The predominant economic/social theory of the day. It supposes first and foremost that unregulated, unfettered 'free' markets provide society with what it needs and is the ideal social construction, and as a corollary that any public spending or effort is antithetical to this, a drain on resources. It thus strives for privatization of everything or almost everything. The term neo-liberal is a bit confusing because the word 'liberalism' can be associated with just the opposite, but in this context it means unregulated business. The name was given to the economic theory to contrast it with the Keynesian economic theory that was dominant at the time it was developed.

Neo-liberal thinking has come to pervade our lives, so much so that its tenets have become instinctual for many people. Neo-liberalism has come to be the national, if not international religion - a 'religion of the market' - that has all of the characteristics and devotion of any religion that has come before.

Neo-liberalism is a very hard term and set of beliefs to elucidate because there are so many misconceptions tied up with it. The basics are: 1) it was developed by heartless ivory tower number crunchers (Milton Friedman et al.) who were followers of Ayn Rand and B.F. Skinner (whose work "Beyond Freedom and Dignity" should be a clue as to what motivated these people), 2) it was disseminated, promulgated and popularized with the help of misreadings and incomplete readings of Adam Smith, 3) It had its first stirrings of triumph under Nixon and took over with the Reagan revolution and the Bush/Clinton years, replacing the Keynesian economic theory and its emphasis on an active public sector and oversight as the dominant model of Capitalism, and 4) it somehow managed to make itself synonymous with Capitalism, even freedom itself, and later, after the fall of state Communism, proclaimed its own triumph.

I should mention that 'neo-liberalism' is the neutral term for it. Advocates evoke terminology such as 'free markets,' while those acquainted with its true nature prefer "Market Fascism." In any case, neo-liberalism is the philosophical basis for, the specific policies that brought and continue to bring about, and a convenient short hand for the near absolute rule by corporations and certain economic interests in general that we have especially come to know in the past 30 years.

Neo-liberal policies and thinking do wonders for abstract markers such as GDP. However, those who live in the real world know it has the opposite effect on quality of life that it does on GDP. When markets are presumed to be the paramount facet of society and thus business is allowed to just algorithmically march on guided by the 'invisible hand' of market forces, when government and popular oversight is negated and derided, when the power of corporate agglomerations aggregate, the following are inevitable effects:

1) The environment is despoiled at an unprecedented and unacceptable rate. Wild places are ruined and natural resources are consumed without regard to any needs or wants other than profit, such as the human need to have preserved parts of nature or the global need for sustainable resources and biodiversity.

2) People work longer with less job security and fewer benefits.

3) The downward pressure on wages and health and environmental standards is absolutely IMMENSE and inescapable as nations, regions, and even localities must compete with one another for the 'investment' that they are not allowed to make or retain themselves.

4) There is no support to elevate most disadvantaged segments. Social programs of all sorts and safety nets must be eliminated in accordance with the downward pressure on standards necessary to secure investment.

5) Small, community based firms, the businesses that give many people a real connection to their labor, are unable to compete with the Wal-Marts of the world and are superfluous and disappear.

6) The third world becomes a sweat shop labor pool. In answer to the argument that jobs are being provided to otherwise jobless countries, the fact is that policies of the WTO, IMF and World Bank, dictated by transnationals and governments beholden to them, and agreed to by the often corrupt, elitist and unrepresentative governments of these nations specifically dictate programs and policies that make subsistence agriculture and other traditional means of support impossible thereby depopulating the countryside and creating a pool of desperate labor in urban centers.

7) Farms and fields become parking lots and shopping malls. This is true metaphorically as well as literally.

8) The vast spectrum of human culture and creativity is subsumed in the name of corporate culture. Activities without any economic value are superfluous and recede. Everything is a commodity.

9) Our public resources, for example the airwaves themselves, are used for private gain and private ends, in effect being turned on us.

10) Public space itself disappears. There is no place for community life as everything is privatized. The food court at the mall is not conducive to meaningful debate, spontaneous meetings, or public forums the way a town square is.

11) Freedom becomes equated with the freedom to consume. People actually have less autonomy in their lives and less individual and community time and initiative as they become further commoditized and engage in a hyperactive marketplace struggle to stay competitive and afloat. At the same time, cultural options and outlets narrow as economically superfluous activities recede, thereby reducing individuality and expression.

12) Power of every form - political, cultural, economic - is consolidated by transnational corporations and their puppet institutions, which are undemocratic, unrepresentative, unaccountable, and by nature not necessarily responsive to human needs

And

13) Public goods - the things that really make life worth while - like a good well rounded education, nice parks to play and exercise in, public works that provide us with increased levels of social safety and health, the ability to walk outside and talk to a neighbor, are wholly sacrificed in the name of private goods - SUVs, McMansions, home theater systems, etc…

Instead of describing the "inevitable effects of neoliberalism" that exist in Purvis' mind, I will first try and define Neoliberalism. Many might disagree or think that the axioms below apply more to Libertarianism, laissez-fare or some other term. Most people disagree over the meaning of Neoliberalism anyway, so I will try and present the general philosophy, and the way most neoliberals think of their ideology.

-Neoliberalism is the belief that every individual has an inalienable right to life, freedom and property of the things it has rightfully acquired. Those rights determine each person's private space. They do not include any positive obligation, which means that the right to life means that "you are not allowed to murder someone" but not that "you are obliged to find something for him to eat".
-Furthermore, these rights are neither collective nor cumulative, and therefore entities like nation, the people, class have no more rights beyond those held by each individual they enclose.
-Aggresive violence is condemned, while defensive force is accepted in order to defend the individual's rights.
-For neo-liberals, no interference in an adult's private space is allowed, even if this interference is supposedly for his own "good".
-The only economical system that protects the above rights and at the same time maximizes human progress is the free market economy.
-All forms of central planning are rejected because it means that a uniform set of goals is imposed on the society.
-The state has two purposes:


-Individuals are equal with respect to laws, and no discrimination because of race, sex, income, religion or any other distinctiveness is allowed.
-The very basic premise of a neo-liberal is that of self-existence: the individual is the goal and not the means to pursue other goals.
-Decisions by the majority do not necessarily create right. Constitutions have to be established so that they restrict the power of the majority and protect human rights.

Historically, neoliberalism has been used to describe the economical policies by Margaret Thatcher and Ronald Reagan in the 80's. A number of think-tanks like The Cato Institute are considered neo-liberal. Neoliberalism is often related to globalization because it extends the freedom of people to trade across national borders, and because it is the favorite target of many activists and intellectuals who accuse capitalism and globalisation for everything evil in this world.

Neoliberalism is an economic doctrine, most prominently propagated by New Right luminaries such as Milton Friedman. It is essentially based on selective adoption of the policies of Adam Smith's classical liberalism, divorced from the underlying assumptions upon which those policies were based. Much like the original "free trade" doctrines of Smith's day, proponents of modern neoliberalism tacitly recognise that the policies of neoliberalism are to be applied only to others.

Neoliberal structural adjustment calls for the liquidation and privatisation of all revenue-producing state enterprises, public utilities, and social services (health care, education, etc.), the elimination of tariffs and other measures traditionally used to protect developing industry, and the deregulation of capital markets. Laws and regulations guaranteeing a minimum wage, safe working conditions, and the right of workers to organise must be struck down as "trade barriers," as must social welfare programmes and environmental protection laws. Agriculture must be reoriented from production for domestic needs to cash-crop export-oriented agriculture.

Not surprisingly, the major proponents of neoliberalism are rather selective in deciding who is subject to its rules. Indeed, since the Great Depression, both the business community and government in today's industrialised nations realised that economic well-being was too important to be left to the devices of an irrational and chaotic entity such as "the market," at least not their economic well-being. Thus, neoliberal dogma has generally been propagated in other countries.

The countries in which a "neoliberal economic miracle" has been proclaimed belong exclusively to what is sometimes called the Third World, or, by those with a taste for irony, "developing countries." While the number of billionaires and foreign investors generally increases exponentially in countries in which neoliberal structural adjustment policies (SAP) have been adopted, the domestic economy is generally decimated, and poverty skyrockets. This may explain why the populations of Third World countries can rarely be won over to neoliberalism by democratic means.

Indeed, for over fifty years, US-sponsored military coups have followed a pattern so familiar as to be traditional. A reformist government is elected, often despite substantial financial support and propaganda efforts on behalf of Washington's candidate. The reform government begins to introduce programmes and reforms that are taken as a matter of course in the industrialised world — minimum wage, protection for trade unions, child nutrition programmes, free public education, regulation, and, occasionally, nationalisation of industries given away to foreign investors by their corrupt predecessor governments. While these measures are overwhelmingly popular amongst the domestic population, they are less popular with foreign capital and the governments that represent it. The development loans extended to the predecessor government (conditioned upon the adoption of neoliberal SAPs) are cancelled, and military aid is increased. Soon enough, the military will overthrow the lawful government and begin dismantling all manner of social programmes, ushering in another new era of solicitude to foreign investors. The stocks of the corporations that sponsored the coup increase in value, and everyone (who matters) is happy.

While the main critique of neoliberalism rightly focusses on the self-serving hypocrisy of its proponents and the selective application of its dogma, it is important to note that neoliberal doctrine is also inherently flawed. This may seem obvious to those who survey the wreckage of neoliberal "success stories" such as Chile, Nicaragua, Brazil, Colombia, and India, there are, of course, those for whom mere empirical evidence is not sufficient. For those who hold fast to Adam Smith's (slightly modified1) vision, it is worth noting that one of the most important underlying premises upon which his work was based has long since been eliminated. Smith wrote, of course, at a time in which capital was largely tied up in land, and was thus highly immobile. Labour, on the other hand, was much more mobile than today. The major restrictions on free movement of labour — immigration laws and similar measures — would not begin to surface for over a century. Thus, if workers in Smith's day felt that they were being cheated by their employers, they could move to the next county, to the neighbouring country, or simply move right across the Atlantic.

These days, of course, free mobility of labour has gone rather out of style. While highly qualified professionals will often have no difficulty moving between countries, unskilled and semiskilled workers will be met with detention and deportation, assuming that they make it across the border alive (in states with highly militarised borders such as the US, this is not always likely). However, under the existing "free trade" agreements, capital — corporations and investors — may move freely across the globe. A US corporation may demand to be treated like a domestic corporation in Guatemala, but a Guatemalan worker will know better than to demand the same courtesy in the US.

This shift from a mobile workforce and immobile capital to globally mobile capital and an immobile workforce has fundamentally altered the balance of bargaining power upon which Smith's assumptions and those of the classical Liberals rested. With labour able to "vote with its feet," state intervention was not a sine qua non of improving working conditions and wages, and ensuring that the majority of the population was not destitute. Now, however, corporate capital is more powerful than ever. Since the adoption of NAFTA and similar free trade agreements, corporations in the US and other industrialised countries have taken a much more aggressive stance in dealing with workers. Practices that were unthinkable twenty years ago (and remain nominally unlawful today), such as threatening to transfer a plant to Mexico in the event of union organisation, are now commonplace. Due to the ability of corporations, with their newfound mobility, to play workforces off against each other, workers have found it much more difficult to ensure that they are paid adequately.






1For example, Smith's description of the developing corporate capitalism as being driven by "the vile maxim of the masters of mankind" has been neatly excised from this version of history.

Though it is difficult to pin down a precise definition of "neoliberalism", it might reasonably be seen, broadly sketched, as an attempt, originating in the late 1960s and becoming prominent in the late 1970s and 1980s, to reconcile two modern strains of "liberal" governance, on one hand the classical liberalism originating in the 19th century and finding its closest modern equivalent in libertarianism, in which the government's role was seen as that of neutral referee, prohibiting fraud, theft, and violence but otherwise leaving its citizens to organize themselves in a context of free trade and free contract, and on the other hand the regulatory welfare state liberalism common throughout the western world in the 20th century, which emphasized a government role in providing social services and in defending citizens against perceived excesses of corporate behavior, a paradigm which might be considered to be found in its purest form in the relatively benign socialism of the Scandinavian nations.

Neoliberals proposed to trim back the social benefits apparatus, backing down from visions of "cradle-to-grave" state-funded services, but retaining some scaled-back programs as a "safety net" to guard citizens against complete destitution and supporting them in the case of periodic misfortune until they are once again able to support themselves. Nationalized industries were to be dissolved, privatized, and/or sold at auction, and the government was to avoid duplicating the functions of private industry, which due to the nature of competition and the profit motive was thought to operate at a level of efficiency unattainable by the state. Instead, governments were to contracting wherever possible and directly provide goods or services only in the case of true market failure. Regulation of industries to achieve health, environmental, or social benefits was acceptable, but should be done in such a way as to interfere as little as possible with the market and its attendant efficiencies, and regulation should be made subject to cost-benefit analysis to assure that the results were worth the costs. Neoliberal proponents promoted this "third way" as a means to both avoid the inefficiency and corruption characteristic of centrally planned economies and temper the dramatic swings and inequality of fortune common under laissez-faire capitalism. If viewed as a bipolar system, the rise of neoliberalism in the late 20th century did represent a step away from welfare state liberalism and towards classical liberalism, but falls short of the complete abandonment of the former for the later by which critics sometimes mischaracterize it - the scope of government was curtailed, but it was accepted as a fundamental assumption that it did in fact have some active role in the economy and lives of its citizens.

Neoliberalism is sometimes considered to be the dominant political philosophy of the modern First World as a whole, but it is often considered to be strongest, especially in domestic policy, in the United States and United Kingdom. In each country the doctrine is generally considered to have been first fully realized in the 1990s under a head of state drawn from a young, reformist faction of the traditionally "liberal" party (Bill Clinton and Tony Blair, respectively), building on the groundwork laid in the 1980s by a predecessor from the traditionally "conservative" party (Ronald Reagan and Margaret Thatcher, as the case may be). Though the parallels are not as close, nor the changes as dramatic, a trend of "new" leftist parties abandoning their socialist roots and ascending to power on a neoliberal platform could also be seen in Canada, Germany, and other parts of Europe through the 1990s.

So why did neoliberalism gain momentum in the fourth quarter of the twentieth century, no earlier, no later? Well, there are a variety of reasons, and I can guarantee you I won't be able to give them all a proper account. Obviously of major significance was the Cold War, which aligned Western nations with a capitalist ethos, often presented as tightly bound to freedom and liberty. The degeneration and ultimate collapse of the economies of the communist-aligned Eastern Bloc, which following the "glasnost and perestroika" lifting of the "Iron Curtain" and the flow of undoctored economic accounts out of the Soviet Union, were revealed to have been in a fairly sad state all along, was taken as indicative of the ultimate impossibility of successful governmental management of economic activity. Contrariwise, the ability of the Western nations to win a major arms race while simultaneously maintaining a high standard of living was taken as an affirmation of the strength and flexibility of a fundamentally capitalist economy.

Heavy government involvement in the economy was getting a bad rap at home, as well - inefficient, uncompetitive nationalized industries were proving to be a drain on the national economy in the UK, and the "nationalization by other means" of heavy regulation in sectors like the American air travel industry was likewise producing less than ideal results. Programs designed to alleviate poverty had not, a generation after their implementation, proved themselves by producing an appreciable decrease in the severity or scope of poverty, and many feared that they had instead created perverse incentives that supported the existence of a nonproductive "underclass", although this issue was muddied by the influence and politics of race, regionalism, and class identity. Health services had by this point come under considerable strain, and had begun to exhibit the characteristic planned economy traits of shortages, rationing, and waiting lists. Ominously, demographic shifts, principally an aging population and declining birthrates, seemed to prophesy the ultimate collapse of many social welfare programs in the early or middle 21st century, as the number of working producers "paying into" the system through taxes appeared to be insufficient to sustain benefit payouts, a somewhat amusing inversion of the classical Marxist critique of capitalism as unsustainably predicated on a continuously expanding population of consumers. These failures of government programs were contrasted in many citizens' minds with private-sector successes represented by the impressive output and innovation of the Western technology and consumer goods sectors, producing a variety of new products - some of which, as critics point out, did have their origins in government-funded research, but were ultimately put to consumer use, manufactured, and distributed by corporations. Stepping back a bit, it is also worthwhile to take into account the inflationary economic shocks of the 1970s, which caused the abandonment of Keynesian economic policy and fixed currency exchange rates in favor of monetarism and floating rates, an important development, though one somewhat removed from the average citizen's experience.

As for where domestic neoliberalism is to develop from here, it is unclear. Though semantically unintuitive, neoconservativism does not appear to constitute a direct challenge or response to neoliberalism - in its more visible incarnations it generally accepts the neoliberal peace on restrained but extant regulatory and welfare systems, focusing itself on foreign diplomatic and military policy, although it would be an understatement to say that war can have a distorting effect on the economy. In any case it remains a minority, if influential, position even in its native America, and one whose star, as of writing, may have already hit its apex and begun its fall. It still remains to be seen if even the minimal welfare state of neoliberal societies will prove ultimately sustainable - America's "Social Security" retirement benefits program and the UK's National Health Service have both proved politically resistant to major change or privatization and are both still forecast for ultimate collapse in the next several decades, and should this come to pass it remains to be seen whether this will lead to a reassertion of the welfare state or, as some are hoping, its complete abandonment altogether.

Setting aside neoliberalism as domestic political policy, it is worth noting that as a term it is also applied to an approach to international economics and "third world" economic development which shares many of the philosophical underpinnings of its domestic counterpart. This form of neoliberalism is sometimes considered synonymous with "globalization", although properly understood I would describe it as more of a reaction to and means of carrying out the process of economic globalization. This form of neoliberalism is treated at more length in writeups above, though I hesitate to proclaim myself in complete agreement with their characterizations of or conclusions about the practice. In summary, neoliberalism in international economics refers to a line of thought which encourages governments of relatively undeveloped nations to restrain government spending, privatize state-owned industries, remove tariffs, quotas, and impediments to capital flow and foreign corporate ownership, promote the cultivation of export-ready cash crops and import food crops (a classical application of comparative advantage), and attempt to create a positive environment for foreign investment, matching up overseas capital with the native resource of a broad, underemployed labor base.

This investment, it is thought, would prove more effective than earlier direct aid efforts which all too often funded mismanagement, political pandering, and endemic corruption, and would instead help build infrastructure and an industrial base, provide employment and training for citizen workers, and encourage the growth of a native middle class which would exercise a power independent from and untainted by the "elites" who previously maintained control over the government and economy, often running them for their benefit alone. This middle class, in turn, would be expected to support stability, government transparency and political reform, fiscal accountability, and not incidentally, a sustained capitalist system. In addition to the predicted inherent benefits of such an approach, developing countries would in return for implementing this plan be given loans and aid to fund development and infrastructure projects, and be exempted from major consumer nations' import tariffs and quotas, making their exports attractive to a readily available market. It is important to note that these goals are often carried out in the context of multilateral negotiation and supranational organizations like the International Monetary Fund, World Trade Organization, and World Bank and such regional trade agreements such as NAFTA and the European Union.

Critics of this form of neoliberalism are many and varied, and while it does them injustice to be lumped together, most of their arguments assert that these policies are in fact meant to benefit large, "advanced" western economies at the real expense of developing nations, and prevent developing nations from enacting the civil welfare programs, domestic spending, and labor, environmental, and economic regulations common (though less so, as above) among the major world powers. Wealthy nations are also often critiqued for maintaining, despite rhetoric to the contrary, their own high tariffs on agricultural products and basic manufactures like textiles, though these are probably less part of a sinister plot than a response to domestic political pressure originating in uncertainty resultant of the recent shifts from agricultural to industrial, and then industrial to service or "information" economies in leading nations. Hopefully, increased media attention in western nations and the united front presented on the issue by the Cairns Group and aligned developing countries at the recent 2003 WTO conference in Cancún will help address this shortcoming.

Pulling further back, some see neoliberalism as an even broader system, greater than any countries, either singly or in combination under any alignment, by which the growing speed of communications, transportation, and computation will render geographic distinctions increasingly irrelevant, and the nation-state will be superseded as the basic unit of global organization by a single integrated market, much as earlier historical situations had caused the nation-state to render obsolete the empire, which in its time had replaced the kingdom and tribe. In this light, the recent devolution of control from both first- and third-world governments is a first step on the road to their eventual collapse into impotence and irrelevance, though the inherent dynamism of market systems makes it difficult to predict the exact form the successor structures will take. Even those who agree that cross-border investment and commercial activity is inevitably increasing, however, may disagree on this point, and many predict that globalization will ultimately prove to be compatible with, or even possibly reliant upon nationalism. Even should the post-nationalists be on the right track, it is predicted that this process will have to face and overcome obstacles before achieving eventual dominance; conventional wisdom says that the greatest current challenge is that of integrating primarily Islamic cultures into the world market, somewhat ironic given Muhammad's background as a relatively cosmopolitan traveling merchant.

At the extreme, some go so far as to interpret neoliberalism the broadest terms, as nothing less than a comprehensive philosophy and worldview which takes markets as a paradigm with which to interpret life, analyzing natural and human behaviors in terms of individual competitive transactions and the complex emergent systems which they produce - the political movements that claim the term for themselves might be seen as simply one sign of this overarching philosophy's pervasiveness, alongside others such as the recent prominence of game and meme theory in academia and popular culture.

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