NEOLIBERALISM

ROOTS,PRINCIPLES, CRITICISMS, AND

NEO-MARXIAN ALTERNATIVES
NEOLIBERALISM

OVERVIEW
▸ While it has come under severe attack in the wake of
global economic crisis, neoliberalism has arguably been
the most important theory in the field of globalization
studies.

▸ Neoliberalism has implications for globalization in general.

It is particularly applicable to economics and politics.
NEOLIBERALISM

PAST, PRESENT,
AND FUTURE
NEOLIBERALISM | PAST, PRESENT, AND FUTURE

BASIC STAGES OF NEOLIBERALISM

▸ Classical Liberalism

▸ Advocates economic freedom which means private property and an

unhampered market economy.

▸ Embedded Liberalism

▸ As a reaction to Keynesian economics, it was embedded because

the market, entrepreneurs, and corporations came to be trapped in a
web of social and political constraints and a regulative environment.

▸ Neoconservatism

▸ Neo-Marxism
NEOLIBERALISM | PAST, PRESENT, AND FUTURE

SHOCK DOCTRINE
▸ Naomi Klein calls the implementation of neoliberal ideas
as the shock doctrine.

▸ The total overhaul of an economy required a shock and

the economic policies put in place were designed to shock
the economy in order to change it dramatically.

▸ Some of the changes were basic free-market premises:

privatization of industry, deregulation of the economy,
reductions in nation’s spending on social welfare
programs.
NEOLIBERALISM | PAST, PRESENT, AND FUTURE

SHOCK DOCTRINE
▸ The changes shook the economy as well as the larger
society.

▸ The nation’s capitalists were the main beneficiaries of the

shock therapy, which put them in an ownership position
and in control of the newly privatized industries.

▸ The main victims were the nation’s poor whose economic

situation was made worse by the shredding of the social
safety net that served to protect them.
NEOLIBERALISM | PAST, PRESENT, AND FUTURE

SHOCK DOCTRINE

▸ The collapse of the Soviet Union left few alternatives to

neoliberalism. Shortly after the collapse of communism,
Russia, and other countries once in its orbit came in for
shock therapy and implementation of the free-market
economy.

▸ Other events that led to neoliberalism:

▸ 2004 Asian Tsunami

▸ 1997 Financial Meltdown

NEOLIBERALISM | PAST, PRESENT, AND FUTURE

ROLE OF IMF AND WORLD BANK

▸ Much of the world was coerced into accepting

neoliberalism through financial institutions such as the IMF
and the World Bank.

▸ In order for suffering countries to receive aid, they have

have to go through a structural adjustment.

▸ e.g. liberalizing financial markets, deregulating the

economy, major cuts to social spending and health care
NEOLIBERALISM | PAST, PRESENT, AND FUTURE

AFTERMATH OF SHOCK THERAPY

▸ The results of the reforms associated with shock therapy is

the “dismal reality of inequality, corruption, and
environmental degradation”

▸ For example, the impact of structural adjustment to

Africa has led to inequality, marginalization, and the
lowest economic growth rates ever recorded.

▸ Another example is that corruption has become

widespread and state-based functions have been
privatized.
NEOLIBERALISM | PAST, PRESENT, AND FUTURE

BASIC STAGES OF NEOLIBERALISM

▸ Classical Liberalism

▸ Embedded Liberalism

▸ Neoconservatism

▸ Based on a commitment to order and morality and the need

to impose them on the rest of the world

▸ Neo-Marxian

▸ Based on building alliances to resist neoliberal globalization

NEOLIBERALISM

BASIC
PRINCIPLES
NEOLIBERALISM | BASIC PRINCIPLES

WHAT IS NEOLIBERALISM?
▸ Generally, neoliberalism can come in
various forms but follows some or all of
the following ideas:

▸ Great faith is placed in the free market.

▸ The market needs to be allowed to

operate free of any impediments,
especially those imposed by the
nation-state and political entities.

▸ This is because of market

fundamentalism.
NEOLIBERALISM | BASIC PRINCIPLES

WHAT IS NEOLIBERALISM?
▸ Generally, neoliberalism can come in
various forms but follows some or all
of the following ideas:

▸ Belief in free trade.

▸ There should be a commitment to

deregulation to limit or eliminate
restraints.

▸ E.g. Banana war as raged

between the US and EU
wherein EU discriminated in
favor of bananas grown in the
Caribbean.
NEOLIBERALISM | BASIC PRINCIPLES
NEOLIBERALISM | BASIC PRINCIPLES

WHAT IS NEOLIBERALISM?
▸ Belief in global capitalist system to continue to expand.

▸ It would be presumed that such expansion would bring with it

increased prosperity and decreased poverty.

▸ “The fundamental mission of the neoliberal state is to create

a “good business climate” and therefore to optimized
conditions for capital accumulation no matter what the
consequences for employment or social well-being”

▸ Thus, in a neoliberalism, the state is subordinated to the

economy.
NEOLIBERALISM | BASIC PRINCIPLES

WHAT IS NEOLIBERALISM?
▸ Commitment to low taxes and to tax cuts (especially for
the wealthy) where taxes are deemed too high and too
burdensome.

▸ Low taxes and tax cuts stimulate the economy by

encouraging people to earn more and ultimately to
invest and spend more.

▸ Savings from low taxes and tax cuts will be invested in

operations and infrastructure, thereby generating more
business, income, and profits.
NEOLIBERALISM | BASIC PRINCIPLES

WHAT IS NEOLIBERALISM?
▸ Spending on welfare should be minimized and the
safety net for the poor should be minimized.

▸ Spending for social welfare programs hurts the

economic growth and even as harming the poor.

▸ Without the safety net, more people would be forced to

find work, often at minimum wage or with low pay.
NEOLIBERALISM | BASIC PRINCIPLES

WHAT IS NEOLIBERALISM?
▸ There is a strong and generalized belief in limited
government.

▸ No government or government agency can do things as

well as the market

▸
NEOLIBERALISM
SOME SUPPORTERS
AND SOME CRITIQUES
NEOLIBERALISM | POPULAR NEOLIBERAL THEORY

THE LEXUS AND THE OLIVE TREE

▸ Friedman captured the essence of globalization
by having a distinction between the Lexus
(modern car) and the Olive Tree (ancient
forces).

▸ The former represents the drive for sustenance,

improvement, prosperity, and modernization
while the latter represents everything that roots
us, anchors us, and locates us in the world.

▸ Friedman has a highly positive view of

globalization seeing it as involving the
democratization of technology, finance, and
information. Above all else, globalization marks
the triumph of one of the hallmarks of
neoliberalism – free-market capitalism
NEOLIBERALISM | POPULAR NEOLIBERAL THEORY

THE WORLD IS FLAT

▸ Friedman further argued that the
world has grown increasingly flat
meaning that the barriers and
hurdles to competing successfully in
it have declined if not completely
disappeared.

▸ Global playing field is completely

leveled. Hence, everyone has the
ability to successfully compete on
a global basis.
NEOLIBERALISM | CRITIQUING NEOLIBERALISM

THE EARLY THINKING OF KARL POLANYI

▸ Polanyi criticized the current economy as
having a very limited focus. Specifically,
the current system of economic
liberalism on the self-regulating market
as well as on basing all on self-interest.

▸ The laisses-faire system was put up by

state and will continue to function as a
result of state functions.

▸ There is a double movement that is

happening now.
NEOLIBERALISM | CRITIQUING NEOLIBERALISM

CONTEMPORARY CRITICISMS OF NEOLIBERALISM

▸ Neoliberalism assumes that
everyone in the world wants very
narrow and specific types of
economic well-being (well-off
economically, if not rich) and
political democracy. But, the fact
is that there are cultural
differences.
NEOLIBERALISM | CRITIQUING NEOLIBERALISM

CONTEMPORARY CRITICISMS OF NEOLIBERALISM

▸ Neoliberalism conceals or obscures the
social and material interests of those
who push such an economic system
with its associated technological, legal,
and institutional systems.

▸ These are not being pursued

because everyone in the world wants
them or will benefit from them, but
because some, especially in the
North, are greatly advantaged by
them and therefore push them.
NEOLIBERALISM | CRITIQUING NEOLIBERALISM

CONTEMPORARY CRITICISMS OF NEOLIBERALISM

▸ Neoliberalism produced, and
continues to produce, financial
crises in various countries
throughout the world.

▸ Neoliberalism contributed to the

degradation of the environment.

▸ In neoliberalism, there is “capital

accumulation by dispossession”
NEOLIBERALISM | CRITIQUING NEOLIBERALISM

EXCEPTION AND EXCEPTIONS

▸ Ong emphasizes that neoliberalism as an exception can be
distinguished from exceptions to neoliberalism:

▸ An instance of the former would be special economic zones,

wherein markets have the maximum freedom. While formal
control of these areas is in the hands of the nationstate, de facto
power rests with the MNCs that operate within these zones.

▸ Exceptions to neoliberalism are double-edged. While the

state can use exceptions to protect citizens from volatility
under neoliberalism, they might also be used to worsen the
effects of neoliberalism.
ASSIGNMENT

ASSIGNMENT FOR NEXT MEETING

▸ Describe the economic development during and after World
War II

▸ What is the Bretton Woods System? Discuss the relevance

What of Bretton Woods’ institutions in the current global
context?

▸ What is a regional coalition? Provide an example of a

regional coalition whose goal is economic in nature.

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