It is important to note that neoliberalism is a system where the free market is put at a pedestal as a solution to all human problems, and governments are considered as something negative. It seeks to utilize human competitiveness and market forces as a prime facilitator of justice and fair development of society, which is a questionable statement requiring in-depth analysis. The modern economic conditions created an environment where informal settlements are becoming widespread, and governments are trying to redevelop them by actively demonizing slums. However, these measures do not address the root cause of the issue but rather seek to fix the symptoms. Neoliberalism and neoliberal ideas lie at the core of the rapid growth of slums around the globe due to marginalization and rural migration, where cooperation with inhabitants can lead to governmental socialization.
Growth of Informal Settlements Globally and the Relationship of the Phenomenon to Neoliberalist Framework
Informal settlements are growing at such a rapid pace worldwide because people from rural regions are migrating to large cities in search of economic opportunities absent in their hometowns. Neoliberalism prevents the creation of effective safety nets for vulnerable groups and regulation of the housing market, which results in the homeless and the poor gathering in urban peripheries. Firstly, in order to observe a clear connection between neoliberal ideology and informal settlements, it is critical to understand the fundamental principles of neoliberalism. The given framework seeks to minimize government intervention and establish free markets on the basis of laissez-faire economic liberalism. The core idea is anchored on a belief that free markets are flawless and most efficient at promoting human prosperity and wellbeing. By advocating minimal intervention from the state, markets become less regulated and less prone to ineffective as well as wasteful governmental policies.
However, the downside of neoliberalism is the fact that it exacerbates social and economic inequality. An unregulated capitalistic system is not harmless and flawless as neoliberalists want to present it because it can be detrimental to society. The most vulnerable groups become the victims of such a system since social programs and other forms of social safety nets disappear under the neoliberal agenda. Neoliberalism fails to account for structural violence in forms of poverty and racism, which go against the core essence of free markets accessible for everyone.
Secondly, it should be noted that slums are part of the urbanization problem. It is driven by the mass migration of people from rural regions to large cities in order to utilize economic opportunities. Informal settlements are defined by the fact that they lack basic urban services, such as access to clean water or electricity. Subsequently, one might wonder how slums are related to neoliberalism. The best example to see the intricate and tight connection between the two is New Delhi. It is stated that the capital city of India has also been significantly affected by this global phenomenon of the neoliberal space-making strategy (Ghosh 2020: 288). Since neoliberalism is built on the flawlessness of free markets, it assumes that they are accessible to everyone, which facilitates competition and efficiency.
However, neoliberalist framework fails to account for structural and cultural inequalities of opportunities, such as the caste system in India or racism in the US. It is evidenced by the fact that the current regime of neoliberal city-making, the urban poor, including the homeless, has become further marginalized (Ghosh 2020: 287). In other words, marginalization is not only neglected by neoliberalism, and the latter even contributes to higher inequality, which translates to less accessibility of these so-called free markets.
Demonization of Informal Settlements, Targeted Redevelopment, and Consequences of Interventions
Governments and authorities demonize slums and target these areas for redevelopment because they are inhabited by highly vulnerable, voiceless, marginalized, and economically undesirable groups of people under the neoliberal framework. For example, in the case of New Delhi, the city has been experiencing restructuring of its cityscape which is dominated by the construction of largescale infrastructure suitable for attracting business capital through eviction of slums and other anti-poor measures (Ghosh 2020: 296). In other words, neoliberalism seeks to make these areas more profitable and attractive for investment, but slums lack such opportunities since the inhabitants tend to have low purchasing power making them unattractive consumers.
Therefore, the poor and homeless are deprived of their political power as well, which makes them voiceless in politics. When commercial and business interests advocate the removal of slums, the inhabitants of these regions cannot voice their stance on the issue. It is reported that being homeless, they neither have any residential address nor any claim to citizenship. Thus, it is no wonder that 95% of Delhis homeless do not possess voting rights or ration cards (Ghosh 2020: 293). Many of the vulnerable groups lose their right to fight against unfair demonization by the systematic marginalization, such as linking voting rights with residential addresses unobtainable in a slum.
Obstacles, Economic Opportunities, and Political Opportunities in Slums
The obstacles found in slums include the lack of voting rights, lack of access to water, poverty, marginalization, crime, food insecurity, and vulnerability to disasters. A major political opportunity when it comes to slums is the socialization of government to become more open and accessible for civil discourse with the inhabitants. It is stated that one should account for these nonmovements as a form of deradicalized dissent that works to amend the existing social order rather than create a new one (Atia 2019: 9). In other words, the resistance of these groups counters the biggest flaws of the neoliberal agenda by exposing its problems in regards to fundamental human needs, such as housing. Economic opportunities can include recognition and support of slums as formal settlements to tax them and provide them with social benefits.
Conclusion
In conclusion, as with any economic, social, and political system, neoliberalism has its flaws, such as the removal of social safety nets and the inability to ensure protection for the most vulnerable groups. Since neoliberalism contributes to inequality, poverty is an inherent part of the given system. Deregulation of markets and reduction of the states authority on intervention leads to homelessness and poverty among groups with an inability to afford the housing market prices. These values are, in turn, driven by supply and demand, where demand can easily and substantively increase due to migration, but supply is limited since it is a challenge to build houses. The lack of support for the poor and homeless in conjunction with policies forbidding settling in urban centers leads to the gathering of such groups in urban peripheries. The end result is slums or informal settlements of large vulnerable groups, which are exposed to dangers of environmental, financial, political, legislative, and commercial natures.
Works Cited
Atia, Mona. Refusing A City Without Slums : Moroccan Slum Dwellers Nonmovements and The Art of Presence. Cities, vol. 1, 2019, pp. 1-10.
Ghosh, Subhamay. Understanding Homelessness in Neoliberal City: A Study from Delhi. Journal of Asian and African Studies, vol. 55, no. 2, 2020, pp. 285297.
Neoliberalism is known as a political movement supporting economic liberalization, open market, and free economy and advocating the necessity to enhance the private sector in the countries. In such a manner, the members of the movement seek to prevent the government from introducing the reforms hampering the overall development of society.
Neoliberalism tendencies in political and social development signify a shift from a public-based economy to the private sector. With people at its core, the neoliberalist movement planned to introduce an improvement to the governmental policy and create a solid basis for the national development (Lim 9).
The neoliberal state should promote private property rights of individuals, instructions of tree trade, and functioning markets. The institutional agreements guarantee freedoms for individuals and, therefore, the legal framework should protect an individual right to action, choice, expression.
Structural adjustment programs (SAPs) aim to reduce the fiscal imbalances of the borrowing countries and reduce poverty. SAPs are also concerned with developing countries and seek to change their direction into developing their market orientations. Free market program and policies also include the privatization process that should contribute to the goals of reducing trade obstacles.
The practice of borrowing money from abroad required the countries to have substantial foreign exchange researched to be able to cover borrowings. The fluctuations in the interest rates contributed to a robust financial flow, which negatively influenced the developing countries.
The tendency of borrowing has been significantly resented by the supporters of neoliberalist movement, believing that lenders should be immune to the financial losses whereas the borrowers must pay up, despite the social costs. In this respect, the theory of neoliberalism warns the lenders, but in practice, borrowers stay on the safe side.
The restrictions in the capacity to compress surpluses from underdeveloped countries exist (Harvey 74). Therefore, some losses have created an attractive option concerning debt relief because there was a higher probability for the developing countries to recover their economies and sustain further steady economic and political growth.
Taking advantage of this debt loss has brought the neoliberalist theory into a tight corner because of the approach to labor markets (Lim 10). The point is that the neoliberal state is opposed to social solidarity, which imposes limits on accumulating the capital.
The social movements and trade unions received power under the new tendency of liberalism but were suppressed because of the right to individual liberty. Increased flexibility, therefore, became a milestone of unequal distribution among people.
An individualized approach to labor market led to incredible social costs because not all social layers were able to promote their private businesses and, as a result, lack of governmental control generate more biases within this domain.
The analysis of the above-presented situations highlights the significant problems of neoliberalist reforms and structural adjustment programs oriented on the private sector. According to Rapley, &SAPs, though positive in some respects, did not yield all their anticipated gains, and produced some unexpected and undesired consequences (90).
At this point, though production under the central premises of structure adjustment rose dramatically, the local orientation did not allow the private owners to compete with the public markets. Another problem is confined to social losses as a result of Structural Adjustment Program implementation.
In particular, methodological pitfalls have negatively influenced social development because of the policy of devaluation, cost recovery, increase in subsidies, etc. These policies changed income distribution and excellent public provision. By alleviating poverty in Africa, SAPs failed to consider the output reduction in urban areas.
Less attention paid to the public sector had a substantial impact on the federal workers, such as teachers and doctors whose salaries reduced to almost 33 % (Rapley 90). Moreover, the devaluation process led to increased prices of imported good, uncontrolled rise o prices, absence of the essential commodities.
Health and education were under the threat of financial recession as well. The economic downturns touched upon such developing countries as Venezuela and Ghana, where the rates of GDP decreased dramatically once the structural adjustment programs were implemented. Industries in such countries tried to sustain healthy development by shifting cost by reducing workers wages and downsizing the labor force.
In conclusion, it should be stated that both the neoclassical economy and SAPs have imposed significant damage to the developing economies at the end of the twentieth century. Though their neoliberal reforms aimed at privatization of the national property sought to reduce poverty, further policies and strategies led to the economic disaster and financial instability.
The social welfare sector experienced significant difficulties in handling social groups and sustaining adequate economic and financial level. Nevertheless, such public spheres as health and education faced a severe financial recession.
Significant investments made into the development of the rural spheres hampered the development of the public market, leading to substantial shortage of financial resources and decline in employment in public areas. Cuts off in capital expenditures put the developing countries under the threat of economic crisis.
Works Cited
Harvey, David. A Brief History of Neoliberalism. UK: Oxford University Press, 2005. Print.
Lim, Timothy. Doing comparative politics: An introduction to approaches and issues, second edition. US: Lynne Rienner, 2005. Print.
Rapley, John. Understanding Development: Theory and Practice in the Third World. US: Lynne Rienner, 2007, Print.
In the article On Neoliberalism: An Interview with David Harvey by Sasha Lille, the concept of neoliberalism has been discussed in detail through an interview with David Harvey. The latter is an eminent Marxist geographer. Although the theory behind neoliberaism is perceived to be new, it is in fact a revival of the 18th century liberalism ideals. Nonetheless, the most important point to note here is that liberalism sought to fight for the rights of individual liberty and freedom (Lilley, n.d). These rights were to be based on the freedom of an individual to think and act independently without being coerced.
One outstanding aspect that the 18th century liberal theorists did not know is that the concept would later find its way into political realms. From the interview, David Harvey is insinuating that the modern trends in global politics have consumed the original ideals of liberalism. If this is the case, can it be argued that neoliberalism is a modern creation of political institutions? Needles to say, the civil rights groups seem to champion the rights of people more vehemently than the ideals put forward by the theory of neoliberalism.
In the second article entitled Neoliberalism as Creative Destruction by David Harvey, the author is quite categorical that neoliberalism is a theory of political economic practices (Harvey 2007, p. 22). It has come of age to an extent that it has already overtaken the social and democratic ideals. Does the author imply that neoliberalism is indeed a destructive theory that should be done away with? Perhaps, this may be true especially if we explore the economic and political perspectives that have been adopted by the ideals of neoliberalism. It is also vital to note that the discourse on economic liberalization came at a time when the desire to globalize the world market was being pushed forward by different western governments.
We can assert that neoliberalism and free trade or liberalization of markets are part and parcel of the same scheme to override the interests of poor nations. The long term and negative economic impacts that have been brought about by neoliberalism within the context of globalization have down-trodden the economic well being of poor countries. In any case, David Harvey points out that both economic greed and search for political might have been duly pronounced in what is being referred to as neoliberalism. Sincerely speaking, if politics and economic empowerment have taken center stage in the neoliberalism debate, then it is obvious that the intended gains of the 18th century neoliberalism ideals are no longer into focus.
In the last article, Global Media, Neoliberalism, and imperialism by Robert W. McChesney, there are three key and broad areas of controversy that have been brought out by the author. These are democratization, technological revolution and globalization. It is necessary to have an incisive look at each of these attributes that shape our modern era history.
To begin with, it is apparent that the media has been used as a viable tool of marketing neoliberalism. Both the local and international media have been instrumental in propagating ideas emanating from strong economic powerhouses of the western world. For instance, democratic governments have been embraced by most of the countries across the world as a result of the power of the media in broadcasting latest developments from different parts of the globe. The author notes that media and communication play a&defining role (McChesney 2001, p. 1). On the same note, democratization is definitely the highest level of neoliberalism in the 21st century. Nonetheless, there are some governments in the developing world that have been quite suspicious of this form of governance citing it to be imperialistic or some form of neocolonialism. Better still, it is also apparent that real sovereignty has been lost especially among weak and emerging economies because they have to forcibly fit within the ideals of neoliberalism.
References
Harvey, D. (2007). Neoliberalism as Creative Destruction. The ANNALS of the American Academy of Political and Social Science 610(21), 22-44.
The Tenet of Neoliberalism. The Main Difference between Neoliberalism and Neorealism
At the center of neoliberalism are the problems of international security and the renunciation of war. Moreover, global safety seems to be the most crucial goal of actors in foreign relations. An essential condition for achieving universal stability, world order, and social progress is developing world cooperation that promotes economic prosperity. The center of gravity shifts from international law and organizations to international morality (Nye & Welch 2013). According to neoliberals, anarchy in foreign relations is surmountable, whereas neorealists believe it is not. Neoliberals believe that the benefits of international cooperation are absolute; that is, cooperation is always beneficial. According to neorealists, the benefit is relative since no country would accept a less absolute benefit than any other (Dunne, et al., 2013). The reason for international cooperation, for neoliberals, is to maximize economic prosperity; for neorealists, it is to maximize military security.
The difference between relative and absolute gain. Role of these concepts play in neo-realist thinking
In international relations, the influence of states on the balance of power without considering other factors such as culture and economy is a relative benefit. Thus, the cooperation required for the balance of power may be limited by the state’s interests. The relative benefit is associated with a zero-sum game, which argues that wealth cannot be increased. That is, the only available way is to take away resources from another state. Relative benefits contrast from absolute ones because absolute advantages consider into account all circumstances. That is, the state’s strategy consists not only of attempts to maintain a balance of power but also includes all the factors that permit better forecasting of the international situation (Viotti & Kauppi 2019). The neorealist concept in international relations concludes that the international structure creates restrictions for states, so those players who count all factors win. Thus, the theory of absolute and relative advantages is a way of expressing it.
Influence of International Organizations
International organizations play a leadership role in standard-setting, accountability, security, and the rule of law in various fields. In addition, they afford a course of interaction between governments and society and create consistent norms of behavior among different countries (Keohane, 2020). Therefore, I believe that the application of the same measures of behavior can influence the foreign policy of states and prevent anarchy.
References
Dunne, T., Hansen, L., & Wight, C. (2013). The end of International Relations theory?. European Journal of International Relations, 19(3), 405-425.
Keohane, R. O. (2020). International institutions and state power: Essays in international relations theory. Routledge.
Nye, J. S., & Welch, D. A. (2013). Understanding global conflict & cooperation: intro to theory & history. Pearson Education.
Viotti, P. R., & Kauppi, M. V. (2019). International relations theory. Rowman & Littlefield.
It is important to note that neoliberalism is a system where the free market is put at a pedestal as a solution to all human problems, and governments are considered as something negative. It seeks to utilize human competitiveness and market forces as a prime facilitator of justice and fair development of society, which is a questionable statement requiring in-depth analysis. The modern economic conditions created an environment where informal settlements are becoming widespread, and governments are trying to ‘redevelop’ them by actively demonizing ‘slums.’ However, these measures do not address the root cause of the issue but rather seek to fix the symptoms. Neoliberalism and neoliberal ideas lie at the core of the rapid growth of ‘slums’ around the globe due to marginalization and rural migration, where cooperation with inhabitants can lead to governmental socialization.
Growth of Informal Settlements Globally and the Relationship of the Phenomenon to Neoliberalist Framework
Informal settlements are growing at such a rapid pace worldwide because people from rural regions are migrating to large cities in search of economic opportunities absent in their hometowns. Neoliberalism prevents the creation of effective safety nets for vulnerable groups and regulation of the housing market, which results in the homeless and the poor gathering in urban peripheries. Firstly, in order to observe a clear connection between neoliberal ideology and informal settlements, it is critical to understand the fundamental principles of neoliberalism. The given framework seeks to minimize government intervention and establish free markets on the basis of laissez-faire economic liberalism. The core idea is anchored on a belief that free markets are flawless and most efficient at promoting human prosperity and wellbeing. By advocating minimal intervention from the state, markets become less regulated and less prone to ineffective as well as wasteful governmental policies.
However, the downside of neoliberalism is the fact that it exacerbates social and economic inequality. An unregulated capitalistic system is not harmless and flawless as neoliberalists want to present it because it can be detrimental to society. The most vulnerable groups become the victims of such a system since social programs and other forms of social safety nets disappear under the neoliberal agenda. Neoliberalism fails to account for structural violence in forms of poverty and racism, which go against the core essence of free markets accessible for everyone.
Secondly, it should be noted that ‘slums’ are part of the urbanization problem. It is driven by the mass migration of people from rural regions to large cities in order to utilize economic opportunities. Informal settlements are defined by the fact that they lack basic urban services, such as access to clean water or electricity. Subsequently, one might wonder how ‘slums’ are related to neoliberalism. The best example to see the intricate and tight connection between the two is New Delhi. It is stated that “the capital city of India – has also been significantly affected by this global phenomenon of the neoliberal space-making strategy” (Ghosh 2020: 288). Since neoliberalism is built on the flawlessness of free markets, it assumes that they are accessible to everyone, which facilitates competition and efficiency.
However, neoliberalist framework fails to account for structural and cultural inequalities of opportunities, such as the caste system in India or racism in the US. It is evidenced by the fact that “the current regime of neoliberal city-making, the urban poor, including the homeless, has become further marginalized” (Ghosh 2020: 287). In other words, marginalization is not only neglected by neoliberalism, and the latter even contributes to higher inequality, which translates to less accessibility of these so-called ‘free’ markets.
Demonization of Informal Settlements, Targeted Redevelopment, and Consequences of Interventions
Governments and authorities demonize ‘slums’ and target these areas for redevelopment because they are inhabited by highly vulnerable, voiceless, marginalized, and economically undesirable groups of people under the neoliberal framework. For example, in the case of New Delhi, “the city has been experiencing restructuring of its cityscape which is dominated by the construction of largescale infrastructure suitable for attracting business capital through eviction of slums and other anti-poor measures” (Ghosh 2020: 296). In other words, neoliberalism seeks to make these areas more profitable and attractive for investment, but ‘slums’ lack such opportunities since the inhabitants tend to have low purchasing power making them unattractive consumers.
Therefore, the poor and homeless are deprived of their political power as well, which makes them voiceless in politics. When commercial and business interests advocate the removal of ‘slums,’ the inhabitants of these regions cannot voice their stance on the issue. It is reported that “being homeless, they neither have any residential address nor any claim to citizenship. Thus, it is no wonder that 95% of Delhi’s homeless do not possess voting rights or ration cards” (Ghosh 2020: 293). Many of the vulnerable groups lose their right to fight against unfair demonization by the systematic marginalization, such as linking voting rights with residential addresses unobtainable in a ‘slum.’
Obstacles, Economic Opportunities, and Political Opportunities in “Slums”
The obstacles found in ‘slums’ include the lack of voting rights, lack of access to water, poverty, marginalization, crime, food insecurity, and vulnerability to disasters. A major political opportunity when it comes to ‘slums’ is the socialization of government to become more open and accessible for civil discourse with the inhabitants. It is stated that one “should account for these nonmovements as a form of “deradicalized dissent” that works to amend the existing social order rather than create a new one” (Atia 2019: 9). In other words, the resistance of these groups counters the biggest flaws of the neoliberal agenda by exposing its problems in regards to fundamental human needs, such as housing. Economic opportunities can include recognition and support of slums as formal settlements to tax them and provide them with social benefits.
Conclusion
In conclusion, as with any economic, social, and political system, neoliberalism has its flaws, such as the removal of social safety nets and the inability to ensure protection for the most vulnerable groups. Since neoliberalism contributes to inequality, poverty is an inherent part of the given system. Deregulation of markets and reduction of the state’s authority on intervention leads to homelessness and poverty among groups with an inability to afford the housing market prices. These values are, in turn, driven by supply and demand, where demand can easily and substantively increase due to migration, but supply is limited since it is a challenge to build houses. The lack of support for the poor and homeless in conjunction with policies forbidding settling in urban centers leads to the gathering of such groups in urban peripheries. The end result is ‘slums’ or informal settlements of large vulnerable groups, which are exposed to dangers of environmental, financial, political, legislative, and commercial natures.
Works Cited
Atia, Mona. “Refusing A “City Without Slums”: Moroccan Slum Dwellers’ Nonmovements and The Art of Presence.” Cities, vol. 1, 2019, pp. 1-10.
Ghosh, Subhamay. “Understanding Homelessness in Neoliberal City: A Study from Delhi.” Journal of Asian and African Studies, vol. 55, no. 2, 2020, pp. 285–297.
Neoliberalism is known as a political movement supporting economic liberalization, open market, and free economy and advocating the necessity to enhance the private sector in the countries. In such a manner, the members of the movement seek to prevent the government from introducing the reforms hampering the overall development of society.
Neoliberalism tendencies in political and social development signify a shift from a public-based economy to the private sector. With people at its core, the neoliberalist movement planned to introduce an improvement to the governmental policy and create a solid basis for the national development (Lim 9).
The neoliberal state should promote private property rights of individuals, instructions of tree trade, and functioning markets. The institutional agreements guarantee freedoms for individuals and, therefore, the legal framework should protect an individual right to action, choice, expression.
Structural adjustment programs (SAPs) aim to reduce the fiscal imbalances of the borrowing countries and reduce poverty. SAPs are also concerned with developing countries and seek to change their direction into developing their market orientations. Free market program and policies also include the privatization process that should contribute to the goals of reducing trade obstacles.
The practice of borrowing money from abroad required the countries to have substantial foreign exchange researched to be able to cover borrowings. The fluctuations in the interest rates contributed to a robust financial flow, which negatively influenced the developing countries.
The tendency of borrowing has been significantly resented by the supporters of neoliberalist movement, believing that lenders should be immune to the financial losses whereas the borrowers must pay up, despite the social costs. In this respect, the theory of neoliberalism warns the lenders, but in practice, borrowers stay on the safe side.
The restrictions in the capacity to compress surpluses from underdeveloped countries exist (Harvey 74). Therefore, some losses have created an attractive option concerning debt relief because there was a higher probability for the developing countries to recover their economies and sustain further steady economic and political growth.
Taking advantage of this debt loss has brought the neoliberalist theory into a tight corner because of the approach to labor markets (Lim 10). The point is that the neoliberal state is opposed to social solidarity, which imposes limits on accumulating the capital.
The social movements and trade unions received power under the new tendency of liberalism but were suppressed because of the right to individual liberty. Increased flexibility, therefore, became a milestone of unequal distribution among people.
An individualized approach to labor market led to incredible social costs because not all social layers were able to promote their private businesses and, as a result, lack of governmental control generate more biases within this domain.
The analysis of the above-presented situations highlights the significant problems of neoliberalist reforms and structural adjustment programs oriented on the private sector. According to Rapley, “…SAPs, though positive in some respects, did not yield all their anticipated gains, and produced some unexpected and undesired consequences” (90).
At this point, though production under the central premises of structure adjustment rose dramatically, the local orientation did not allow the private owners to compete with the public markets. Another problem is confined to social losses as a result of Structural Adjustment Program implementation.
In particular, methodological pitfalls have negatively influenced social development because of the policy of devaluation, cost recovery, increase in subsidies, etc. These policies changed income distribution and excellent public provision. By alleviating poverty in Africa, SAPs failed to consider the output reduction in urban areas.
Less attention paid to the public sector had a substantial impact on the federal workers, such as teachers and doctors whose salaries reduced to almost 33 % (Rapley 90). Moreover, the devaluation process led to increased prices of imported good, uncontrolled rise o prices, absence of the essential commodities.
Health and education were under the threat of financial recession as well. The economic downturns touched upon such developing countries as Venezuela and Ghana, where the rates of GDP decreased dramatically once the structural adjustment programs were implemented. Industries in such countries tried to sustain healthy development by shifting cost by reducing workers’ wages and downsizing the labor force.
In conclusion, it should be stated that both the neoclassical economy and SAPs have imposed significant damage to the developing economies at the end of the twentieth century. Though their neoliberal reforms aimed at privatization of the national property sought to reduce poverty, further policies and strategies led to the economic disaster and financial instability.
The social welfare sector experienced significant difficulties in handling social groups and sustaining adequate economic and financial level. Nevertheless, such public spheres as health and education faced a severe financial recession.
Significant investments made into the development of the rural spheres hampered the development of the public market, leading to substantial shortage of financial resources and decline in employment in public areas. Cuts off in capital expenditures put the developing countries under the threat of economic crisis.
Works Cited
Harvey, David. A Brief History of Neoliberalism. UK: Oxford University Press, 2005. Print.
Lim, Timothy. Doing comparative politics: An introduction to approaches and issues, second edition. US: Lynne Rienner, 2005. Print.
Rapley, John. Understanding Development: Theory and Practice in the Third World. US: Lynne Rienner, 2007, Print.
In the last twenty years of the 20th century and the previous decades since World War II there was a dramatic difference and it was not uncommon to give details of the last twenty years of capitalism as neoliberalsm. During the change between the 1970s and 1980s the functioning of capitalism was deeply transformed both within countries of the center and in the periphery. The earlier capitalist configuration was often referred to as Keynesian compromise.
Such years could be characterized in the center countries like United States, Europe, and China by large growth rates sustained technological change, an increase in purchasing power and development of a welfare system concerning in particular health and retirement and low unemployment rates.
The situation deteriorated during the 1970s as the world economy in the wake of the decline of the profit rate entered a structural crisis. Its main aspects were diminished growth rates, a wave of unemployment, and cumulative inflation. This was when the new social order, neoliberalsm emerged, first within the countries of the center beginning with the United Kingdom and the United States and then gradually exported to the end. The nature of neoliberalsm was explored and its balance sheet after nearly a quarter of a century.
Neoliberalsm was often described as the ideology of the market and private interests as opposed to state intervention. Although neoliberalism conveyed an ideology and a propaganda of its own, it was fundamentally a new social order in which the power and income of the upper fractions of ruling classes was reestablished in the wake of a setback.
The conditions which accounted for the structural crisis were gradually superseded, as most of the world economy remained plagued by slow growth and unemployment, and inequality increased tremendously. This was the cost of a successful restoration of the income and wealth of the wealthiest (Brown).
Thesis Statement
Neoliberalism describes a market driven approach to economic and social policy based on economics neoclassical theories that stresses the efficiency of private enterprise, liberalized trade and relatively open markets, which seeks to maximize the role of the private sector in determining the political and economic priorities of the state.
According to Larner (63) neoliberalism is used to describe an internationally prevailing ideological paradigm that leads to social, cultural, and political practices and policies that make the use of markets, efficiency, consumer choice, transactional thinking and individual autonomy to shift risk from governments and corporations onto individuals and to extend the market logic into the realm of social and affective relationships.
Neoliberalism transfers control of the economy from public to the private sector, in the sense that it will produce a more efficient government and improve the economic health of the nation. In the 1970s an economic systems that prevailed after the World War II dominating the non-economist global economy was referred to as embedded liberalism. At the end of the war, David Harvey postulates that the main agenda was to establish an economic plan wary of preventing a recurrence of the great depression witnessed in the 1930s.
Pegging the fixed exchange on the US dollars convertibility at fixed price into gold, Harvey further assured that the new system would be greatly regulated and secure. Fixed exchange rates were incompatible with free flows of capital. Harvey argues that embedded liberalism led to the surge of economic prosperity that came to define the 1950s and 1960s (Prasad 328).
The free market policies of reform were favored in the 1980s, due to curtailed state intervention by political intervention as the decade came to a close after the collapse of the Communist bloc and the dire economic crisis of the 1980s. Between 1970 and 1980 changes begun to take shape when majority of world governments democratically focused on the roles of governments in regulating relative free trade, rules of law, and economic individual rights.
The market became more important when governments through organized labour groups adopted much stronger stances in counteracting trade barriers, eventually reducing government intervention. Therefore industries increasingly shifted globally with integrated knowledge boosting the economy (Campbell and Ove 288).
The desire for hemisphere integration to improve economic well-being of the people reflects the need for understanding free trade as a human right. Primary in their agenda was to protect human rights, promote good governance and strengthen representative democracy. In turn, greater economic opportunities would be created leading to prosperity and achieving the social justice of human potential. From the above, reflection, the development of human rights therefore necessitates the integration of markets
The World War II paved way for the Stalinists to maintain control over China. This was however, not a lasting regime as battles regained the cities that were under their rule. Opposition was imminent despite the Stalinists’ “democratic” reform and agrarian movement especially as they concentrated their energy in opposing the Chiang’s Kuomintang regime.
Close to two decades later, the capitalist press does not recognize the rise of the working-class across major cities. The class polarization process is made worse by the rejuvenation of the Chinese working-class coupled with increased infiltration of the face of the country by pent-up forces of civil war.
The Chinese industry was paralyzed by the capitulation of Japan; with majority of Shanghai factories closing down and suspended operations by plants internally. The Chinese proletariat was dealt another blow as their economic position was under threat due to the business failures.
The social counter-revolution after the Maoist-Stalinisr bureaucratic change in the last two decades allowed for a shift to capitalism from central planning. The beneficiaries of the transformation were undoubtedly the bourgeoisie both within China and in the global arena. 1949 witnessed the Chinese revolution forces achieve the class balance of international forces (Johannes and Jacques 69).
As a result of blurred market and social values, the revival of class rules the social rekindling of neoliberalism. Considered as a domino-effect, neoliberalism on one end could not be controlled once the private sector is honoured with a publicly-owned industry. Because of reduced regulation and government interference, a publicly-owned industry in the hands of the private sector cannot be monitored to measure the influence by the owners to fit into their economic benefits.
In a similar manner, governments that adopted neoliberal policies proceeded to model and expand them in pursuit of the expected positive benefit. As such, in the equation of current era of market globalization, where neoliberalism was considered a constant, and an economic benefit although it varied depending on the geographic location.
China’s neoliberals counter revolution
The historical trajectory led up to china’s capitalist form of engagement with the neoliberal counter revolution. In 1949, immense pressure leveled against the Maoist state sensing the wave of revolution that was approaching was forced into providing great social improvements to cater for the communities’ housing, educational standards, healthcare, and poverty situations.
Consequently, the regime went ahead and adopted socialistic policies by nationalizing the land, a move that received little oppositions from the public; despite occasional land privatization cases due to partial land reforms while the government remained as the chief owner of national land.
According to Lenin land nationalization does not in itself constitute a barrier to capitalism. The move to attempt reversing the land tenure policies despite representing a perfect from of capitalism was an impossible task for the skeptics. However, the policies remained unchanged considering China’s economic foundations that were grounded on centralized planning and nationalized property dictated by the narrow national-bureaucratic limits.
Consequently, the Chinese masses resorted to the prevailing Stalinism policies and rules that featured absence of social safety net and extreme manpower exploitation, in addition to absent elementary democratic rights and police terror. Unlike other ex-Communist states, China is considered more integrated into the capital world. Foreign capitalists today control a quarter of China’s industrial production (Johannes and Jacques 76).
Central planning was not allowed to take center stage by the capitalist nature of renationalization. The now powerful capitalist economic foundations common within China could entirely be brought down by a massive revolutionary force of direly oppressed peasants and workers, despite the economic foundations’ close ties with global capitalism.
The process of counter revolution in China has been complex and sometimes extremely contradictory. It is only through a new proletarian social revolution that China’s capitalist counter-revolution can be reversed as a qualitative change that manages to expropriate foreign capitalists and Chinese, who are the main beneficiaries of an overthrown present state.
The Chinese experience is one of shifting from one national policy to the other; with the outstanding Chinese peculiar type having been fully restored. The restoration commenced in 1970s when the search for an exit from the economic and political crisis prompted the Stalinist regime in an empirical reflex exercised the civil war elements inherited from the Maoists.
The initial stages of the empirical reflex strategy sought through Stalinist state-owned economy, customize some market mechanisms. But such processes have logic of their own especially given the delay of the world socialist revolution, the crisis and collapse of Stalinism worldwide, and the ferocious acceleration of neo liberal globalization (Larner 67).
In the present state of uncertainty and political flux, the influence that the Stalinists enjoy is the main focus, after their abandonment for the proletariat 19 years ago in a revolutionary defeat. In an attempt to increase their social base, the Stalinists are targeting the revival of the labour movement.
Additionally, the move in strategic sector of the economy, will also avail an opportunity to convince the ‘national’ bourgeoisie of their capabilities to maintain the status of social status and furthermore open a road towards a peaceful capitalist development. However, the role of Stalinists in China just like any other part of the world is to hamper with the process of revolutionary movement, and instead revert back to class collaboration (Larner 72).
In conclusion existing Chinese state cannot be reformed in any fundamental way to serve the masses’ interests; instead in reflection the common traits of most capitalist states, China attends entirely to the ruling class. A working class should be implemented to replace the existing ruling-class-oriented capitalist China through organized institutions, revolutionary party, factory committees, and workers’ councils.
Works Cited
Brown, Wendy. “Neoloberalism and the End of Liberal Democracy” in Edgework: critical essays on knowledge and politics Princeton University Press, 2005, ch 3.
Campbell, John L., and Ove K. Pedersen, eds. The Rise of Neoliberalism and Institutional Analysis Princeton University Press: London, 2001. P. 288
Harvey, David. A Brief History of Neoliberalism. Oxford University Press: Oxford. 2005
Johannes Dragsbaek S. and Jacques Hersh, Neoliberal globalization: Workfare without welfare, Globalizations, 1474-774X, Vol. 3 (1), 2006, Pp. 69 – 89.
Larner, Wendy. “Neo-liberalism: policy, ideology, governmentality,” Studies in political economy, 2000, p. 63-72.
Prasad, Monica. The Politics of Free Markets: The Rise of Neoliberal Economic Policies in Britain, France, Germany and the United States. University of Chicago Press: Chicago, 2006. P. 328.
With the ever increasing cost of living, everyone would be thrilled with the idea of buying quality and readily available goods for less. Similarly, as the wave of neoliberalism sweeps across the globe, profits are amplified and economies stabilized. That is the ultimate embodiment of neoliberalism; passing the market test.
Challenges have been encountered but paramount attention has only been on immediate effects of structural changes and of other policies especially in the developing countries.
The socio cultural implication of neoliberalism, more so ethical implications on a majority of seemingly invisible workforce, has since been ignored.
This paper seeks to provide an in depth scrutiny of global reestablishment by drawing attention on what it means for the workers. It seeks to analyze the current global labor policies and their impacts on the labor market with special attention to its effects on the working conditions of the cleaners.
Neoliberalism
Neoliberalism is a term used to describe an attempt by governments to restructure and stabilize their economies through decentralization, increasingly involving the private sector in the economic and political affairs and regularizing the market.
This approach was adopted by a number of nations in their quest for economical policies that would reduce inflation and foster economic growth. It involves a combination of economic policies which institutionalize sectors through reforming or changing whole political and economic setups.
Its ultimate goals involve handing over the control of the economy to the private industry with the hope that it will improve governance and boost the economy.
Ideally, neoliberalism is expected to harness and transform into operations the strategies that employ the language of the market, the competence, consumer preference, self independence and conventional thinking to move the risk from states and institutions to individuals or groups and spread out the concept to the social spheres.
However, these attempts have on the other hand culminated into a platform where markets are no longer regulated; workers are being exploited by their employers, environmental degeneration and impunity at almost all levels of governance.
The invisible worker
While it has managed to spearhead economic growth across nations, neoliberalism has degraded the working and living conditions of the workers and promoted deception on the part of employers in this industry.
The shifting of risk from the government corporations to the private sector has created a situation where individuals and groups which have monopolized the cleaning industry have turned deceptive. They are keen to look into their own interests and take care of their business empires at the expense of employees.
In the contracts that bind their employees to them, their conditions are provisional and the workers are engaged on equally provisional basis and not considered as real employees. This leaves them in a vulnerable situation since they are stripped off employee rights such as insurance, paid holidays among others.
This was a common phenomenon in London during the 1970s. A similar situation was observed recently in Santiago where a bathroom attendant not only single handedly takes charge of the washroom but he is also expected to take care of collecting the charging fee and provide the bathroom toiletries (Aguiar and Andrew, 89).
This is the situation especially in the cleaning industry all over the world. Cleaners maintain upscale shopping places, modern offices and hotels yet this group of workers has never been paid much attention. More often than not they are looked down upon.
Majority of the cleaners are not valued and are often subjected to mistreatment. Owing to their low wages and status, they happen to live in the most adverse conditions in the worst shanties in big cities. The cleaner is actually in a modern world, yet has an outsider relation with.
Lack of government policies that describe fair employment and working conditions such as the required working hours, standard wages and working conditions only serves to expose workers to further vulnerability, worsening their deplorable conditions.
The bonding of the worker’s legal rights with the employers undermines their rights and gives absolute control of the worker to the employer creating an unbalanced power relationship. Wal-Mart for instance succeeds by capitalizing on the low wage low benefit premise of employment. Their employment policies are wanting.
The success of the company is at the expense of workers who endure the lowest wages, substandard working conditions, lacking healthcare, security among other disturbing issues. Workers at Wal-Mart have unspecified working hours and their wages are comparatively lower than those of a normal retail employee.
Many workers are compelled to work long hours, denied breaks and in many cases are denied overtime wages. It is not a new phenomenon for Wal-Mart to give lower wages when sales go down.
Discrimination still remains an issue despite most governments’ attempts at reforming the cleaning industry. Contracting out in apartheid South Africa and its subsequent neoliberal post apartheid institutions has led to increased workload and diminished pay and benefits to a large number of workers in the cleaning sector.
Just like it was in the apartheid labor system, neoliberalism has redirected the burden to the homes and communities of the poor workers through policies such as “rational” effecting of change in public institutions. There still exists segregation in places such as universities and other institutions of higher learning.
Attempts have been made by the “invisible” workers to restore and defend their pride as workers. This is all done with the understanding that theirs is an equally important work which the top echelons of management cannot do by themselves.
The Women’s Liberation Movement of the 1970s in Britain was such an attempt to organize night janitors. The subsequent strikes brought to light the plight of this disregarded type of workers.
However, the prevailing economic and political situation and the effects of privatization made unionization difficult as they increased discrepancies in the society.
Wal-Mart company
Private corporations’ policies have not only wiped out small businesses but also disregarded the employees’ rights and caused serious harm to the environment.
By exploiting technology and the rising global economy (a product of neoliberalism), corporations like Wal-Mart have completely altered the American economy and greatly influenced the global economic balance.
The seller has become more powerful than the producer. Consequently, retailers are coercing the manufacturers to shift production overseas. This quest has led to the joint undertakings between Wal-Mart, a prominent US retailer of most consumer goods and China.
While the company rummages the world for less costly suppliers that benefit the American buyer, just how do the workers in the supplying nations fare?
Wal-Mart is the epitome of neoliberals ideal; the best thing to have ever happened to the American and world economy as it happens to not only produce what the consumer needs but also deliver a variety of goods at very affordable prices.
However, what are the implications of low priced products to the people who work for these companies? It is not only increasing the number of jobless people in the streets but is also responsible for the ever increasing low standards of living not just for the American people but also for those working in the diaspora.
While these products are achievable for the American consumer, the “everyday low prices” is an issue of concern not just for the consumer but more so for the worker.
The enterprising spirit that is responsible for these lower prices in Wal-Mart outlets and similar places happen to impinge on the ability of large numbers of workers to reap satisfactory wages and respectable benefits that would enable them lead a steady life.
The flippant attitude from the governments towards this group of workers exposes them to maltreatment and exploitation.
In an attempt to boost economic growth and development, companies are putting up measures to modernize and civilize this workforce by employing austere rules which end up restricting their freedom of movement and dictating their codes of conduct while at the work place.
For instance Wal-Mart’s store policy of locking in nighttime workers not only inconveniences the employees but also possesses a great security hazard in times of emergencies.
Recompense for workers
Organizing workers of this group has proved to be quite a challenge. Among the major challenges is the fact that they are among the lowest paid.
This means that most cannot manage to meet some of the demands of the unions like union dues. More often than not, their working places are small and scattered geographically. This proves an obstacle in mobilizing workers.
At the same time, they are among the most watched of all employees. These are among the challenges that prompted the cleaners’ strikes in the 1970s in London and the Justice for Janitors Movement in the USA in the 1990s (Aguiar and Andrew 214).
Unionization of these workers is low in many countries. This calls for establishment of new forms of workers organization. These should take the bottom up approach; from the grassroots levels to the highest echelons and high mobilization and participation of workers.
A perfect example of such an approach is The Justice for Janitors crusade which has been quite successful. It is a more decentralized perspective to workers unionization owing to its awareness of the local labor market situation. It bases its membership on locality and not the work place.
It is the kind of approach through which unnoticed workers can come together to confront a mutual enemy: larger companies. Local unions are strengthened through the skillful organizational attempts by trained organizers from the national union.
Other models like the Service Employees’ International Union advocate for de- concentration of power to a variety of national union apparatus.
Though there are geographical issues at play in the movement, it becomes necessary to come up with ploys that would harmonize the movements and strategies that are not only sensitive to the local needs but also able to challenge these private corporations be they local, national or global.
Through this, workers are able to battle for varying rights and at the same time apply the benefits of their struggle to all employees in that field.
How labor policies can be reformed to serve the cleaners and domestic workers better
Labor policies ought to influence laws and regulations that would assist in strengthening organizations of informal employees through facilitating policy discourse and procedures that involve representatives of these organizations.
Policy makers, economic strategists and the global community should recognize, understand and give support to the lower working classes in their organizations.
Concerning institutional discrimination, international labor assemblies ought to put into consideration the incomparable work delineation of this workforce and design or reconcile their policies in a manner that will ensure fairness.
Government policies should also take into consideration the needs of the workers and the demands for the workers and come up with laws and regulations that would provide for quality care of their needs and their families’ even as they fill those positions.
It is also necessary for the international community to establish global standards for domestic workers. This will ensure that their human rights are not violated and their legal rights are protected. It will also ensure that the workers are accorded the recognition and equal protection just like other workers similar fields of work.
Conclusion
Whether in the developed or developing world, whether large or small, the operations, wages and working conditions of private corporations bear resemblance to each other. While it is good for consumers to access products at a lower price, the workers need also earn decent wages for their labor.
The cleaning sector is one of its kinds. Therefore, there is need for adjustments in the labor policies and the immigration policies so as to eradicate the possibility of misuse and mistreatment of workers.
Works cited
Aguiar, Luis and Herod Andrew (eds). The Dirty Work of Neoliberalism: Cleaners in the Global Economy. Oxford: Basil Blackwell, 2006. Print.
In the field of international finance and the global economy, the issue of government intervention in the business activities of organizations has always been an ambiguous aspect. Supporters of the classical principles for resolving these relations adhered to the position of removing restrictions from authorities and providing the freedom of financial activity to those companies that brought profit to the budget.
However, today, the concept of neoliberalism promoted in many states involves reassessing corporate opportunities and freedoms, which is the topic of discussions and protests among some of the companies involved. In order to evaluate the manifestations of both concepts, it is essential to analyze their key features and compare how their provisions and principles differ. Based on the examples of the activities of large international organizations, neoliberal influence will be examined from the perspective of economic impact. In the current context of global finance, the role of government in regulating cash flows and profits is significant, and sometimes, control approaches maintained by state boards are controversial and ambiguous.
Classical Liberal Economic System
The core of the classical liberal economic system includes several aspects. In particular, the founders of this theory promoted the contractual nature of the relationship between the government and business, the restriction of authorities’ intervention, and autonomy in the context of asset allocation. According to Baylis, Owens, and Smith (2017), classical liberal theorists considered this concept in relation to international organizations and noted that these corporations were able to maintain peace through the competent distribution of finances.
Over time, more features of the liberal economy began to emerge. For instance, Baylis et al. (2017) note a negative attitude towards the overgrown economic and social functions of the state as a component of classical theory. Such an assessment implies excluding mediation between companies and authorities and maintaining exclusively business interaction.
When comparing the theory of classical economic liberalism with modern approaches to the formation of the financial market, the unique features of the traditional concept may be distinguished. In particular, Stockhammer (2016) remarks that, in accordance with the initial practice, corporations were able to create markets and demand on their own, thereby controlling the specificity and volume of supply.
In its traditional form, classical liberalism reflects the idea that for a sustainable business, there is no need to involve governments in order to organize stable and productive monetary control. Markets can work better if they function independently of the state and its motives, and this idea is justified in view of the freedom to develop business prospects and engage any interested parties for cooperation.
Work in the financial sector involves interaction with authorities, but taxation is to be the only way of control from official boards. Thus, the contacts of international organizations with governments should be minimized in accordance with the concept under consideration. Regarding the relevance of this strategy to business sustainability, it is productive and stimulates the development of financial activities in the conditions of healthy competition, which does not contradict the norms of market interaction. In addition, fair conditions are promoted, and each of the market participants has an opportunity to develop a specific business freely and openly. Nevertheless, over time, classical liberal principles succumbed to new approaches that offered different conditions of government-organization interaction.
Nature of Neoliberalism
The current trend of economic globalization and involving numerous market participants to trade unions has become one of the factors that influenced the transformation of classical liberalism. As Blanton and Kegley (2016) argue, geopolitical principles play an essential role in the modern system of international finances, and the aspects of political power affect the economy significantly. As a result of these changes, the trend of neoliberalism has developed.
According to Baylis et al. (2017), this concept does not imply amendments in domestic financial practices solely but means “a process of fundamental structural change in the global political economy” (p. 259). In other words, neoliberalism is the idea of converging a free market and a planned economy by enhancing government control. Despite the fact that this theory was designed to strengthen financial flows and regulate the economic activity of corporations to distribute resources equally, it caused mixed reactions from many stakeholders.
The idea of moving to an updated cash flow control system is explained from different perspectives. Blanton and Kegley (2016) cite the position that numerous currency crises have led to the need to create more reliable mechanisms for coordinating financial activities. However, when analyzing the neoliberal approach to the economy, the integration of business and government structures can have a negative impact on market structure.
The distribution of income in accordance with state justice standards may violate the existing competitive trends promoted among organizations, thereby changing the system of budget revenues. Also, a decrease in inflation as one of the postulates of neoliberalism may be fraught with an increase in taxes levied on financial institutions, which, in turn, will affect their profits negatively (Baylis et al., 2017). These aspects are the reason to doubt the uncompromising benefits of the new economic trend and its relevance to the modern financial market.
Comparison of the Theories
When comparing the concepts of classical liberalism and neoliberalism, one can note that the latter theory is more controversial and ambiguous in relation to existing financial trends. Stockhammer (2016) states that neoliberalism, as a global movement, “has given rise to an unstable finance-dominated accumulation regime” (p. 365). A characteristic feature of the neoliberal practice is that economics and politics do not form two dimensions of social reality, which, being autonomous themselves, interact and intersect under the influence of globalization.
The neoliberal economic model may be considered the system that excludes the creative potential of markets and is designed to work solely to bring profit to the budget due to the constant interaction of governments with organizations. At the same time, as Baylis et al. (2017) note, this concept may be relevant in the context of economic globalization. The authors remark that governments often conflict with private financial institutions due to violations of business equity principles (Baylis et al., 2017). Accordingly, an updated liberal theory can stimulate closer contact between authorities and the financial sector in order to eliminate any biases and flaws.
Therefore, while comparing both economic models, it is crucial to note that classical liberalism offered more free conditions for the activities of international organizations. However, in the context of economic globalization, neoliberalism can help rule out illegitimate practices and establish fair market relations among stakeholders. Thus, the changes have become the consequences of reforming not only in a single area but in the global financial system as a whole.
Reasons for Heavy Government Intervention
The reasons for heavy government intervention in the economy are usually associated with the trend of globalization and the challenges of control over monetary funds. According to Blanton and Kegley (2016), “the speed and breadth of finance capital flow throughout the entire globe” are those factors that require addressing (p. 325). Based on the complexity of market participants’ interaction and, consequently, control difficulties, governments cannot allow the unauthorized establishment of rules and approaches to financial dynamics. In this regard, the practice of neoliberalism is promoted as a principle that may give authorities the opportunity to control all flows and, at the same time, benefit due to replenishing the budget.
Another possible reason is a steady increase in domestic debt and, as a result, searching for ways of involving organizations to help solve this problem. Stockhammer (2016) argues that in the USA, the principle of neoliberalism is a common practice in view of the presence of this problem in the state. Therefore, the reasons for government intervention are associated not only with the desire to equalize market possibilities and eliminate biases but also to solve the problems of domestic economies.
Areas for Government Intervention
Despite the fact that in its optimal form, neoliberalism presupposes market freedoms and the possibility of the independent regulation of financial flows, government interventions take place often. In particular, according to Blanton and Kegley (2016), exchange rate fluctuations are one of the reasons why authorities seek to control state monetary policies. The authors also note that the tax system is another economic sector in which interventions are observed (Blanton & Kegley, 2016).
Attempts to pay off public debts, reduce inflation, minimize social expenses, and other activities are reasons for the desire to control the amount of taxes from large companies and introduce individual practices of contributions. One of the possible manifestations of such an activity is an increase in taxes for those enterprises whose work is environmentally unsafe in order to cover the costs of disposal and prevent harmful environmental impacts. Such examples prove that government intervention in domestic economies is a common trend that is hard to avoid.
Promoting Neoliberal Principles
When assessing neoliberalism as a general concept, one can note that by resorting to this movement, governments seek to provide the freedom of choice and respect for individual human rights. However, in the context of the economic sector, this background is erased, and some controversial aspects are manifested. For instance, as Baylis et al. (2017) argue, states with a neoliberal approach to the economy strive not to preserve the existing order but to develop programs “to dismantle any remaining regulatory structures” (p. 472).
In other words, governments seek to monopolize or, at least, strengthen market leadership, which is expressed in the discontent of many business companies. Baylis et al. (2017) mention some principles that authorities follow in promoting neoliberalism, in particular, the privatization of public services, the abandonment of support programs, as well as “the deregulation of business” (p. 472). To implement their ideas, governments often use the services of some supranational organizations, and this approach proves the extreme interest of many states in promoting neoliberalism.
Regarding the involvement of international financial organizations as tools to maintain the policy of neoliberalism, condemnation is found among interested parties. For instance, according to Blanton and Kegley (2016), the International Monetary Fund (IMF) is often criticized for not being able to influence currency fluctuations, which may thus be beneficial to governments. Also, as the authors state, claims are made against the World Bank, the organization that is called to control global financial funds but is unable to resolve issues of imbalances (Blanton & Kegley, 2016).
The World Trade Organization (WTO), as one of the guarantors of compliance with a fair market economy, promotes the ideas of individual countries’ dominance, which contradicts the policy of equality (Baylis et al., 2017). Such criticism is justified since the inability or unwillingness to regulate financial flows and the relationships of market participants violates the idea of a free economy.
As a result, the possibility of influencing and enforcing trends lies in the hands of individual governments of the former colonial states that impose neoliberal rules. Stockhammer (2016) notes that such countries as the United States, the United Kingdom, and some other WTO members subsidize their production, thereby violating the ideology of a free market. The outcome is the economic decline of the countries of South America, Africa, and other states that cannot compete with more developed market participants.
Stockhammer (2016) also cites the example of southern European countries and remarks that rising inflation and the loss of competition in the international arena are the consequences of a neoliberal propaganda policy. Thus, the promotion of this concept may have negative implications for countries with weak economies.
Significance of Anti-Neoliberal Globalization Protests
Protests against the neoliberal policies promoted by the governments of different countries are evidence of the dissatisfaction of the parties involved with economic changes. Actions in support of free business without the participation of state boards have often been held in recent years in different world cities, which proves the urgency of the problem. Quinn (2018) provides an example of student protests in Quebec in 2012, which drew attention to the issues of global neoliberalism. The author notes that people’s desire to influence international trends through local strikes may be productive and meaningful if protesters’ demands are sufficiently justified and legitimate (Quinn, 2018).
Based on the experience of other protesters in different cities (Montreal, Ontario, Washington, and others), Quebec residents raised the topic of labor opportunities in the context of government intervention in the activities of business organizations. The requirements to abolish strict control principles were based on people’s desire to work in large corporations that, in turn, could not promote their market policies due to government restrictions. As a result, the importance of such protests around the world lies in the controversial nature of economic neoliberalism and its implications.
Conclusion
The controversy and ambiguity of the neoliberal policy promoted by modern governments in the context of market globalization are due to state boards’ influence on the activities of business organizations. Compared to the classical concept, the renewed neoliberal trend allows for the regulation of markets through government intervention. State participation can be observed in the areas of taxation and monetary exchanges. As instruments of influence, supranational organizations (IMF, WTO, and the World Bank) are involved.
Neoliberalism in the financial sector is often criticized in different countries, and the states of southern regions with underdeveloped economies experience the greatest challenges due to the inability to compete in the market. World protests prove the importance of this topic and serve as the ways of attracting authorities’ attention to the negative implications of neoliberalism.
References
Baylis, J., Owens, P., & Smith, S. (Eds.). (2017). The globalization of world politics: An introduction to international relations (7th ed.). Oxford, UK: Oxford University Press.
Blanton, S. L., & Kegley, C. W. (2016). World politics: Trend and transformation, 2016-2017. Boston, MA: Cengage Learning.
Stockhammer, E. (2016). Neoliberal growth models, monetary union and the Euro crisis. A post-Keynesian perspective. New Political Economy, 21(4), 365-379. Web.
Quinn, H. E. (2018). My protest body: Encounters with effect, embodiment, and neoliberal political economy. New Proposals: Journal of Marxism and Interdisciplinary Inquiry, 9(2), 51-65.
The current research paper defends the following thesis: Neoliberal policies in Mexico notwithstanding the fact of their warm welcome by the international community and international financial institutions had a negative and devastating impact on the country’s social fabric ruining social solidarity, autonomous development, state social and human development functions and instigating further exploitation of Mexican labor by transnational and national capital.
Neoliberalism as a set of social and economic policies is closely tied with the context of globalization which is characterized by aggressive development and expansion of financial and transnational capital in the third world and Western countries. The theoretical premises of neoliberal policies were elaborated in 70-s by the group of scholars closely associated with the interests of international monopoly capital which sought to debunk the so-called welfare state in the West and install a new model of economy which was to reduce state intrusion into the economy, decrease taxes and improve investment incentives.
It was the project of complete market deregulation and as W. Graf rightly calls it, a new recommodification of the state which refused its role in guaranteeing high social standards and haltering the aggressive nature of the market economy. Friedman, Hayek, and other neoclassic economists were the main proponents of neoliberalism as the new model of state policies in society. As D. Harvey claims, neoliberalism hence may be understood as the ‘capital’s class power renewal’ (Harvey,).
Third World countries such as Mexico benefited during the period of Welfare State in the West when capitalist expansion was hindered by the state’s crucial role. For Mexico, as other Latin American countries, the period after World War 2 was characterized by great industrialization leap forward combined with an active state role in bridging the gap between rich and poor. The development of the national economy was autonomous but not perfect due to structural inequality between the center and periphery. But even these minor achievements were ruthlessly terminated by neoliberal globalization that reinforced itself through political and economic pressure of international capital centers like the United States, international financial institutions as IMF, World Bank, etc.
For Mexico, the negative consequences of this transformation were evident since they transformed into the entire periphery of the United States, the supplier of disenfranchised labor and natural resources. The development of social services and the protection of workers’ interests were stopped and the country sunk into aggressive exploitation, moral, cultural, and personal deprivation while few benefited from the ‘intimate’ relations with the political establishment, comprador oligarchy, and American corporations which promoted their power through new ‘integration’ mechanisms such as NAFTA. But let’s look concretely at how it happened.
The neoliberal dogma of growth and economic consequences of neoliberal reforms on Mexico
Neoliberals confuse either consciously or not economic growth reflected in the level of Foreign direct investment, GDP with real development of national economy and bridging the gap between rich and poor which is considered to be the main achievement of the Western welfare state. This is explained by the fact that neoliberals protect the interests of grand moguls and capitalists whose profits stimulate the improvement of statistical economic variables. For instance, economic growth that
was the case in Mexico in 1996-2000 results not from national economic and social development but the neoliberal restructuring of the Mexican economy the growth of which depends on exports rather than the development of the national economy and internal market. The latter in their turn depend on creating a large portion of the middle class and consumers, which is incongruent with neoliberal theory and practice. As M. Hart-Landsberg suggests that the percentage of exports in GDP had grown from 15 % in 1993 to 33,5 % in 1999 due to the implementation of neoliberal policies that loosened the grip on American transnational monopolies which were provided by the tax-free conditions and no social guarantees vis-à-vis Mexican state (Hart-Landsberg, 2002).
Export reorientation of the Mexican economy soon resulted in the deterioration of other sectors of the economy, especially community economic development because the state was moved by the interests of the market and international oligopolies rather than the interests of the people.
Mexico neoliberal governments following NAFTA agreements and IMF ‘conditionalities’ implemented massive scope of reforms including capital account and trade liberalization, tax reforms, liberalization of the labor market, liberalization of the pension system, etc. which can be described as the total regress in comparison to the import-substitution system which was dominant after World War 2 (Kunhardt, 2001).
General economic consequences of these reforms can be described as opening Mexico to a free movement of capital and investments in the international market at the expense of social development. While Mexico was forced by International Financial Institutions to liberalize its market and refuse all protectionism, budget deficit, social expenditures on education, public health, national projects, Western countries while promoting liberal rhetoric constantly refused from its total implementation themselves. Therefore, inequalities between peripheries and center were reinforced making the Mexican economy dependent on the changing conditions of the international market, investor preferences as in the case of the 2001 year crisis in the United States when low levels of consumption made its automobile monopolies reorient capital assets from Mexico to East Asia (Hart-Landsberg, 2002).
Basic elements of neoliberal transformation in Mexico and its immediate consequences
Neoliberal restructuration in Mexico initially took the form of the cut of public spending which resulted in massive economic stagnation in 1983 and 1986. In its turn, the need to pay ever-rising public debts was one of the main causes of rising trading imbalance and surpluses negatively affecting national economic development.
The next step was initiating a massive privatization project which changed economic conditions radically. If in 1984 Mexican state-controlled over 1, 200 firms, in 1988 it had only 448 state enterprises at its disposal which in their turn were planned to be privatized (ECLA, 110).
In the middle of the 90-s with the growing neoliberal transformation of international trade and capital regime, Mexico accession to GATT and WTO all trade restrictions including tariffs, quotas, import licenses were eliminated which resulted in many national manufacturing firms going to bankruptcy as they lost national market filled by international corporation and investors (Hart-Landsberg, 2002).
Financial regulation was also undergoing change leading to complete deregulation of foreign financial investment and currency which was one of the main results of growing inflation and future debt and peso crisis.
Changing economic priorities and orientation of the Mexican ruling class was reinforced by accessing the NAFTA area which benefited both big American corporations and financial institutions and Mexican comprador oligarchy (Harvey,2005, 121).
Mexican workers were that wide sector of the population that was negatively affected by the neoliberal reforms immediately after their realization.
Their real wages fell approximately by 30 percent during the 80-s. Mexican elites in their turn effectively used the possibilities opened by the economic crisis benefiting from Mexican currency devaluation which made it possible for them to offshore their funds to foreign bans worsening the scope of the crisis. Besides this, they were the first beneficiaries of the state’s privatization campaign in which they gained the best enterprises at the cheapest prices.
Neoliberalism in its own right
The massive growth that happened in Mexico during 1990 and 1993 is mainly connected by the intensive inflow of foreign capital and investment which reached the mark of 91$ billion. Though this ‘growth without development’ led to neoliberal euphoria these changes were detrimental to Mexican social situations and independent economic development. For instance, 1992 saw a dramatic rise in account and trade deficits. As the ECLA report suggests, the total trade deficit amounted to $ 18,5 in 1994 compared to 0,9$ billion 4 years earlier.
Negative economic and social impacts of neoliberal globalization combined with political instability caused by alter globalism movements and Zapatista movements in Chiapas province show great Mexican depends on international speculative capital whose primary interests are profits but not Mexican stability and human development. In 1994 with the growth of such social instability investors began pulling money out of Mexico creating ruins behind them. All this caused the rapid fall of the peso which only intensified the capital flight. Finally, this led to a total collapse of the economy in 1995 when wages fell by 25 percent and GDP by nearly 10 percent.
The growing crisis in concert with government inability and unwillingness to implement anti-neoliberal policies resulted in further development of export-oriented foreign (mainly American businesses) in Mexico which benefited on the lessening level of salaries and super-exploitation of the labor force in so-called maquiladoras – enterprises where products were manufactured without tax deduction and then exported to the United States (Harvey, 2005, 164).
In this way, Mexico became deindustrialized during 80-s and 90-s and became heavily dependent on imports of various categories of manufactured goods.
Human costs of these changes as it was noted were immense. During seven years from 1991 to 1998, the real percent of employed urban workers for the wages fell by nearly 15%. During the same period, the percent of the workers that were unpaid rose by 7,4 percent and the number of self-employed had increased by nearly 6,2 percent. More than 50% of workers were subjected to massive salary declines. As a result, many workers had to live in poor suburbs created in the Mexico agglomerate where they live without water, canalization, and other necessary social services. The main question arises: why did employees were so badly damaged by neoliberal reforms and globalization if these are described as the main elements of economic and social development? To answer these questions it is necessary to analyze different modes in which new neoliberal reforms are reflected in economic enterprises and social conditions.
For instance, maquiladoras are foreign firms (mainly American) which import resources duty-free since they export all the production. This type of enterprise became central to the Mexican economy during the process of neo-liberalization.
By the year 2000, they produced 47% of all export and 54 % of total manufactured exports.
Besides this, it should be noted that the growth of maquiladoras sectors was accompanied by the massive rise of workers employed in it from 420,000 (in 1990) to 1.3 million in 2000.
In its turn as a reflection of the ever-rising export orientation of the economy urban employment and national manufacturing had rapidly fallen to record low marks.
Maquiladoras’ wages are twice as less as traditional manufacturing wages. Besides these HRW and other organizations claim that maquiladoras pollute the air and natural resources, do not organize normal conditions for workers, and super exploit them as disenfranchised labor without home and rights. This results in that the approximate average work life of maquila workers is 10 years because of professional diseases, various injuries, and firing the pregnant women.
Borderline when maquiladoras are usually created has poor conditions that are even more deteriorated. Among them is the absence of living infrastructure such as sewage systems, houses, clean water. Hence, all these works only for generating profit notwithstanding negative social consequences for ordinary people. Besides this, it should be noted that maquiladoras are functioning like international enclaves which are not connected to the Mexican economy. For instance, 97% of production inputs are imported from the United States and do not participate in national economic metabolism.
When the national economy in Mexico stagnates international capital considers it be more profitable to transform their activities in export production which is the most profitable.
This business is largely dominated by transnational automobile companies such as Nissan, GM, etc. These companies are the leading export-oriented companies in the country.
Contrary to the widespread claim that these industries contribute to Mexico transforming into a modernized economy, the abovementioned phenomena are the signs of ever-increasing deindustrialization of the Mexican economy and social sector destruction. Employees are badly affected by the changing patterns of the market as they do not have a permanent guarantee in social security in the companies they work for. As the market is reinforced in its profit-seeking impulse, workers become hostages of its flexibility. Many part-time workers, season workers are widespread not having any security, insurance, super-exploited. The legislation works in favor of grand international and comprador capital ignoring the interests of the workers.
Peasant and indigenous people territories such as Chiapas become the arenas of protest movements as in the case of the Zapatista movement. They protest against.
Aggressive globalization leads many people to abandon their home places seeking a job just to earn their living. Economic development of provinces is halted and they serve as a supplement to the colonial economy of the United States providing it with agricultural products which bring millions of dollars for local moguls capitalizing on cheap peasant labor. As ECLA reports postulates “Mexican automotive industry is focused essentially on the North American market, is dominated by foreign companies and has limited national linkages” (ECLA, 1999). This is the direct result of neoliberal economic policies.
But not only the transnational corporations are predominantly export-oriented but local national companies as well. As in the case of the US companies, their export orientations were by large part motivated by the 1994 peso crisis and the lowering of national wages. The relation of export to import rose by 15 % in favor of export only in mere 4 years which is good evidence of the abovementioned trend.
As far as these national exporters progress in breaking ties with the national economy they become more and more skeptical over national projects and rising wages.
Even such promoter of neoliberal policies as World had to acknowledge that the Mexican economy is disarticulated and misbalanced: “The productive sector continues to be characterized by a dual structure that seems to have become increasingly differentiated in the wake of trade liberalization and the banking crisis of the 1990s. On the one side is a dynamic export sector made up of internationally competitive firms, including the maquiladoras, and on the other is a less efficient domestic-market-oriented sector dominated by microenterprises and small- and medium-scale firms” (Clifford, 2001)
The domestic purchasing capacities have been continuously undermined by lowering wages which in its turn is designed by the government to support exporters. Exporters’ profit is more dependent on wage level than any other economic entity. As they gain profits in dollars or other foreign currencies they are not inclined to exchange them in devalued peso.
Besides this, it should be noted that the collapse of the Mexican banking and financial system leads to the collapse of many low and medium-size companies which were unable to borrow money for their activities. The bank that was left in the hands of national oligarchy were used for speculative operations on the peso, which had a detrimental effect on the Mexican economy and the social well-being of the people.
In its turn, this led to the considerable decline of loans to the private sector – by 40 percent and the total disappearance of customer credits.
International financial capital was at the forefront of benefiting from the banking crisis. It bought the majority of Mexican banks becoming the main source of credit to large transnational and local corporations.
As it was noted above new configuration of the Mexican economy makes it dependent on the U.S. economy. For instance, as a result of the U.S. crisis, the Mexican economy declined by approximately 1,5 percent in 2001. The production by maquiladoras fell by nearly 9,2 % and employment in maquiladoras by 20%. In its turn, constant Mexican instability forces the transnational corporation to reorient their businesses to Asia and other countries.
Conclusion
Neoliberal transformations in Mexico despite the vivid enthusiasm of international business and its clients was detrimental to Mexican society.
First of all, the Mexican economy was eliminated as the integral entity as its national market was neglected by export and international capital. The ties between national enterprises were broken and internal development stopped. Besides these neoliberal reforms harmed the stability of the financial system as liberalization of trade and capital account market resulted in inflation and currency crises. State which refused of its social responsibilities and made heaven conditions for international corporations and national capital faced up with insolvency and huge foreign debt reproducing itself on a high scale.
In its turn, social fabric and leaving conditions of people deteriorated in comparison to the period of development between 50-80-s. Real wages lowered, social guarantees eliminated. Entire communities faced up the problem of water supply, housing absence, and the state’s inability to provide basic health, education, and other necessary citizen services.
Maquiladoras and exploitation of Mexican employees intensified during the years of neoliberal restructuring leaving the country in ruins and with large polarization between wealth and poverty.
References
Clifford, Richard. (Washington D.C.: The World Bank, 2001), Growth and Competitiveness” in Mexico: A Comprehensive Development Agenda for the New Era, Marcelo M. Giugale, Oliver Lafourcade, and Vinh H. Nguyen, editors, 67.
Hart-Landsberg, Martin (2002). Challenging Neoliberal Myths: A Critical Look at the Mexican Experience. Monthly review, Vol. 54., # 7.
Harvey, David. A Brief History of Neoliberalism. New York: Oxford University Press, 2005.
Economic Commission for Latin America and the Caribbean, Statistical Yearbook for Latin America and the Caribbean 1999 (Chile: United Nations), 110.
Kunhardt, Jorge Basave (2001). Accomplishments and Limitations of the Mexican Export Project,” translated by Enrique C. Ochoa, Latin American Perspectives 28, No. 3 43.