Over the past 40 years, neoliberalism has demolished trade unions and stripped away financial restrictions which has led to more wealth for people with money and a stagnation in wages for the rest of us. President Reagan imposed this in the USA and Thatcher did so in the UK. In later years, neoliberalism repurposed the function of the World Bank and the International Monetary Fund (IMF). These global corporations, in charge of overseeing cooperation in international markets, lend money to poorer countries when they need money.
With these loans comes a set of conditions which the country must adopt to get the
money. These conditions are changes to the economic structure of the country and are often neo-liberal in flavour. They often stipulate that the loans cannot be spent on social programs, but that said countries should further austerity measures and the privatisation of state-owned companies.
Many Western countries have a lot of influence over the direction of the IMF and World Bank. With developing countries being the recipients of the loans, this has been called a form of neocolonialism in the modern age. There are currently calls to cancel the debts of many African and South American countries as they have had little benefit from these
loans, in fact they have made these countries poorer.
In 1991, in Egypt, the IMF and the World Bank put in place the Economic Reform and Structural Adjustment Programme. These neo-liberal reforms caused a deep social crisis in the country. This was as a result of privatising public companies, and prices
and rents were liberalised causing increases. From 2005 there was unrest between the working class as many lost their jobs when the companies were sold. Later high food prices and increasing inflation settled in, all whilst companies celebrated increase profits. The World Bank’s own report showed that inequality was on the rise in a country that had 60% of the population already living in poverty. The IMF policies merged with the regimes policies and they have ruined the Egyptian economy. These policies were like the ones imposed in Libya, Tunisia, India, and Syria. Neoliberalism’s inability to adapt to the needs of the citizens created the environment for the Arab Spring in the early 2010’s.
This type of neo-colonisation is more common today as it would not be accepted by the vast majority as okay to invade countries for the resources. As we have seen with Iraq, it can be done under the cloak of delivering democracy and emancipation. However, it is a lot easier to do this by bending poor countries arms with loans and reforms. China is challenging this idea and setting up its own institutions such as the Asian Infrastructure Investment Bank which the USA has not joined. This is another chapter in the war for global hegemony.
Margaret Thatcher was more of a Marxist than most left-wingers today.
She understood that change at the economic base would change society itself. ‘Economics are the method: The object is to change the soul’. She also understood that a revolution involved destroying or changing your enemies. In 2002 she said her greatest achievement was “Tony Blair and New Labour. We forced our opponents to change their minds.”
This is how we ended up in an a-political world. A world where identity and aesthetics become the only form of politics. It was o longer viable to argue for change. The Left was dead in Europe the UK and the USA. The neo-liberal revolution was won and we are living in its post-modern remains.
Nancy Fisher has since broken-down neoliberalism into ideological bite-sized chunks. She explains following on from its initial inception, after the right lost power, neoliberalism was like an alien trying to find a host body so it would not wither out and die. It found a host in President Bill Clinton (not the only thing he has merged with whilst in office), neoliberalism merged with progressive forces to become capitalism with a smiling face: progressive neoliberalism.
Under this fluffy disguise, sometimes called the third-way, neoliberalism was able to fuse liberal progressive movements that were fighting for better rights, the middle classes, modernisers, the media, and gigantic business. With the language of equality and freedom, progressive neoliberalism could please almost everyone.
An example of this was in the UK from 1997 to 2010, New Labour under Tony Blair paid private companies to build hospitals and schools. The private companies got contractual rights to maintain the building for the next 20-30 years, and the government would pay off the mortgage at the same time (with added interest). A government credit card otherwise known as PFI (Private Finance Initiative). Most citizens were content as they got new public facilities, governments were popular, and the private companies were making money.
That was until the 2008 worldwide recession. Governments never directly caused the crisis, but this form of neoliberalism fed the machine. In truth, they never told the system when to stop eating. That caused it to explode. It wasn’t the people who
were too greedy; it was the banks and shareholders. Governments could have done something about it before but they chose not to believing the days of crashes were over.
Eventually government debt went through the roof because so many companies went under, and people lost their jobs. They had to resort to claiming benefits and then there was also the need to bailout banks. Austerity, the act of cutting public spending, was put in place throughout the UK and most of Europe in response to the crash, mainly to curb the deficit to pay off the debt. The allegory of household was used to justify these cuts, however a country’s economy does not work the same as your current account. This failed to boost the economy and most countries have struggled to recover since. In fact, it was a good way of justifying the further privatisation of services and cutting taxes. Not only does it hurt public services, when compared tot the USA, who invested in building and improving state infrastructure, their economy grew double the amount of the EU’s after 2008. Before the crash they were equal. This obviously has effects on business, people and industry. It was a bad move.
These mistakes are influencing how governments react to the coronavirus pandemic. Whilst austerity may not be on anyone’s lips for now, pumping loads of money into a fragile and corrupt corporate system is also a questionable idea. Austerity left services under-funded within the framework of PFI. This framework functions as long as there is plenty of money going in, enough for private companies to take their profit out. Yet, when there is less going in, the companies still want their profit, meaning less for the services and public. We are paying their directors bonuses. The welfare states, in both the UK and the EU, are a shell of what it was designed for, yet they have protected us
during this pandemic.
Over the last 50 years in most of the Western world, the image of the state as being cumbersome and inefficient has been used to spur on the privatisation of services whilst the public view it with minor threat. Under the guise of efficiency and freedom of
choice, public services have been hollowed out. Services (mental health, libraries etc.) have been closed if they are not deemed effective by the government, prioritising growth over people’s well being. Yet it is forgotten that the state was instrumental in designing and inventing many things that private companies make money from today. The internet and GPS were both funded and developed by the American government. Not Google.
This economic path has also promoted the financialization of the world economy. Globalisation has gone rampant which has left individual nation states powerless to combat illegal activities and toothless international institutions scared of the private sector.
Industry and manufacturing have moved abroad to poorer countries to help lower costs (and increase dividends) whilst Western countries increased their financial service industries. Not only does this effect the working class in the west but also the working class internationally. With increased manufacturing and shipping the earth is also suffering so deviants can be paid out.
In the UK, and in many countries, the working class has been demonised through television shows, newspapers, and the media. Owen Jones points out in his book Chavs, the narrative use of overarching stereotypes, that all working class people are lazy and living off benefits, helped to justify the cutting of state help and institutions. People in lower-paid work were deemed to be worthless, as they never had a job that added to the growth of the economy.
Yet, it is the economy that has failed to provide secure and meaningful jobs in areas where manufacturing and other sectors have diminished, the blame for our societal flaws has been transferred to the individual. This move alone sums up the philosophy of neoliberalism. The rise of the individualism at the cost of the collective.
The myth that powerful individuals and the chase of individual goals furthers society has been cemented in the public’s psyche as common sense. It gave the impression that people are free to follow their dreams and think more individually, but it
took away civil responsibility and a sense of community.
Meritocracy is the new society