Neo-Liberalism

1. Neo-Liberalism As adapted from Professor Christian Stark

2. Neoliberalism • the term neoliberalism was coined by the economists Friedrich A. von Hayek, Wilhelm Röpke, Walter Eucken etc. at a conference in Paris 1938 • economic policy concept • counter-concept to Keynesianism • “a capitalism which is liberated from all democratic and social inhibitions and scruples

3. Formation of the neoliberal project • 1947 Mont-Pelerin-Society. • Establishment of an international network of: • foundations, institutes (Institute of Economic Affairs 1971, London), research centers, journals, public relations-agencies • to support and spread neoliberal thinking. • Scientific breakthrough: • series of awards of the Nobel Prize for Economic Sciences (1st 1969) for neoliberal economists (e.g. Friedrich A. v. Hayek 1974 and M. Friedman 1976).

4. Political implementation of NL • First experimental field for neoliberal economic policy was Chile. • Since 1975 the representatives of the Chicago School have subjected Chile to a neoliberal restructuring with the support of the military regime of Pinochet • Also see JacoboArbenz (Guatemala)

5. From the Periphery to the Center • 1979: Margret Thatcher: Prime Minister of the U.K. • 1980: Ronald Reagan: President of the U.S.A. • Reaganomics and Thatcherism implemented throughout the 1980s • 1989: dismantling of the Iron Curtain, end of communism in the Soviet Union • Neoliberalism then became the predominant economic doctrine. • Thatcher: T.I.N.A.-Syndrome (there is no alternative)

6. Neoliberalism: viewed as a religious structure • One God • Profit • Primary requirement: sacrifice • “save!” • “tighten one‘s belt!” • Who Makes Sacrifices? • the majority of the poor (who provide an enriched lifestyle for the rich minority)

7. Divine Laws of Neoliberalism • the invisible hand of the market • A. Smith, J. Bentham • force of circumstance • Similar to the circumstances people were born into in the middle ages of Europe

8. Invisible Hand, Hidden Fist • The invisible hand of the market cannot work without the hidden fist. McDonalds cannot prosper without McDonnell-Douglas (US-armaments group). The invisible fist, which creates security over the world for the prospering of the technology of Silicon Valley is called US Army, Air-Force and Marine-Corps.“ (T. Friedman; a journalist close to the US-ministry of Foreign Affairs)

9. Universal Statement • “Who is not with me, is against me” • "Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists." (George Bush, Address to a Joint Session of Congress and the American People, September 20, 2001) • Relate to those who oppose neoliberal policies • alternative solutions to those who oppose neoliberalism: • Denied • Ridiculed • Stigmatized • finally criminalized

10. Neoliberalism as a religious structure (continued) • Saints • Adam Smith • John Locke • David Ricardo • Head theologians • Friedrich von Hayek • Milton Friedman

11. Bishops, High Priests of NL • Ben Bernanke (since 1.2.2006): chairman of the Federal Reserve Board • Robert Zoellick1.7. 2007: president of the world bank group • Dominique Strauss-Kahn: 04.2007: IMF managing director • Pascal Lamy (1.9.2005): Director General WTO

12. Vatican and Holy War of NL • Neo-Liberalism’s “Vatican” • The World Bank • WTO • IMF • N-L’s Holy War in the name of • democracy • human rights • prosperity for everybody

13. NL as a religion (continued) • Blasphemies: • property tax • value added tax • Heretics: • Critics of globalization • Trade unions • NGO‘s

14. Myths of Neo-Liberalism • “We cannot afford the welfare state any longer“ • “the fat years are over!“ • “performance must be worthwhile!“ • less state more private! • If the economy is doing well, everybody is doing well

15. NL and distribution of wealth • NL: We can‘t afford the welfare state any longer • We don‘t want to afford the welfare state any longer! • What we can afford depends on what politicians want to afford • Alternate experiences/explanations • There is enough money but it is distributed unequally • There is enough for everybody's needs but not enough for the greed of some people

16. NL: “Performance must be worthwhile” • Huge wage gap between (normal) employees and managers • 1:250 to 1:550 • Can a person really do 250 (550) times more than someone else?

17. Elements of Neo-Liberal Thought • economization of all areas of life • privatization • economic globalization • deregulation

18. Economization of all areas of life • the market as an universal model of organization • all areas of life are subjected to the logic of the market, the logic of economic optimization. • Individuals become human capital

19. Privatization: Less state, more private • privatization of state owned enterprises and state monopolies • e.g. traffic, provision of energy and water. • The state as an instrument of private economic interests • guarantees the necessary conditions for a free market. • As an instrument of repression the state is rearmed instead of disarmed

20. Less state, more private (or, what can be owned in the NL system) • What belongs to everybody (public goods) suddenly becomes the property of a few • Traffic • water • health • Social affairs • Justice

21. NL and ownership: a quote • “The first human being who fenced in a piece of land and had the idea to say ‘this is my property‘, and who found people naive enough to believe him, was the real founder of the civil society. How many crimes, wars and murders would have been prevented by the man who knocked down the fence posts and called to his fellow human beings: Don‘t listen to this swindler! You are lost if you forget that the fruit belongs to everybody and the earth belongs to nobody.”Jean Jacques Rousseau

22. Economic Globalization • Opening of borders for global transfer of goods, services, capital and investments • Reduction of rules and laws which impede free trade • Globalization is regarded as a natural process which forces the industrial states to reduce social and environmental standards in order to remain competitive on the world market

23. Deregulation • No renouncement of state interventions • focus on the support of economic competitiveness and profitable capital utilization. • Increase of the scope of enterprises to support investments • reduction of taxes for enterprises • rules to protect the employee and the environment are regarded as: • obstacles for investments • restriction of freedom for entrepreneurs

24. The Liberty part of Neoliberal • Freedom for entrepreneurs? • How is freedom defined here???? • Freedom to exploit workers? • The freedom of wolves to poach in a free chicken coop among free chickens?

25. Neoliberalism and social policy • “Every man is the architect of his own fortune!“ • poverty as a crisis of one‘s own making • just penalty for non-performance • unemployment is reinterpreted as a problem of individuals and their weakness of character and lack of willingness to perform • Worker is unable to sell himself or his work successfully on the market. • the pressure to work is intensified in a crisis situation where there are not enough jobs but enough people willing to work • victims become offenders: • The unemployed, the homeless and welfare recipients are responsible for empty public purses, not the tax-evading multinational concerns and multi-billionaires.

26. Social Responsibility • The state and enterprises have no social responsibility • Therefore, the welfare state is a bad idea • Welfare leads to non-performance, which is intolerable in the scope of free market capitalism • Welfare unnecessarily drains money away from the development of productive enterprises • mass-unemployment, starvation are accepted as acceptable side effects of free market capitalism • Claims for social justice restrict the right to unlimited private property.

27. Social Responsibility (continued) • The only social responsibility of entrepreneurs is the responsibility for the profit of the shareholders • “There are few developments which can undermine the fundaments of our society as basically as the opinion that entrepreneurs have any other social responsibility than to gain as much profit for their share-holders as possible“ (Friedman 1976, S.176.)

28. Establishment of neoliberal thinking (ideology) • Fabrication of Consent • The ruling morals are the morals of the rulers • The ruling ideas are the ideas of the rulers • “And when all others believed the lies which were spread by the party –when all records told the same tale –then the lie went down in history and became the truth.“ (Orwell, 1984)