Neoliberalism theory, Lecture notes of Sociology

Download Neoliberalism theory and more Lecture notes Sociology in PDF only on Docsity! University of Tasmania Perspectives on the Social World 2021 What is Neoliberalism?  Neoliberalism has often been used by critics of free-market economics (David Harvey & others). Supporters of Neoliberalism are more likely to use the term– free market economics.  Ideology and policy model.  Neoliberalism is a largely unregulated capitalist system with a set of economic policies.  In “A Brief History of Neoliberalism” (2005), the Marxist thinker David Harvey defines neoliberalism as “a theory of political economic practices that proposes that human wellbeing can best be advanced by liberating individual within an institutional framework characterized by strong private property rights, free markets, and free trade.”  According to Foucault, the establishment of neoliberalism coincides with a new mode of exploitation of peoples’ activities, which he calls governmentality. Neoliberalism’s assumptions?  Government is the problem, not the solution.  Individual freedoms are guaranteed by freedom of the market and of trade.  Free market reforms can lead to significant benefits, e.g. increased trade and investment can play an important role in increasing real wages, job creation and economic growth.  Thus, this requires the removal of various controls deemed as barriers to free trade, such as: tariffs, regulations, certain standards, laws, legislations, and restriction on capital flows and investment.  Sustained economic growth as the means to achieve human progress, its confidence in free markets as the most-efficient allocation of resources. 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World Bank Grants loans for major projects | Development aid programs Secures private investors against non-commercial risks World Trade Organization (WTO) Government of global economy High court of trade disputes Agents of Neoliberalism: Aims and Contradictions  These financial institutions were created to assist in global economic post-war recovery.  However, it is clear they are actually avenues for spreading and enforcing neoliberal policies.  For the IMF, loans were given under the condition that the borrower country must adopt a package of economic policies that were neoliberal in nature and promoted US dominance (Structural Adjustment Policies SAPs during 80s).  “The WTO works for the powerful nations (USA & EU) and not for all countries. The failure of neoliberalism  Incentivize and free economy: Would result in quick growth from which all would benefit; even tax revenues would grow.  Results were the opposite: Growth slowed and inequality increased; those at the bottom and middle saw their incomes stagnate or fall; poverty is everywhere.  David Harvey (2005) has concluded that neoliberalism was, from the very beginning, a project to achieve the restoration of class power.  1970‟s capital accumulation crisis: There were clear political and economic threats to elites and ruling classes everywhere. They had to move to protect themselves from political and economic crises.  After the implementation of neoliberal policies in the late 1970‟s, increases in income inequalities spread in the US, Britain, Russia, China and Australia. The failure of neoliberalism - Neoliberalism serves political agendas and not the wellbeing of people. That is, neoliberalism was always a political game serving certain interests. It was never supported by economic theory. - Example, America's policies have served the military-industrial sector to protect the elite and interests of corporates and businesses. . Federal Discretionary Spending, FY 2019 $1.38 trillion Employment &Labor__ Science $36 billion, 3%, 945 billion, 3% Food & Agriculture $16 billion, 1% Transportation $44 billion, 3% International Affairs $45 billion, 3% Energy & Environment $51 billion, 4% Education 374 billion, 5% Military $730 billion, 63% Health $79 billion, 6% Veterans $87 billion, 6% Housing & Community. $88 billion, 6% © _ Government $90 billion, 7% NATIONAL PRIORITIES nationalpriorities.org ma PROJECT Source: OMB, National Priorities Project The failure of neoliberalism - Free from government regulation, can enable individuals and households to handle the risks they face more flexibly than a social-democratic welfare state- The Global Financial Crisis (GFC) and economic crisis during COVID-19 proved this to be wrong- people are unprotected (health-US & India as an example- and jobs). . The failure of neoliberalism Austerity politics are the feature of the 21st century (i.e. an increase in taxes & decrease in government spending). 1. The United Kingdom: the fiscal policy after the 2008 recession (reductions were made in public spending and taxes were increased). 2. Greece: the Greek tax system underwent major changes in 2010 (wage reductions to public workers, sold off large public assets, such as state-owned buildings, etc.). 3. Australia: cuts to education sector (e.g. university funding cuts, esp. for arts and humanities programs). The failure of neoliberalism Despite the good intentions of many policies framed under the Structural Adjustment Policies (SAP), they often led to more harm than good (e.g. education/health are no longer free for the poor). The failure of neoliberalism One major factor responsible for global poverty and inequality is that the economics cannot be separated from politics (Harvey, 2005); in other words, neoliberalism influences and manipulates trades for certain agendas and interests.