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Elizabeth Martinez and Arnoldo Garcia: What is Neoliberalism?

A Brief Definition for Activists

“Neoliberalism” is a set of economic policies that have become widespread during the last 25 years or so. Although the word was rarely heard in the United States until recently, you can clearly see the effects of neoliberalism 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 Scottish 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 Neoliberalism) 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 neoliberalism include:

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.

CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care which means 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.

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

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.

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, neoliberalism 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 neoliberalism 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 our backs.” The beneficiaries of neoliberalism 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.

First published in Corpwatch.org

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.

In this Friday, Dec. 27, 2013 photo, workers at one of maquiladoras of the TECMA group prepare to raise the U.S. flag along with the Mexican and TECMA flags in Ciudad Juarez, Mexico. TECMA currently has 14 maquiladora plants in Ciudad Juarez. With the implementation of the North American Free Trade Agreement twenty years ago, many North American and international companies have moved their manufacturing to Mexico at a lower cost and while a majority of Mexicans have seen little benefit in income. While there is undoubtedly a larger middle class today, Mexico is the only major Latin American country where poverty also has grown in recent years. (AP Photo/Ivan Pierre Aguirre)

Workers raise flags at a maquiladora plant in Juarez. One of the elements of neoliberalism is to make it easy for corporations to cross national borders, but difficult for workers. (AP Photo/Ivan Pierre Aguirre)

6 comments on “Elizabeth Martinez and Arnoldo Garcia: What is Neoliberalism?

  1. johnlawsonpoet
    April 27, 2019

    Reblogged this on Site Title and commented:
    Useful summary of neoliberalism.


  2. berolahragamatras
    March 20, 2016

    Thnks For Information


  3. beenculverted
    March 20, 2016

    The economic liberalism Adam Smith wrote about, and the economic liberalism the US was founded on, was for a pre-capitalist society. Capitalism didn’t come around until the 1820’s, though there were companies like England’s East India Company prior-to. But Adam Smith also decried in The Wealth Of Nations, “All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”
    Smith, and the Founding Fathers, were for liberal trade, but wary of capitalism. Madison, I read somewhere, echoed Smith’s concerns of Capitalism’s Vile Maxim. Madison saw what capitalism was becoming, and didn’t like it.
    And for the first 100 years of the US, wage-labor was viewed as a cheap form of slavery: slavery, indentured servitude, wage-labor. Wage-labor was viewed as a temporary, soul-crushing arrangement until the person had saved enough to work for himself – so that he could own the products of his own labor.
    There was apparently a popular tradition of collective ownership of mills in New England, in colonial times. The workers owned the products of their own labor. All of this fit perfectly well with liberal economics and free-trade: people worked for themselves, and nobody dominated markets; the economy was controlled by no government or company, and all were able to prosper by their own hands.
    Noam Chomsky covers most of this in his lecture on Madisonian Democracy, which is up somewhere on Youtube.

    All of the circumstances I mentioned are impossible today, because of capitalism’s Vile Maxim, and because of Neo-Liberalism: allow the corporations to do as they please, and over-regulate everyone else. The same practice is seen in Neo-Conservatism; cut taxes for the wealthy, cut public services and institutions.

    The Great Depression was caused by the Federal Reserve, which, in a massive affront to Liberal Economics, spent 10 years keeping interest-rates artificially low to boost the stock markets. Wall Street did excessively well, and the 1920’s became the Roaring Twenties. And then, as the Reserve realized it was creating a bubble on the stock market, it aggressively raised interest-rates. These much higher rates caused investors to flee Wall Street. The fleeing snow-balled, and Wall Street collapsed in 1929, ushering in the Great Depression.
    You can watch Money For Nothing on Netflix, and listen to someone from the Federal Reserve actually explain how the Federal Reserve was responsible for the Great Depression.

    I guess what I’m trying to say is that Classical Liberalism, and Classical Conservatism (which I suppose would defend the Classical Liberalism the Founding Fathers supported), have both been undermined via the Vile Maxim Of The Masters Of Mankind.
    If you’re a Liberal who wants caps on Capitalism, you also have to put up with Free-Trade agreements, and spending your life forced to make monthly payments to insurance corporations.
    If you’re a Conservative who wants Free-Markets, you also have to let corporations dominate those markets, which makes the markets not-so-free, after all.
    What I’m really trying to say, is that Free Markets and Liberal Trade are excellent, but are destroyed when dominated by handfuls of people – anything dominated by a few, is not a thing that is free. Liberal Economics, of the form America was founded on, depends on people providing for themselves, owning what their own labor produces; necessitates the marginalization of Capitalism and the restriction of corporate power.


  4. sarahngima77
    March 19, 2016

    I am an economics and statistics student and this is eye opening. Great article.


  5. Luz Vega-Hidalgo
    March 19, 2016

    Fantastic article, thank you Vox Populi…

    Liked by 1 person

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This entry was posted on March 19, 2016 by in Opinion Leaders, Social Justice and tagged , , .

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