2. Neoliberalism Flashcards
Define neoliberalism
- A political agenda that transports governance in a certain way
- A form of human liberation
- Frees markets
- Replaces big state to the extend that it only protects these markets
- Belief: markets create efficiency
- Belief: Governments can never have the information needed to make the most efficient transaction
OR:
- According to Harvey (2005), Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices.
What are the three pillars of neoliberalism?
- Deregulation
- Privatization
- Liberalization
According to Harvey (2005), how can we interpret neoliberalism?
- According to Harvey (2005), we can interpret neoliberalism either as a utopian project to realize a theoretical design for the reorganization of international capitalism
- Or as a political project to re-establish the conditions for capital accumulation and to restore the power of economic elites.
Describe the key historical moments that characterized the rise of neoliberalism
- Late 1960s: double crisis in US
- 1970s: wealth crash
- 1970s-80s: Volcker shock
- 11 September 1973: Coup-de-etat in Chile
- 1973: oil crisis
- 1978: Deng Xiaoping opens Chinese markets
- 1979: Thatcher into office
- 1981: Reagan into office
- 1989: Washington Consensus results in Global Unequal Exchange
Provide an example of where in the sustainability world you see neoliberalism
- Because the SDG framework does not have legal binding, it places responsibility of achieving targets to consumers rewarding companies in a free market system
- Global unequal exchange (Global North has been accumulating profit by dumping contamination in Global South)
- Privatization of water services, dams, energy companies, recycling companies
- Tradable carbon permits (commodification is ghost of neoliberalism)
- Inequality in access to water in water stressed countries
What is the main point made by Harvey (2005) in chapter 1: freedom’s just another word?
Harvey explains neoliberalism at its core as a project about human dignity and individual freedom. He lists the events that led up to the neoliberal hegemony. According to Harvey, neoliberalism has resulted in a system that is authoritarian, forceful, anti-democratic, and the cause of inequality and massive concentrations of power.
According to Harvey, what are the two core ideals of neoliberalism?
Human dignity and individual freedom. (Harvey, 2005)
What is the connection of the Mont Pelerin Society with neoliberalism?
The Mont Pelerin Society was highly influential in shaping neoliberalism. They had a strong belief in Smith’s Invisible hand theory. They were highly influential in the 70s. Harvey (2005)
What was the initial goal of neoliberalism and how were these ambitions abandoned?
The goal of neoliberalism was to prevent a crash such as in the 30s, and to prevent war.
However, the US used neoliberalism to pry open other countries, in return for trade, and as a way to fight off communism and revolutions.
Since the 1980s, neoliberalism has caused a widening income gap.
Harvey (2005)
What happened in Chile in 1973 and why was it important?
- On September 11, 1973 in Santiago Chiley, the bombing of the Presidential Palace took place in order to kill the democratically elected socialist Allende, and to replace him with Pinochet. This operation was directed by the CIA.
- The Chicago Boys (Chilean economists educated under Milton Friedman in the 50s and 60s became economic advisors of the new government).
- One of the first policy changes the new government made was privatization of goods, especially of water.
- This established the playground for the neoliberal project.
What is the Volcker shock?
In order to restore the class power in 1979, the Volcker shock was given. Paul Volcker was the head of the Federal Bank in the US, and raised interest rates. Thereafter, the FED fought aggressively against inflation, sometimes resulting in high unemployment rates.
What happened after the Yom Kippur war?
When the US was cut-off from Arabian oil during the 1973 oil crisis following their support for Israel during the Yom Kippur war, the US threatened Saudi Arabia with violence to recycle all of their petrodollars through New York investment banks.
Explain how the Washington Consensus was a driver of the Global Unequal Exchange
- The Washington Consensus was a set of economic policy recommendations for developing countries (Latin-America in particular) that became popular during the 1980s.
- It often refers to the dogmatic belief that developing countries should adopt market-led development strategies that will result in economic growth that will trickle down.
- Following the Washington Consensus, different banks and government agreed that any excess of money had to be reinvested in the Global South.
o Through a flow of money from OPEC (petrol dollars) through the World Bank, major loans were given out to the south. These loans were called “stabilization and adjustment programs”. - These loans, used for infrastructure in the 1980s, had high interest rates.
- A lot of the money was lost due to corruption, inefficient governments and military interventions, and these governments defaulted.
- This gave the World Bank, or the US, an excuse to take control of these countries. This is how the Global North gained control over these resources, and it gave rise to the global unequal exchange.
