a key to successful market-based economies.

As summarized from What is “Neo-Liberalism”? A brief definition for activists by Elizabeth Martinez and Arnoldo Garcia from Corporate Watch, the main points of neoliberalism includes:

• The rule of the market — freedom for capital, goods and services, where the market is self-regulating allowing the “trickle down” notion of wealth distribution. It also includes the deunionizing of labor forces and removals of any impediments to capital mobility, such as regulations. The freedom is from the state, or government.
• Reducing public expenditure for social services, such as health and education, by the government
• Deregulation, to allow market forces to act as a self-regulating mechanism
• Privatization of public enterprise (things from water to even the internet)
• Changing perceptions of public and community good to individualism and individual responsibility.

Overlapping the above is also what Richard Robbins, in his book, Global Problems and the Culture of Capitalism (Allyn and Bacon, 1999), summarizes (p.100) about some of the guiding principles behind this ideology of neoliberalism:

• Sustained economic growth is the way to human progress
• Free markets without government “interference” would be the most efficient and socially optimal allocation of resources
• Economic globalization would be beneficial to everyone
• Privatization removes inefficiencies of public sector
• Governments should mainly function to provide the infrastructure to advance the rule of law with respect to property rights and contracts.

At the international level then we see that this additionally translates to:

• Freedom of trade in goods and services
• Freer circulation of capital
• Freer ability to invest

The underlying assumption then is that the free markets are a good thing. They may well be, but unfortunately, reality seems different from theory. For many economists who believe in it strongly the ideology almost takes on the form of a theology. However, less discussed is the the issue of power and how that can seriously affect, influence and manipulate trade for certain interests. One would then need to ask if free trade is really possible.

From a power perspective, “free” trade in reality is seen by many around the world as a continuation of those old policies of plunder, whether it is intended to be or not. However, we do not usually hear such discussions in the mainstream media, even though thousands have protested around the world for decades.

Today then, neoliberal policies are seeing positives and negatives. Under free enterprise, there have been many innovative products. Growth and development for some have been immense. Unfortunately, for most people in the world there has been an increase in poverty and the innovation and growth has not been designed to meet immediate needs for many of the world’s people. Global inequalities on various indicators are sharp. For example,

• Some 3 billion people — or half of humanity — live on under 2 dollars a day
• 86 percent of the world’s resources are consumed by the world’s wealthiest 20 percent
• (See this site’s page on poverty facts for many more examples.)

 

Joseph Stiglitz, former World Bank Chief Economist (1997 to 2000), Nobel Laureate in Economics and now strong opponent of the ideology pushed by the IMF and of the current forms of globalization, notes that economic globalization in its current form risks exacerbating poverty and increasing violence if not checked, because it is impossible to separate economic issues from social and political issues.

 

And as J.W. Smith has argued:

Issues such as the criticisms of “free” trade, of protests around the world, and many others angles are discussed on this section’s subsequent pages.

The history of neoliberalism and how it has come about is worth looking at first, however, to get some crucial context, and to understand why so many people around the world criticize it.

 

http://www.globalissues.org/article/39/a-primer-on-neoliberalism