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5 July 2009

Neoliberalism

Neoliberalism is a label for economic liberalism used only by critics of the doctrine. The central principle of neoliberal policy is a noninterventionist "free market". The prime global advocate[citation needed] is the International Chamber of Commerce in Paris, whose self-defined trade and commerce mandate is: "to break down barriers to international trade and investment so that all countries can benefit from improved living standards through increased trade and investment flows". Neoliberalism is a terrible name for an important movement. Economic growth is most is important now. It is essential to almost everything else we want to achieve. Our hero is the risk-taking entrepreneur who creates new jobs and better products. Liberalism has become a movement of those who have arrived, who care more about preserving their own gains than about helping those in need.
Broadly speaking, neoliberalism seeks to transfer part of the control of the economy from public to the private sector,to, ostensibly, bring a more efficient government and to improve economic indicators of the nation. The definitive statement of the concrete policies advocated by neoliberalism is often taken to be John Williamson's "Washington Consensus", a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the International Monetary Fund (IMF) and World Bank). Williamson's list included ten points:
* Fiscal policy discipline; * Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment; * Tax reform – broadening the tax base and adopting moderate marginal tax rates; * Interest rates that are market determined and positive (but moderate) in real terms; * Competitive exchange rates; * Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by law and relatively uniform tariffs; * Liberalization of inward foreign direct investment; * Privatization of state enterprises; * Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions; and, * Legal security for property rights.
Impacts Neoliberal movements ultimately changed the world's economies in many ways, but some analysts argue that the extent to which the world has liberalized may often be overstated. Some of the past thirty years' changes are clear and unambiguous, like:
# Growth in international trade and cross-border capital flows # Elimination of trade barriers # Cutbacks in defense spending, although it is unclear whether these reductions are associated with neoliberalism or the peace dividend that was supposed to accrue at the end of the Cold War # Cutbacks in public sector employment # The privatization of previously public-owned enterprises # The transfer of the share of countries' economic wealth to the top economic percentiles of the population.
Other changes are not so apparent, and are debated in the literature: * Reduction in the size of governments. Governments do not appear to have shrunk wholesale. With the exception of exceptionally high-spending governments, government expenditures (as a percentage of GDP) appears to have stayed the same since 1980. Most of the cuts to government spending appear to have been a temporary phenomenon that took place during the 1990s. * Social welfare spending. Many governments have generally spent more on health, education, social security, welfare and/or housing. However, populations have increased and populations have aged in affluent countries. As well, some of these services (such as health care and education in the U.S.) are also very inefficiently organized. Criticisms:
Notable opponents to neoliberalism in theory or practice include economists Joseph Stiglitz, Amartya Sen, and Robert Pollin, linguist Noam Chomsky, geographer David Harvey, and the anti-globalization movement in general, including groups such as ATTAC. Critics of neoliberalism and its inequality-enhancing policies argue that not only is neoliberalism's critique of socialism (as unfreedom) wrong, but neoliberalism cannot deliver the liberty that is supposed to be one of its strong points. Daniel Brook's "The Trap" (2007), Robert Frank's "Falling Behind" (2007), Robert Chernomas and Ian Hudson's "Social Murder" (2007), and Richard G. Wilkinson's "The Impact of Inequality" (2005) all claim high inequality is spurred by neoliberal policies and produces profound political, social, economic, health, and environmental constraints and problems. The economists and policy analysts at the Canadian Centre for Policy Alternatives (CCPA) offer inequality-reducing social democratic policy alternatives to neoliberal policies. In addition, a significant opposition to neoliberalism has grown in Latin America, a region that has been seen only limited implementation of neoliberal policies. Prominent Latin American opponents include the Zapatista Army of National Liberation rebellion, and the governments of Venezuela, Bolivia and Cuba.
Some critics view neoliberalism as both an economic and political project aimed at reconfiguring class relations in societies. They allege that many "core countries" middle class and "labor aristocracy" families have become constrained by the cascading costs created by the conspicuous consumption of goods and services encouraged in the system, as a result many are losing allotments of time once used for personal development, recreation, family, community, and citizenship as a result of lower wages and inflation coupled with a decrease in the amount of or opportunity for advanced formal education and/or training. Moreover, they claim workers have been so heavily disciplined by capital and the capitalist state that, as Alan Greenspan said, they are "traumatized" and unable to politically moderate capitalist aggression. Daniel Brook's "The Trap: Selling Out to Stay Afloat in Winner-Take-All America" (2007) describes the anti-democratic effect of decreased middle class welfare. The massive U.S. military-industrial complex adds an extra layer of repression to working class "traumatization," according to (Harvey 2005), making resistance and inequality-reducing policy innovation seem unfeasible to most workers. A "traumatized" working class allows the capitalist class absolute reign, which Harvey claims – citing the economic crises of 1873 and the 1920s – to be disastrous for economies around the globe, states, and working class people; though, he points out, on average capitalists were not negatively impacted by these crises
References: Wikipedia, A Neoliberalism Manifesto, A Neoliberal Education.

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