What is Neoliberalism?
Neoliberalism is one of the names that is used to describe a certain economic ideology. It can also be called corporate capitalism, corporate globalization, globalization, and even suicide economics. This ideology is what actually dominates the politics of the global economy. This is a brief explaination of how neoliberalism was created, how it came to dominate the economic world, how neoliberalism affects the communities of the world, what "foundations" sustain this monster, and finally, other forms of structuring economies.
The History of Neoliberalism
Neoliberalism has not always existed. Actually, it is quite a young system of thought - it became the dominant economic ideology only within the last twenty-five or thirty years. The previous system, which dated from approximately the end of the 1930s until the late 1970s, was formed in large part by the ideas of the English economist, John Maynard Keynes, and by his influence which is known as "Keynesianism." Without rejecting capitalism, Keynes decided that the State should take an active role in managing the economy of its country. In Keynesianism, the State imposes rules and supervises the market to direct the economy towards priorities it previously determined. The State was never intended to supplant the market, but rather to regulate it. For example, the State could require that a part of the profits of foreign investors must be re-invested within the country; or it could impose tariffs on foreign products to protect national industries; or the State could invest in its national markets to promote public objectives. In conclusion: in Keynesianism, the market was subordinate to the power of the State.
But while Keynesianism dominated the global economy, another very influential economist, Milton Friedman, proposed an economic model based on principles that are practically contrary to those of Keynes - a model that forms the base of what is now known as neoliberalism.
Friedman proposed that the State should almost never intervene in the national economy - which is to say that the control of the economy would be in the hands of private capital and not in the hands of the State. It criticized national governments for its enormous and inefficient bureaucracies that impeded the optimal functioning of the market. As advisor to US Presidents Richard Nixon and Ronald Reagan, Milton Friedman came to have a decisive influence over the structuring of the global economy. The latter, accompanied by his counterpart, Margaret Thatcher, Prime Minister of the United Kingdom, began to put Friedman's economic theories into practice. With the objective of permitting corporations and investors to maximize their profits by operating freely in any part of the world, these two leaders promoted the policies of free trade, deregulation, privatization of public enterprises, lower inflation, the unrestricted movement of capital, and balanced budgets (by spending what is collected in taxes).
Neoliberalism forcefully arrived in the Global South with the 1982 financial crisis in Mexico, in which Mexico declared to its international creditors (including the World Bank and the International Monetary Fund) that it could no longer pay its debts. (For more information on the evolution of the debt crisis in the Global South, see the External Debt.) Taking advantage of the vulnerable position of many of the countries of the South, the IMF and the World Bank began to demand that the poor countries make great changes in the structures of their economies in the 1980s. These changes are called Structural Adjustment Programs and have had profoundly damaging consequences for millions of people in the affected countries.
The Future of Neoliberalism
Neoliberalism continues to be the dominating ideology in the governments of many countries, both rich and poor, for transnational corporations, and in multilateral organizations such as the World Bank, the IMF, and the World Trade Organization (WTO). But like all other ideologies, it will come to an end - and millions of people all over the world work and fight to accomplish this end. In 1999 between 50,000 and 100,000 people protested in Seattle, USA, against the WTO. Other massive protests against neoliberal institutions were organized in Prague, Czech Republic in 2000, and in Washington DC, Quebec City, Canada, and Genoa, Italy in 2001. Millions of people more who could not be at these manifestations were working to understand and explain the destructive principles of neoliberalism, and to propose and construct alternative economies, in which the market is subordinate to human rights, justice for all, democracy, and maintaining a sustainable environment.
- Keynes, John Maynard.’ Biografías y Vidas. http://www.biografiasyvidas.com/biografia/k/keynes.htm
- Friedman, Milton.´ Biografías y Vidas. http://www.biografiasyvidas.com/biografia/f/friedman.htm
- WTO protests in Seattle.’ Global Issues. http://www.globalissues.org/TradeRelated/Seattle.asp
- Korten, David. - Economies for Life.’ Yes! Magazine, Autumn 2002. http://www.yesmagazine.com/article.asp?ID=1124
- El Neoliberalismo.’ Biblioteca Luis Angel Arando. http://www.lablaa.org/ayudadetareas/politica/poli63.htm
- Jesús Antonio Bejarano. - Qué es el neoliberalismo?’ Biblioteca Luis Angel Arando. http://www.lablaa.org/blaavirtual/credencial/9102.htm
- Ellwood, Wayne. The No-Nonsense Guide to Globalization. New Internationalist Books, United Kingdom, 2002.
For More Information:
- Susan George. - A Brief History of Neoliberalism.’ Znet. http://www.zmag.org/Spanish/0501geor.htm