What is Neoliberalism?

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via weheartit

In order to answer the question of how the internet may or may not embody neoliberalism, it’s necessary to look at the concept of ‘neoliberalism’. It’s one of those concepts that people talk about all the time, but they may not have really thought about it and the assumptions behind it and only really have a vague idea of how to use the term.

Additionally, ‘neoliberalism’ and its implications are contested. The way you understand neolibelism might depend on the context in which you might approach it, and certainly someone who relies on social welfare might think of neoliberalism differently than an executive of a very large company. And perhaps people from countries in which neoliberalism is not the dominant political system might have a different understanding of it than someone who is used to the way it works.

Here are some definitions of Neoliberalism which are provided by the internet, you’ll notice that some of these definitions are not just descriptive but loaded with opinions:

1. Theories of Economics: ‘In the developed world, Neo-liberalism has become a growing opposition to Keynesian economics. Neo-liberalism stands for privatization and deregulation , while increasing trade and financial liberalization. They want to shrink the size of government, the encouraging of foreign direct investments and to dismantle the Federal Reserve system, the IMF, the World Bank, NAFTA, CAFTA, the WTO, and the United Nations.’

2. Deardorffs’ Glossary of International Economics: ‘A view of the world that favors social justice while also emphasizing economic growth, efficiency, and the benefits of free markets.’

3. Global Exchange: Says that neoliberlism is based on the folowing:
a) free market economics, which means that the government tends to not intervene in the economy by implementing a high minimum wages, or taxing highly.
b) cutting public expenditure for social services.
c) deregulation, which means that the government doesn’t implement a lot of rules like safety regulations, advertising restrictions, guidelines for labels on products, etc.
d) privatisation. This means that companies tend not to be owned by the government and instead owned by private corporations.
e) ‘eliminating the concept of “the public good”… and replacing it with “individual responsibility.’ For instance, if a poor person with no health insurance becomes ill, they have to find their own way to pay for treatments. People who fail to provide for themselves are deemed to be ‘lazy’.

The liberal school of economics became famous in Europe when Adam Smith, a Scottish economist, published a book in 1776 called The Wealth of Nations. He and others advocated the abolition of government intervention in economic matters. No restrictions on manufacturing, no barriers to commerce, no tariffs, he said; free trade was the best way for a nation’s economy to develop. Such ideas were “liberal” in the sense of no controls. This application of individualism encouraged “free” enterprise,” “free” competition — which came to mean, free for the capitalists to make huge profits as they wished… But the capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate elite to revive economic liberalism. That’s what makes it “neo” or new. Now, with the rapid globalization of the capitalist economy, we are seeing neo-liberalism on a global scale.

4. Global Sociology: ‘the contemporary view that the global reach of the market is the solution to all poverty and development issues.’

5. John McMurria in Deperate Citizens and Good Samaritans (2008) argues that with neoliberalsm, a vulnerable population is created because they lack social welfare and basic social safety nets – ‘at any given time one fifth of the US population is either in poverty or on the brink and most Americans will experience poverty at some point in their lives’. In relation the the rise of neoliberalism in the US, charity donations rose, but not to the extent to which it’s able to replace the social safety nets. McMurria describes the role of reality television in this, where American TV shows take on the political agenda of neoliberalism. They come to rebuild houses of people who were victims of Hurrican Katrina and other disasters completely out of the family’s control. Instead of addressing underlying social issues that may be the cause of the family’s problems, they work within a neoliberal framework to donate to the family what they need, despite that many more families still suffer from a lack of a safety net and private donations.

6. Francis Fukuyama in The End of History and the Last Man, on the other hand, suggests that neoliberal ideals are actually the last stage of the ‘evolution’ of political systems.

The triumph of the West, of the Western idea, is evident first of all in the total exhaustion of viable systematic alternatives to Western liberalism… it can be seen also in the ineluctable spread of consumerist Western culture in such diverse contexts as the peasants’ markets and color television sets now omnipresent throughout China, the cooperative restaurants and clothing stores opened in the past year in Moscow, the Beethoven piped into Japanese department stores, and the rock music enjoyed alike in Prague, Rangoon, and Tehran.

7. Margaret Thatcher talks about a ‘free economy’ whereby other freedoms can then be pursued.

8. Kees van der Pijl in The History of Class Struggle, points out a number of things about neoliberalism. Firstly, it’s very cultrally/historically specific:

Let us first establish that, contrary to capitalist ideology and standard economics textbooks, capitalism is not a universal, eternal, transhistorical system which has always existed at least in embryo or in the depths of human nature. Acts of exchange, and even markets of one kind or another, may have existed throughout recorded history. But the subjection of society to the disciplines of the market, to the imperatives of competition, capital accumulation, and increasing labor-productivity, is historically specific, relatively recent, and has required profound and painful social transformations.

And it’s pervasive:

we do need to recognize the enormous transformations that take place as capital penetrates to the vital centre of society, as market relations pervade every social practice and nature itself, stamping the commodity form on things, qualities, resources and wealth, and on labor power itself, transforming the labor process and subjecting it to the requirements and rhythms of capital accumulation.

9. Lipschutz: Posits that:

Smith argued that the nub of economic growth was the division of labor. He tracked economic development as the move from being subsistence farmers who produced almost everything they consumed themselves to a society in which people became more specialized. The first step away from subsistence was when some people became dedicated blacksmiths, carpenters or bakers. The specialization enabled people to become more skilled at what they did and to make tools that assisted with the task, resulting in people becoming much more productive. As industrialization took hold, manufacturing led to greater and greater levels of specialization, creating higher and higher levels of productivity. The flip side of all this specialization was that we developed longer and longer production chains where more people were involved in creating a single product. In the modern world these production chains flow from primary producers, who sell to wholesale manufacturers, who make inputs for other manufacturers, who make inputs for other manufacturers, before it finally goes to a retailer and on to the consumer.

As a result, in order to function under a neoliberal framework, one must trust all the people they’ve never seen before on the production line to make things they can use that are both high quality and safe.

Neoliberalism is largely seen as an economic term – in relation to free markets, privatisation and little government intervention. But, it turns out as well, as these definitions reflect, the term also describes the kinds of relationships people might have with each other under such a system. What role the government might play in one’s life, what socially contractual obligations we might have for other people, how what we do and how much we earn may or may not be representative of our achievements. It also is quite philosophical, it goes to the heart of what it is to be a person. As Thatcher puts it, it gives people ‘the right to be unequal’. It also operates under a paradox – while it is described as individualisation, at the same time, people must rely on each other in order to buy food and shelter and other things they need to live.

A resource that focuses on these social aspects of neoliberalism, I think the following video, “Neoliberalism as a Water Balloon”, is very effective, though of course, goes beyond merely describing the system and into the realm of opinion:


Video via Poetix.

To surmise, there are actually quite a lot of ideas to draw from from these resources. Neoliberalism is therefore quite a complex system – it is economic, political and also cultural:
Economic: Liberalised trade, no or low minimum wage, very little government intervention such as through income taxation and the redistribution of income.
Political: Low government interference, which means that people, but particularly businesses are allowed to do more or less what they like. People aren’t ‘protected’ by the government, other than the law, rules and regulations are either decided at an industry level or there are none, this includes safety regulations and environmental regulations. Market forces, rather than policy or law are believed to solve many (not all) of these issues (e.g. it is thought that if a consumer is worried about pollution, they will discourage it by not buying things from polluters). There is freedom of speech and the system is democratic.
Social: People are responsible for themselves and there are limited social safety nets so many social programmes rely on donations and charities (e.g. feeding the homeless, funding for libraries and schools, etc.). People who are impoverished in this system are often seen as being ‘lazy’ and ‘irresponsible’ and their problems could be solved through economic participation.
Global: Neoliberlism, alongside forces of globalisation has a growing presence in the world because if one country has low taxation and low labour costs, other countries are pressured to follow or else major corporations which supply many jobs and help the local economy will move off shore where prices are lower.
Culture: is one of individualisation and responsibility for oneself. There aren’t any stipulations that one must care for their family, their local area or their nation-state. Acting in one’s ‘self-interest’ is very important. A large scale economy also means that individuals are far from the production process and must put trust into corporations to produce safe and quality goods and serives like food, vehicles, buildings, clothing, medicine, etc.

My next post will be about how all this information might fit in when we discuss the internet and whether the internet reinforces or challenges this political system.

One Response

  1. […] exist on Second Life (not to say that inequalities are only in the domain of neoliberalism, but as Margaret Thatcher so puts it, neoliberalism directly protects people’s ability to not be equals). Interestingly, fat […]

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