What is Neoliberalism?

["Charles Brown" <CharlesB@xxxxxxxxxxxxxxxxxxxxx>]

What is Neoliberalism?

A Brief Definition for Activists

By Elizabeth Martinez betita1@xxxx
and Arnoldo Garcia agarcia@xxxx

March 22, 2001; CorpWatch

"Neo-liberalism" is a set of economic policies that
have become widespread during the last 25 years or
so. Although the word is rarely heard in the United
States, you can clearly see the effects of neo-
liberalism here as the rich grow richer and the poor
grow poorer.

"Liberalism" can refer to political, economic, or
even religious ideas. In the U.S. political
liberalism has been a strategy to prevent social
conflict. It is presented to poor and working people
as progressive compared to conservative or
Rightwing. Economic liberalism is different.
Conservative politicians who say they hate
"liberals" -- meaning the political type -- have no
real problem with economic liberalism, including
neoliberalism.

"Neo" means we are talking about a new kind of
liberalism. So what was the old kind? The liberal
school of economics became famous in Europe when
Adam Smith, an English economist, published a book
in 1776 called THE WEALTH OF NATIONS. He and others
advocated the abolition of government intervention
in economic matters. No restrictions on
manufacturing, no barriers to commerce, no tariffs,
he said; free trade was the best way for a nation's
economy to develop. Such ideas were "liberal" in the
sense of no controls. This application of
individualism encouraged "free" enterprise," "free"
competition -- which came to mean, free for the
capitalists to make huge profits as they wished.

Economic liberalism prevailed in the United States
through the 1800s and early 1900s. Then the Great
Depression of the 1930s led an economist named John
Maynard Keynes to a theory that challenged
liberalism as the best policy for capitalists. He
said, in essence, that full employment is necessary
for capitalism to grow and it can be achieved only
if governments and central banks intervene to
increase employment. These ideas had much influence
on President Roosevelt's New Deal -- which did
improve life for many people. The belief that
government should advance the common good became
widely accepted.

But the capitalist crisis over the last 25 years,
with its shrinking profit rates, inspired the
corporate elite to revive economic liberalism.
That's what makes it "neo" or new. Now, with the
rapid globalization of the capitalist economy, we
are seeing neo-liberalism on a global scale.

A memorable definition of this process came from
Subcomandante Marcos at the Zapatista-sponsored
Encuentro Intercontinental por la Humanidad y contra
el Neo-liberalismo (Inter-continental Encounter for
Humanity and Against Neo-liberalism) of August 1996
in Chiapas when he said: "what the Right offers is
to turn the world into one big mall where they can
buy Indians here, women there ...." and he might
have added, children, immigrants, workers or even a
whole country like Mexico."

The main points of neo-liberalism include:

1) THE RULE OF THE MARKET. Liberating "free"
enterprise or private enterprise from any bonds
imposed by the government (the state) no matter how
much social damage this causes. Greater openness to
international trade and investment, as in NAFTA.
Reduce wages by de-unionizing workers and
eliminating workers' rights that had been won over
many years of struggle. No more price controls. All
in all, total freedom of movement for capital, goods
and services. To convince us this is good for us,
they say "an unregulated market is the best way to
increase economic growth, which will ultimately
benefit everyone." It's like Reagan's "supply-side"
and "trickle-down" economics -- but somehow the
wealth didn't trickle down very much.

2) CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES
like education and health care. REDUCING THE SAFETY-
NET FOR THE POOR, and even maintenance of roads,
bridges, water supply -- again in the name of
reducing government's role. Of course, they don't
oppose government subsidies and tax benefits for
business.

3) DEREGULATION. Reduce government regulation of
everything that could diminsh profits, including
protecting the environmentand safety on the job.

4) PRIVATIZATION. Sell state-owned enterprises,
goods and services to private investors. This
includes banks, key industries, railroads, toll
highways, electricity, schools, hospitals and even
fresh water. Although usually done in the name of
greater efficiency, which is often needed,
privatization has mainly had the effect of
concentrating wealth even more in a few hands and
making the public pay even more for its needs.

5) ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or
"COMMUNITY" and replacing it with "individual
responsibility." Pressuring the poorest people in a
society to find solutions to their lack of health
care, education and social security all by
themselves -- then blaming them, if they fail, as
"lazy."

Around the world, neo-liberalism has been imposed by
powerful financial institutions like the
International Monetary Fund (IMF), the World Bank
and the Inter-American Development Bank. It is
raging all over Latin America. The first clear
example of neo-liberalism at work came in Chile
(with thanks to University of Chicago economist
Milton Friedman), after the CIA-supported coup
against the popularly elected Allende regime in
1973. Other countries followed, with some of the
worst effects in Mexico where wages declined 40 to
50% in the first year of NAFTA while the cost of
living rose by 80%. Over 20,000 small and medium
businesses have failed and more than 1,000 state-
owned enterprises have been privatized in Mexico. As
one scholar said, "Neoliberalism means the neo-
colonization of Latin America."

In the United States neo-liberalism is destroying
welfare programs; attacking the rights of labor
(including all immigrant workers); and cutbacking
social programs. The Republican "Contract" on
America is pure neo-liberalism. Its supporters are
working hard to deny protection to children, youth,
women, the planet itself -- and trying to trick us
into acceptance by saying this will "get government
off my back." The beneficiaries of neo-liberalism
are a minority of the world's people. For the vast
majority it brings even more suffering than before:
suffering without the small, hard-won gains of the
last 60 years, suffering without end.

--

Elizabeth Martinez is a longtime civil rights
activist and author of several books, including "500
Years of Chicano History in Photographs." Arnoldo
Garcia is a member of the Oakland-based Comite
Emiliano Zapata, affiliated to the National
Commission for Democracy in Mexico. Both writers
attended the Intercontinental Encounter for Humanity
and against Neoliberalism, held July 27-August 3,
1996, in La Realidad, Chiapas.

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