Transcript A Brief History of NEOLIBERLISM

A Brief History of
NEOLIBERLISM
BY DAVID HARVEY
Two tales of Neoliberalism
In the United States:
Two Tales of Neoliberalism
In
India:
Police brutality
against worker’s
strike at Honda car
plant, Gurgaon
Malls of the few, chawls of the many
P. Sainath (2005)
The scenes from Gurgaon gave us more than just a picture of one labour protest,
police brutality or corporate tyranny. It presented us a microcosm of the new and
old Indias. Different rules and realities for different classes of society.
The Haryana police lived up to their history… Gurgaon was about the police and
administration increasingly acting as enforcement agents of big corporations. Not
without precedent in the past. But more and more a symbol of the new India…
The streets of Gurgaon gave us a glimpse of something larger than a single protest.
Bigger than a portrait of the Haryana police. Greater than Honda. Far more
complex than the "image of India" as an investment destination. It presented us a
microcosm of the new and old Indias. Of private cities and gated communities. Of
different realities for different classes of society. Of ever-growing inequality. Of the
malls of the few and the chawls of the many.
What is neoliberalism?
-Economically: Restoration/ constitution of class power
-Ideologically: a theoretical doctrine 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; Uses concepts of human dignity and individual freedom to
appeal to broadly to a wide variety of constituents, becoming a ‘common sense’
discourse
-Politically: The neoliberal state should persistently seek out internal
reorganizations and new institutional arrangements that improve its competitive
position as an entity vis-à-vis other states in the global market
-Historically: Comes to fruition in late-1970s/ early-1980s to replace post-WWII
political economy of ‘embedded liberalism’ in the West; gains traction through rise
of information technology, fall of Soviet Union, globalization of investment and
trade
Crisis in capital accumulation:
By mid-1970s, discontent was widespread. There was a clear political threat to
economic elites and ruling classes everywhere. In post-WWII settlement upper
class economic power was restrained as redistribution of wealth accorded to labor
a much larger share of economic pie than previously.
“Redistributive effects and increasing social inequality have in fact been such a
persistent feature of neoliberalization as to be regarded as structural to the
whole project.”
Inequality
“After the implementation of neoliberal policies in the late 1970s , the
share of national income in the top 1 percent of income earners in the US
soared, to reach 15 percent by the end of the century (close to pre-WWII
share). The top .1% of income earners in the US increased their share of
the national income from 2 percent in 1978 to 6 percent by 1999, while the
ratio of the median compensation of workers to the salaries of CEOs
increased from just over 30 to 1 in 1970 to nearly 500 to 1 by 2000…With
the Bush administration's tax reforms taking effect, the concentration of
income and wealth in the upper echelons of society is continuing apace
because the estate tax (a tax on wealth) is being phased out and taxation
on income from investments and capital gains is being diminished, while
taxation on wages and salaries is maintained.”
Class Power: Increasing productivity, stagnant real wages (adjusted for
inflation)
Class Power: Decreasing taxes on wealthy
“Neoliberalization has not been very effective in revitalizing global capital
accumulation, but it has succeeded remarkably well in restoring, or in some
instances (as in China and India) creating, the power of an economic elite.”
Key Terms
-Fordism/ Post-Fordism (flexible labor/ flexible accumulations)
-Supply-side economics (lower corporate taxes, creating ‘business environments’,
de-regulation of business and investment
-Embedded liberalism: post-WWII political economy that features social
redistribution through public investments in health, education, infrastructure, as
well as social security and safety nets; compromise between capital and labor
(creation of broad middle class of homeowners and consumer-citizens)
-Neoliberal theory: cutting government spending (mostly on social expenditures),
decreasing taxes and regulation on capital but not labor, free trade and
investment, market-logic pervades everyday life
-Reaganism/Thaterism: neoliberal turn in US and Britain in the 1980s (crushing
of labor, reduction in social welfare state, privatization of state industries,
decreased tax rate on wealthy and business), de-industrialization and capital flight
to “emerging markets” abroad; shift from industry to financial services
Globalization and Financialization
“Neoliberalization has meant, in short, the financialization of
everything. This deepened the hold of finance over all other
areas of the economy, as well as over the state apparatus and,
as Randy Martin points out, daily life.
It has also introduced an accelerating volatility into global
exchange relations. There was unquestionably a power shift
away from production to the world of finance. Gains in
manufacturing capacity no longer necessarily meant rising
per capita incomes, but concentration on financial services
certainly did…
In the conflict between Main Street and Wall Street, the latter
was to be favored. The real possibility arises that while Wall
Street does well the rest of the US (As well as the rest of the
world) does badly.”
Contradictions of Neoliberalism
- Exceptions to neoliberalism (protectionism, state intervention, central bank)
- Neoliberalism as exception (free-trade zones, tax-exemptions, labor deregulation)
- “Golden Straightjacket” of Global Financial System
- “Electronic Herd” of global financiers
- “Too big to fail” (73) vs. “personal responsibility”
- Hatred of democracy: bypassing of democratic politics and representation to
enact neoliberal economic policies
- Neolibearlism and nationalism (85)