CULT 320 Globalization and Culture

Kara Heitz, 09/18/2014 & 09/25/2014

Topics:

• What is neoliberalism?

• Neoliberalism as Ideology

• Brief history of neoliberalism

• Harvey’s critique of neoliberalism

What is Neoliberalism?

“Neoliberalism is a theory of political economic practices proposing that human well-being can best be advanced by the maximization of entrepreneur freedoms within an institutional framework characterized by private property rights, individual liberty, unencumbered markets, and free trade. The state has to be concerned, for example, with the quality and integrity of money. It must also set up military, defense, police, and juridical functions required to secure private property rights and to support freely functioning markets. Furthermore, if markets do not exist (in areas such as education, health care, social security, or environmental pollution), then they must be created, by state action if necessary. But beyond these tasks the state should not venture.” (Harvey, 22-23)

What is Neoliberalism?• Neoliberalism as:

– Set of specific policies– Ideology

• Set of specific policies: D-L-P

– Deregulation (of the economy)• Ex. Removing government regulations in areas like the environment and finance

– Liberalization (of trade, industry, and finance)• Ex. Cutting tariffs, lowering trade barriers, removing capital controls on foreign

investment

– Privatization (of state-owned enterprises)• Ex. selling public companies, esp. in areas like utilities, energy, communication

– Other policies: tax cuts (esp. for businesses and high income earners), reduction of social service and welfare programs, control of interest rates by central banks to keep inflation in check (over concerns with unemployment)

Neoliberalism as Ideology?• What are ideologies?

– “… systems of widely shared ideas and pattered beliefs that are accepted as truth by significant groups in society” (Steger & Roy, 11)

– “The commonsense way we interpret, live in, and understand the world” (Harvey, 23)– “For any system of thought to become dominant, it requires the articulation of fundamental

concepts that become so deeply embedded in commonsense understandings that they are taken for granted and beyond question.” (Harvey, 24)

• Components of neoliberal “ideology”– Appeals to individual freedom and liberty (Harvey, 24-25)– Idealized images of consumerist, free market world (Steger & Roy, 11)– Single global marketplace = better world for all (Steger & Roy, 11-12)

• Ideologies as in the interests of some (but presented as universal)– “In whose particular interests is it that the state takes a neoliberal stance and in what ways

have those interests used neoliberalism to benefit themselves rather than, as is claimed, everyone, everywhere?” (Harvey, 24)

Neoliberalism in Historical Context• Some problems with Capitalism

– Capitalism inherently crisis-prone; boom & bust cycles• Ex. Great Depression (1930s)

– Generates lots of overall wealth but creates inequalities• Distributional issues

• How to deal with these problems?– Managed capitalism

• Use government policies to address– Government spending during recession; curbing inflation during growth periods;

promoting employment– Social programs and taxes to address inequalities

– Marxism• Overthrow the whole system

– Neoliberalism• Crises actually caused by government interference in economy

“Golden Age of Managed Capitalism”

• Time period: ~1945-1975• Associated with high growth rates, low unemployment, low inflation and

prosperity of middle class (esp. in the West)• A.k.a. “embedded capitalism”; Keynesianism

• Domestic policies: – Higher taxes (esp. on corporations and wealthy)– Gov’t social programs – pensions, health care, unemployment benefits, education– Publically owned companies (ex. utilities, energy, communication)– Strength of unions – increases bargaining power of working classes

• International policies:– International Organizations (GATT, IMF, World Bank)– Gradual, managed trade liberalization– Controls on cross border financial flows

• Fixed exchange rates, capital controls

Global Economic Crises of 1970s

• 1971: end of global fixed exchange rate system• 1970s: global economic recession– Stagflation (high unemployment & high inflation)

• 1973, 1979: oil shocks• Late 1970s – early 1980s: Third World debt crisis

• Crises leave opening to question managed capitalism policies

Spread of Neoliberal Ideas Globally• Initial adoption in US & UK (1980s)

– Ronald Reagan, Margaret Thatcher

• Emulation by other governments– Ex. New Zealand, Mexico, post-apartheid South Africa– Fall of communism– Influence of Western (esp. US) economics departments (Chicago School)

• Policies of International Institutions– Structural Adjustment loans (IMF and World Bank)

• Esp. to Latin American and African countries– “Washington Consensus”

• Pressure by Multinational Corporations– “Race to the bottom”

• Military coercion– Chile, Iraq

Globalization & the Neoliberal Era• Neoliberal era: early 1980s – late 2000s– Neoliberalism associated with current era of

globalization

• Features of neoliberal era:1. Broad adoption of D-L-P policies2. Expansion of global trade3. Rapid rise in global financial flows4. Increasing power of Multinational Corporations5. Rising income inequality

• Still dominant today?

Income inequality in the U.S.

Small Group Work

• How does neoliberal philosophy and actual practice diverge according to Harvey?

• What is Harvey's concept of “accumulation by dispossession”?

Harvey & Neoliberalism

• Neoliberalism as Ideology– Commonsense; cannot be questioned

• Neoliberalism as project to restore upper class power• Divergence between neoliberal philosophy and practices

– Ex. Role/power of state• Spread and maintenance of neoliberal policies through

state coercion– Legitimacy of non-democratic channels?

• Accumulation by dispossession