BY DAVID HARVEY

A Brief History of NEOLIBERLISM

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 de-regulation)

- “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)