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Neoliberalism
Neoliberalism Vishanthie Sewpaul, School of Applied Human Sciences, Howard College Campus, University of KwaZulu Natal, Durban, South Africa Ó 2015 Elsevier Ltd. All rights reserved.
Abstract This article teases out the concept of neoliberalism as ideology, as a form of governmentality, and as a policy paradigm. It provides a brief history of neoliberalism and then discusses the consequences of neoliberalism in respect of unfair trade, the destruction of domestic production and markets, poverty, and inequality. It concludes with the argument that despite the ideological hegemony of neoliberalism, the current crisis and trends of global social justice movements, which social workers can be engaged in, hold potential to create alternative socioeconomic and political systems in support of a more just world.
Introduction Neoliberalism has its ideological roots in classical liberalism articulated by early theorists such as John Locke, Adam Smith, and David Ricardo and in the twentieth-century theories of Friedrich von Hayek and Milton Friedman (Harvey, 2005; Pierson, 1991; Steger and Roy, 2010). The neoliberal revolution was consolidated during the regimes of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States from the early 1980s onward. A related significant event during this period was the opening up of the economy of China, the world’s emerging superpower, by Deng Xiaoping in 1978. According to Harvey (2005), events in the United Kingdom, the United States, and China during this period “spread and reverberated to remake the world around us in a totally different image” (p. 1). The breakdown of Soviet communism also played a decisive role in entrenching neoliberalism as the dominant ideology. The past few decades have witnessed the increasing dominance of neoliberalism as discourse and practice on a global level, which has remolded health, education and welfare, and global flows of finance, trade, and labor (Abramovitz and Zelnick, 2010; Schram and Silverman, 2012; Sewpaul, 2008; Rowden, 2009). Classical liberalism is characterized by a global laissez-faire that holds the market to be sacrosanct, self-regulating, and entirely rational. This was the appeal of Adam Smith’s idea that “markets and the pursuit of self-interest would lead, as if by an invisible hand, to economic efficiency” (Stiglitz, 2006: p. xiv). Referring to contemporary neoliberalism, the collapse of markets; the implosion of the American financial system, beginning with the subprime mortgage crisis that began in August 2007; and the bail-out of banks, Gray (2009) reiterated his belief of 1998 that: “Today’s regime of laissezfaire will be briefer even than the belle époque of 1870 to 1914, which ended in the trenches of the Great War” (p. xii). Obama’s (2009) inaugural address in which he warned that, “without a watchful eye, the market can spin out of control” also made some people believe that the end of neoliberalism was imminent. Yet, the “world failed to shake the ‘Washington Consensus’” (Bond, 2010: p. 59) – a consensus between the International Monetary Fund (IMF), the World Bank (WB), and the United States Treasury that fostered fiscal austerity, privatization, and market liberalization
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(Stiglitz, 2006) that are defining features of neoliberalism. However, there is now hope as the majority of the world’s dispossessed (symbolically represented as the 99%) is reacting to global capitalism as seen in the recent Arab spring, the Occupy movement, and protests in many parts of the world. This article teases out the concept of neoliberalism, provides a brief history of it, and then discusses the consequences of neoliberalism. It concludes with the argument that despite the ideological hegemony of neoliberalism, the current crisis and trends of global social justice movements hold potential to create alternative socioeconomic and political systems in support of a more just world, which constitutes a central goal of social work education, research, and practice.
Conceptualization of Neoliberalism Neoliberalism refers to a combination of socioeconomic and political discourse and policy choices based on the values of an unregulated market; the rarefaction of individual freedom and choice; as well as the faith that market fundamentalism, and not state intervention, would promote economic growth, efficiency, progress, and distributional justice, primarily through trickle-down effects. Harvey (2005) defines neoliberalism as “a theory of political economic practices” (p. 2), rather than an unadulterated political ideology. Although neoliberalism has its roots in classic liberalism, it has come to span diverse political leanings and is associated with center-left politics, moderate right-wing conservatism, and autocratic dictatorships, embraced by and/or imposed on almost all countries across the globe. The author draws on the works of Larner (2000) and Steger and Roy (2010) to conceptualize neoliberalism as an ideology, as a form of governmentality, and as a policy paradigm. These dimensions are mutually constitutive and overlapping.
Neoliberalism as Ideology Duménil and Lévy (2011) maintain that the neoliberal revolution was engineered by class and imperialist objectives, serving the interests of a privileged minority and a few powerful countries, with the United States occupying a unique
International Encyclopedia of the Social & Behavioral Sciences, 2nd edition, Volume 16
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hegemonic power. They argue that ideology was not the engine of the neoliberal revolution but that “the hegemony of the upper classes was deliberately restored [.] A neoliberal ideology emerged, the expression of the class objectives of neoliberalism” (p. 18). Whether a precursor to and/or an outcome of the neoliberal revolution, ideology has come to play a huge role in its reproduction. While the crisis that began in 2007, with the crash in October 2008, held the potential to create cracks in the consciousness of people about the moral and pragmatic limits of a system regarded as inviolate (Sewpaul, 2008), the opportunities seem to be lost. Although Stiglitz (2006) claimed that there is little intellectual defense of market fundamentalism left, a claim supported by a reading of the vast body of literature that almost unanimously speaks of the negative consequences of neoliberalism, there is yet a marked failure to disrupt the Washington Consensus. Given the power of ideology, the disjuncture between popularly held neoliberal values and empirical data, and the lack of political debate on neoliberalism in mainstream politics, this is understandable. Fortunato Jr. (2005) described the “manufacture of consent” (p. 4) by the mass media that serves the interests of the corporate world and political elites and that ensures that capitalism succeeds through ideological control of consciousness designed to make us believe that neoliberalism is in our interests and is inevitable. Neoliberalism was engineered and gained ground primarily on account of the lure of the language of liberal theory with its emphases on individualism, ownership, choice, flexibility, and competition that mask “the grim realities of the restoration or reconstitution of naked class power” (Harvey, 2005: p. 119). It is not only the manufacture of consent that is created by the media but also the “manufacture of desire” (Leonard, 1997: p. 37) as the market seduces people into constructing themselves as good consumers where their moral worth is determined by their ability to make the right purchasing choices (Bauman, 1992). Bauman (Bauman and Tester, 2001: p. 87) speaks of the “disguise of the individual’s freedom of choice,” which is so taken for granted that it “seldom has a chance of being examined and questioned [.] an old sinister temptation [.] left to be exploited by commercial markets.” These views are suggestive of Gramsci’s (1977) thesis of ideological hegemony exercised by the state and civil society to control the consciousness of people, not through repression or coercion but by gaining popular consent in the reproduction of class relations. While most theorists are quick to comment on the dangers of neoliberalism, few are willing to critique the liberal democracy that underpins it. There is a general taken-for-granted assumption of a convergence between the market and democracy, with American liberalism and capitalist hegemony touted as the source of morality and democratic practice, which is furthest from the truth (Amin, 2001; Fortunato Jr., 2005; Harvey, 2005). Samir Amin (2001), a postcolonial writer, cogently raises a number of critical questions in relation to liberal democracy and neoliberalism, concluding that “Convergence theory – the notion that the market and democracy converge – is today pure dogma with much of the talk about democracy reflecting the imposition of policy makers who have usurped power in the United States” (p. 9). Gray (2009) declares that “democracy and the free market are
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competitors rather than partners” (p. 213), a view supported by Stiglitz (2006) who proclaims that neoliberal globalization is not consistent with democratic principles. Citing several groups of power elites that serve as the main advocates of neoliberalism Steger and Roy (2010: pp. 11–12) argue that: “These individuals saturate the public discourse with idealized images of a consumerist, free-market world [...] neoliberal decision-makers function as expert designers of an attractive ideological container for their market-friendly political agenda.” Neoliberalism does not get reproduced in a vacuum. We are all complicit. “We all consume [.] we all participate in hierarchies of race, class gender and privilege. No one is a pure victim in this economic system, though almost everyone is ultimately a loser” (Haiven, 2011: p. 1). Harvey (2005) describes how neoliberalism penetrates daily consciousness so much so that it is normalized and naturalized, and it is considered necessary for social order despite the gross inequalities and poverty that it engenders.
Neoliberal Governmentality The treatise on neoliberalism as a mode of governance borrows from Foucault’s concept of governmentalities that provides a means of understanding the relationships between knowledge, power, and technologies of the self (Foucault, 1984; Leonard, 1997; Lemke, 2002). From this perspective, neoliberalism refers to “a political rationality that tries to render the social domain economic and to link a reduction in (welfare) state services and security systems to the increasing call for ‘personal responsibility’ and ‘self-care’” (Lemke, 2002: p. 203). While neoliberalism guarantees personal and individual freedom, each person is held responsible for his or her own actions and well-being. Thus, poverty and hardships are seen as personal failings rather than being attributed to any structural barriers to unemployment and the consequences of exclusions based on race, class, caste, gender, and/or disability. Steger and Roy (2010) assert that: A neoliberal governmentality is rooted in entrepreneurial values such as competitiveness, self-interest, and decentralization [...] Rather than operating along more traditional lines of pursuing the public good (rather than profits) by enhancing civil society and social justice, neoliberals call for the employment of governmental technologies that are taken from the world of business and commerce. (p. 12)
Thus, along with neoliberalism, there is entrenching of new managerialism into all spheres of life, including social work and welfare. New managerialism emphasizes getting the job done, with checks and balances in the shortest space of time as well as with the imposition of economy, efficiency, and effectiveness manifesting in such tangibles as performance measurement, inputs and outputs, outcomes, and targets (Dominelli, 1996). One example of this, in the South African context, is the Financing Policy for Welfare, which speaks of business plans, contracts, affordability, efficiency, outputs, performance audits, outsourcing, venture financing, and service purchasing, thus effectively reconstructing users of welfare services as customers (Sewpaul and Hölscher,
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2004). This trend, replicated in many parts of the world, found its origins in Britain and the United States. The 1989 Community Care White Paper in Britain (cited in Sewpaul and Hölscher, 2004) promoted choice, flexibility, and innovation, which was to be achieved through a prospering private welfare sector and outsourcing of government services. The introduction of competition between providers is aimed at increasing value for money, efficiency, accountability, and quality of the services provided. Banks (2011), writing within the British context, observes an intensification of “procedures, measurement and centrally defined targets” (p. 10) and the adoption of depersonalized ethics that focus on predetermined standards, contracts, and procedural manuals. New managerialism relegates the importance of other ethical values such as autonomy, critical reflection, care, equality, solidarity, interdependence, reciprocity, respect, and trust in favor of narrowly defined economic priorities (Bottery, 2000).
Neoliberalism as Policy As a policy package, neoliberalism is associated with spread of global capitalism and consumerism that has engineered the attacks on, and dismantling of the welfare state (Chomsky, 1999; Harvey, 2005; Steger and Roy, 2010), expressed in what Steger and Roy (2010: p. 14) call the “D-L-P formula,” which is deregulation of the economy, liberalization of trade, and privatization of state assets, which provided the ideological basis for the restructuring, privatization, and retrenchment of social policy and welfare programs, and for managerial approaches to social work practice (Clarke, 2007). Neoliberalism is a discourse and practice, which rarefies individual interests where transnational corporations (TNCs) and a few, rich powerful elites dominate the market primarily interested in profit making. Following this individualistic logic, the state uses neoliberal socioeconomic policies to allow it to abdicate its responsibilities in relation to the welfare of its people. Evocative of Foucault’s (1984) governmentality and technologies of the self, the most dominant neoliberal discourses in social work and welfare have been on the promotion of self-reliance, the importance of individuals and families taking responsibility for their own well-being, and shifting responsibility from the state to local communities. This neoliberal policy doctrine is reflected in the voice of a manager in the South African context: “The State is an entrepreneur of its own. It must make a profit where it can [.]. The state must be minimalist, it must really do the least and the last. Civil society, empowered civil society is to do the most” (Sewpaul and Hölscher, 2004: pp. 84–85), a doctrine that had become quite universal in the 1990s, reflecting the hegemony of neoliberalism. Apart from the use of ideological manipulation that engineered this, there was the use of military force and sanctions, or threats of sanctions by the United States against governments in the developing world that deviated from the US ideal of liberal capitalist democracy (Harvey, 2005; Sewpaul, 2006; Steger and Roy, 2010). In some countries like the United Kingdom, there continues to be the strategic use of budgets and legislation, thus avoiding political discourses on the nature of the welfare state and of social work.
Neoliberalism: A Brief History There are three distinct periods of lasting and deep structural crises in the history of modern capitalism: the crisis of the 1890s, the Great Depression, and the crisis of the 1970s, with the contemporary crisis of neoliberalism ushering in a new phase (Duménil and Lévy, 2011). Mid-Victorian England saw the demolition of social markets (which combined a regulated market with issues of social justice, with, for example, universal health care and extensive social security) and the introduction of deregulated, free markets that functioned independently of social needs, based on the theories of classical liberals like Adam Smith and David Ricardo (Gray, 2009; Steger and Roy, 2010) who were convinced that economic difficulties were the consequence of government failures, particularly from state interference. People were seen to be creatures of economic rationality and, in accordance with modernist thinking, as opposed to premodern conceptions of an unquestionable divine order (Howe, 1994), evolved the idea of the human being as subject, “an autonomous self who is the source of his or own action” (Sewpaul and Hölscher, 2004: p. 18), thus imposing no duty on the part of the public to provide, or any right on the part of the destitute to claim any relief. Gray (2009) argues that the removal of agricultural protectionism, free trade, and the Poor Laws of 1834 formed the cornerstones of the unregulated market of mid-Victorian times that has influenced all subsequent neoliberal policies. The Poor Law Act of 1834 was one of the most demeaning and stigmatizing pieces of legislation based on laissez-faire ideology, reflected in the activities of the nineteenth-century charities, particularly that of the Charity Organisation Society whose activities “rested on a belief in moral character as the decisive feature in people’s circumstances – no structural issues of power, unemployment or marginalization entered the moral calculus” (Clarke, 1993: p. 9), hence “individuals were solely responsible for their own welfare” (Gray, 2009: p. 9). The laissez-faire ideology reduced the role of the state to that of “night watchman” (Steger and Roy, 2010: p. 5) where the state takes responsibility only for the most basic aspects of public order, and it entrenched casework as the basis of social work while marginalizing the more structural approaches to the profession, as reflected in the work of the Settlement House Movement. This laissez-faire governance was legislated out of existence from the 1870s onward and, by the end of World War I, markets had become, in the main, reregulated in the interests of public health and welfare. However, individualism and free trade characterized Britain until the Great Depression of the 1930s that paved the way for Keynesian economics underscored by egalitarian or embedded liberalism, which held sway from the mid-1940s until the 1970s (Gray, 2009; Stiglitz, 2006; Steger and Roy, 2010). This was not the product of a natural evolution. Leonard (1997) posits that the political masses played a central role in establishing the Keynesian welfare state in the West, including the United States, although working class consciousness was weaker and more transitory there than in the social democracies of Europe. Keynesian egalitarianism involved state intervention, regulation of the market, the involvement of organized labor to promote full
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employment and growth, and some state ownership of crucial national enterprises like railroads, public utilities, and energy companies (Keynes, 1933). Keynes in 1933 (unpaged) argued that, “Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.” The salience of his reflections for our contemporary world is expressed in the following:
Experience accumulates to prove that most modem processes of mass production can be performed in most countries and climates with almost equal efficiency [...]. National self-sufficiency [.] though it costs something, may be becoming a luxury, which we can afford, if we happen to want it.
Karl Polyani also made significant contributions to economic thinking during this period. In 1944, combining issues of economic and environmental justice, he prophetically wrote: “To allow the market mechanism to be the sole director of the fate of human beings and their natural environment [.] would result in the demolition of society” (Polyani, 1957: p. 73). Polyani, like Keynes, believed that sustainable economic relationships needed to be embedded in a framework of regulations, institutions, and social norms. In the three decades following World War II, Keynesianism, which inspired the American New Deal, the British welfare state, and the Scandinavian Social Democratic welfare model, produced impressive economic growth, low inflation, high wages, and exceptional levels of human well-being and social security. The benefits of Keynesianism, however, eluded most of Africa (Harvey, 2005), which continued to be the biggest loser throughout history and as neoliberalism intensified into the 1990s. Keynesianism came to a halt with the economic crises of the 1970s, with the oil shocks that raised the price of petrol, and induced high inflation and rising unemployment (Harvey, 2005; Steger and Roy, 2010; Stiglitz, 2006). The structural crisis of the 1970s allowed for the reassertion of the dominance of finance (Duménil and Lévy, 2001) revitalizing the earlier creed of classical liberalism under conditions of globalization. The welfare state in Britain was one of the casualties of the imposition of IMF conditions in 1976 when Britain borrowed US$3.9 billion. The loan came with a heavy price as it introduced policy changes away from full employment and social welfare toward inflation and public expenditure controls (The Cabinet Papers 1915–82). The early 1980s saw the consolidation of first wave neoliberalism, characterized by conservative Thatcherism and Reaganomics, based on reducing taxes, liberalizing exchange rate controls, deregulation, privatization, and diminishing the power of labor unions, “interlaced with the geopolitical imperative to stop the spread of communism and socialist developmentalism in the Third World” (Steger and Roy, 2010: p. 47), directed primarily at the maintenance of US hegemony through its imperialist roles in the WB, the IMF, and the economies of Latin America, Africa, and Asia (Stiglitz, 2006; Gray, 2009). The introduction of structural adjustment policies and programs, the changes in the US monetary policies toward price stability before full
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employment, and their associated debt crises produced untold burdens for Third World countries (Stiglitz, 2006; Duménil and Lévy, 2011): “A strategy for development [.] transformed into an actual catastrophe by a decision emanating [.] within leading capitalist countries, with a total indifference for the hardship imposed on the Third World” (Duménil and Lévy, 2001: p. 595). Second-wave neoliberalism has been identified with the policies of Tony Blair and Bill Clinton, that began in the 1990s and sought to strengthen “social solidarity without dropping the neoliberal ideal of market-oriented entrepreneurship” (Steger and Roy, 2010: p. 50), with a corporate-led globalization that entrenched further inequalities within countries and between the North and the South (Sachs, 2005; Saul, 2006). Despite its success, Keynesian economics was vilified by classical liberals like Von Hayek and Milton Friedman, whose doctrines dominated the 1944 Bretton Woods conference, which saw the introduction of a system of free trade with fixed exchange rates tied to the US dollar and the establishment of the International Bank for Reconstruction and Development, later renamed the WB, and the IMF (Harvey, 2005; Stiglitz, 2006), initially designed to provide loans for Europe’s postwar reconstruction but later expanded to fund various industrial projects in developing countries. The General Agreement on Tariffs and Trade (GATT) was established in 1947 in order to enforce multilateral trade agreements. In 1995, the World Trade Organization (WTO) was founded as a successor to GATT. In the mid-twentieth century, given that national economies were still relatively closed, governments were able to regulate capital movements, which allowed for a period of relative stability and economic growth that enabled the implementation of Keynesian policies that formed the structural basis of the welfare state (Sewpaul and Hölscher, 2004). But following the recession, in 1971, the United States denounced the fixed exchange rate linked to a fixed gold price, a move followed in 1973 by the introduction of flexible exchange rates and the abolition of capital controls by the United States in 1974, followed by Britain in 1979, and by the early 1990s, most of the other 32 Organisation for Economic Cooperation and Development (OECD) countries (Pierson, 1991). The increase in international trade provoked greater financial speculation and fluctuation of exchange rates, with a steady growth of TNCs. These developments altered the economic context within which the welfare state operated in the context of OECD countries, yet they failed to stem the recession that they were aimed at addressing. Pierson (1991) avers that: “Governments throughout the developed West were simultaneously failing to achieve the four major economic policy objectives – growth, low inflation, full employment and balance of trade – on which the post-war order had been based” (p. 145). With monetary policy increasingly being set by the WB, the IMF, and the United States; the ability of capital to move freely; and the growing presence of TNCs that provided capital with an exit option from one national economy to another, the bargaining power of governments was weakened. Yet, the neoliberal agenda was and continues to be a product of strong governments and cannot function without them. The attack on the World Trade Center on 11 September 2001 led to another phase where the profoundly “anti-democratic
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nature of neoliberalism [is] backed by the authoritarianism of the neoconservatives” (Harvey, 2005: p. 205) and where neoliberal discourses are increasingly tied up with the penalization of poverty (Wacquant, 2001) and with antiterrorism and Islamophobic discourses. On 11 September 2001, radical Islamic forces attacked what they considered to be the symbols of economic oppression – the World Trade Centre and the Pentagon in the world’s most neoliberal society. Steger and Roy (2010) rightly concluded that “Bin Laden articulated a criticism of neoliberal market globalism that was shared by opponents of neoliberalism across the Left/Right ideological divide – though the principles and horrific methods of alQaeda have been unambiguously denounced by the leaders of the global justice movement” (p. 123). Despite growing inequality and crises engendered by neoliberalism, and the global manifestations of resistance against it, neoliberalism endures largely on account of the taken-for-granted assumptions that are reproduced among people on a daily basis.
Consequences of Neoliberalism The current crises, which is seeing marked decreases in the living standards of people, has reverberating effects in all parts of the globe, as reflected in the crises of Wall Street, the deepening of the Eurozone crisis, the economic slowdown of some of the Asian countries including India and China, and the entrenching of uneven development and greater inequality within and across countries. Duménil and Lévy (2011) contend that, as a class project, neoliberalism has been exceptionally successful as it has worked in the interests of privileged minority capitalist classes with the divides between the rich and the poor having deepened. Neoliberalism has contributed to distorted development between the North and the South, to greater levels of inequality within nation-states, to the further marginalization of women and to a greater feminization of poverty, especially among Black women (Dominelli, 2002; Gibson, 2009; Lara, 2011; Sewpaul, 2005; Stiglitz, 2006; Gray, 2009; Steger and Roy, 2010). The World Commission on the Social Dimensions of Globalization (2004) concluded that the levels of global imbalances were “morally unacceptable and politically unsustainable” (p. x), while some authors like Dominelli (2012) and Nixon (2010) warn that the great threat is also against environmental sustainability. In a survey of 73 countries, the Commission found that apart from South Asia, the United States, and the European Union, unemployment increased between 1990 and 2002, with global unemployment reaching a high of 185.9 million, and that 59% of the world’s people were living in countries with growing inequality. While countries in Africa, Asia, and Latin America have long been the biggest losers within global capitalism with austerity measures imposed as conditionalities of structural adjustment programs (Dominelli, 2008; Rowden, 2009; Bond, 2005; Stiglitz, 2006; Gray, 2009), patterns of capital accumulation and consumption are now becoming more complex, with many of the rich core capitalist countries now being subject to stringent austerity measures. There are new configurations of global power with, for example, a growing Chinese imperialism that
challenges the hegemony of the United States. Also, while many companies have been relocating production to low-wage countries for many years, India has become very successful in attracting high-skilled jobs in computer programming and customer services. The North–South divide is giving way to a new international division of labor where the “familiar pyramid of the core-periphery hierarchy is no longer a geographic but a social division of the world economy” (Hoogvelt, 1997: p. xii). The current manifestation of these is the rising levels of unemployment and inequality and the severe austerity measures sweeping across the globe, with the United States and several European countries like Italy, Greece, Portugal, Britain, and France being extremely hard hit. In the United States, between 2000 and 2008 household incomes declined 1%, while corporate profits rose 70%; the gap between the rich and the poor is higher than at any time since 1930; and the rates of poverty and those living without health insurance has increased by 20% (Nixon, 2010). Economic growth in itself does not translate into a better life for the majority of people, and the ‘trickle-down’ notion of capitalism has proved to be a myth. The International Labor Organization (ILO, 2009) predicted that the crisis would wipe out at least 20 million jobs by the end of 2009, bringing global unemployment to an unprecedented number of over 200 million. Accompanying neoliberal policy choices are the weakening of trade unions and labor power; tax cuts for big business and the rich; the erosion of meaningful and egalitarian democracy; cutbacks in state expenditure in sectors such as health, education, and welfare; the relocation of labor to areas of least production costs; and the creation of sweatshops and economic processing zones that compromise workers’ rights (Gray, 2009; Stiglitz, 2006; Klein, 2000; Sewpaul, 2006; Steger and Roy, 2010). Trade liberalization and unfair trade has often resulted in massive imports, which undermine local production and prices, and increased unemployment, which places enormous strains on poor people, and contributes to children dropping out of school, women and child trafficking, engaging in dangerous work, starvation, and xenophobic outbursts, issues that social workers engage with on a daily basis. The WTO remains a site of marked resistance on account of unfair trade practices, with the US government using it to protect the market for its multinational corporations with devastating effects on smaller-scale business within the developing world (Gray, 2009; Nixon, 2010; Stiglitz, 2006; Steger and Roy, 2010). The subsidies, what Nixon (2010: p. 260) calls perverse subsidies that amount to about US$2 trillion a year, include subsidies from rich country governments like the United States, Europe, and Japan that produce cheaper agricultural imports against which farmers in the developing world cannot compete. This practice exposes the hypocrisy of rich countries that argue no subsidies for agricultural products while doing precisely that in their own countries. Another player on the global bloc, threatening domestic production and employment, is China, with an influx of Chinese trade across the globe setting ablaze anger at the destruction of domestic livelihoods (Reuters, 2012). Local producers cannot compete against a range of cheap Chinese imports of clothes, shoes, toys, crockery, and electronics. Chinese goods accounted for 18% of South Africa’s imports in 2012, up from 2% in 1995. With the
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Eurozone crisis and a declining European market, China has been increasingly turning its trade interest to Africa, with Africa now accounting for about 70% of the revenue of some Chinese companies (Reuters, 2012). With growing intolerance for lack of government regulation, people are taking measures into their own hands with violence and threats of violence. One Malawian merchant was reported to have said: “One day there will be blood” (Reuters, 2012: p. 13). In South Africa, xenophobic attacks, linked to socioeconomic deprivations, has seen blood and this seems to be spilling over to Chinese migrants. In November 2011, four Chinese were murdered in South Africa (Reuters, 2012). In August 2012, Kenyans protested with placards that said: ‘Chinese must go.’ If no attempts are made to regulate trade, it is likely that there will be increased backlashes against cheap Chinese imports. Yet, political leaders go against their own professed understandings. In July 2012, Jacob Zuma in Beijing talked about the importance of exercising caution “when entering partnerships with other economies” and he said that the trade relationship was “unsustainable in the long term” (Hook, 2012: p. 1, my emphasis). But it is in the immediate and short term that people have to feed, clothe, educate, and care for themselves and their children. The consequences of these discourses and policies for social work practice are self-evident, as social workers are at the forefront of dealing with the various manifestations of poverty and inequality.
Conclusion The austerity measures imposed by the WB and the IMF and liberalization of trade continue to have devastating effects upon people, culminating in the current neoliberal crisis, which heralds a new multipolar world with the emerging economies of China, India, and Brazil being less dependent on the United States (Duménil and Lévy, 2011), and which has generated a range of oppositional movements. From small-scale protest actions in various parts of the world to the Arab Spring and the international Occupy Movement, lies the core-underlying theme of citizen intolerance of political authoritarianism, poverty and inequality, and exclusion in its various forms (Tormey, 2012; Wight, 2012). However, whether or not the current neoliberal crisis will allow for a transition toward a new world order beyond neoliberalism is open to question. Steger and Roy (2010: p. 137) predict that if the crisis continues or deepens “both third-wave neoliberalism (of a more moderate kind than its two predecessors) and a global new deal (built on Keynesian principles) are distinct possibilities for the second decade of the twenty-first century” (p. 137), while Duménil and Lévy (2011) are optimistic that the crisis might “favor a transition evocative of the New Deal” (p. 333). Given the hegemony of neoliberalism and its entrenched institutions and practices in favor of capitalist elites, who are not willing to give up their privileged positions, this will require a very strong counterhegemonic discourse to neoliberalism, envisioning another and a better world based on egalitarianism and emancipatory politics (Stiglitz, 2006; Nixon, 2010) and ensuring that popular global justice movements continue the pressure in
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challenging global capitalism. The hope for a better world is borne out of the ongoing struggle of the Arab revolution and in people becoming aware of the legitimating power of neoliberal capitalism, as seen in the international Occupy Movement.
See also: Disposable Youth in America in the Age of Neoliberalism; Governmentality; Liberalism, Anthropology of; Liberalism: Historical Aspects; New Managerialism and New Public Sector Management; Policy Knowledge: New Liberalism; Poverty Policy; Poverty, Geography of; Poverty, Sociology of; Trade Unions and Social Work: Lessons from Canada; Welfare Economics; Welfare Reform; Welfare Retrenchment; Welfare State, History of.
Bibliography Abramovitz, M., Zelnick, J., 2010. Double jeopardy: the impact of neoliberalism on care workers in the Unites States and South Africa. International Journal of Health Services 40 (1), 97–117. Banks, S., 2011. Ethics in an age of austerity: social work and the evolving new public management. Journal of Social Intervention: Theory and Practice 20 (2), 5–23. Bauman, Z., 1992. Intimations of Postmodernity. Routledge, London. Bauman, Z., Tester, K., 2001. Conversations with Zygmunt Bauman. Blackwell Publishers, Oxford. Bond, P., 2005. Elite Transition: From Apartheid to Neoliberalism in South Africa. University of KwaZulu-Natal Press, Scottsville. Bond, P., 2010. Limits to class apartheid. In: Maharaj, B., Desai, A., Bond, P. (Eds.), Zuma’s Own Goal: Losing South Africa’s War on Poverty. Africa World Press, Trenton, pp. 59–69. Bottery, M., 2000. Education, Policy and Ethics. Continuum, New York. Chomsky, N., 1999. Profit over People – Neoliberalism and Global Order. Seven Stories Press, New York. Clarke, J., 1993. A Crisis in Care? Challenges to Social Work. Newbury Park, London. Clarke, J., 2007. Subordinating the social? Neoliberalism and the remaking of welfare capitalism. Cultural Studies 21 (6), 974–987. Dominelli, L., 1996. Deprofessionalising social work: anti-oppressive practice, competencies and postmodernism. British Journal of Social Work 26, 153–175. Dominelli, L., 2002. Anti-Oppressive Social Work Theory and Practice. Palgrave Macmillan, Basingstoke. Dominelli, L., 2008. The new world order, scarcity and injustice: social work fights back. Caribbean Journal of Social Work 6 (7), 6–15. Dominelli, L., 2012. Green social Work: From Environmental Crises to Environmental Justice. Polity Press, Cambridge. Duménil, G., Lévy, D., 2001. Costs and benefits of neoliberalism: a class analysis. Review of International Political Economy 8 (4), 578–607. Duménil, G., Lévy, D., 2011. The Crisis of Neoliberalism. Harvard University Press, London. Foucault, M., 1984. The Foucault Reader. Pautheon, New York. Ferguson, I., Lavalette, M., 2006. Globalisation and global justice: towards a social work of resistance. International Social Work 49 (3), 309–318. Gramsci, A., 1977. Selections from Political Writings 1910–1920. Lawrence and Wishart, London. Gray, J., 2009. False Dawn: The Delusions of Global Capitalism. Granta Publications, London. Harvey, David, 2005. A Brief History of Neoliberalism. Oxford University Press, Oxford. Howe, D., 1994. Modernity, postmodernity and social work. British Journal of Social Work 24, 513–532. Hoogvelt, A., 1997. Globalization and the Postcolonial World: The New Political Economy of Development. Macmillan, London. Klein, N., 2000. No Logo. HarperCollins Publishers, Hammersmith. Larner, W., 2000. Neo-liberalism: policy, ideology, governmentality. Studies in Political Economy 63, 5–26.
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Lemke, T., 2002. Foucault, governmentality and critique. Rethinking Marxism 14 (3), 49–64. Leonard, P., 1997. Postmodern Welfare: Reconstructing an Emancipatory Project. Sage Publications, London. Nixon, B., 2010. A Better World is Possible: What Needs to Be Done and How We Can Make It Happen. O-Books, Winchester. Pierson, C., 1991. Beyond the Welfare State? The New Political Economy of Welfare. Polity, Cambridge. Polyani, K., 1957. The Great Transformation: The Political and Economic Origins of Our Time. Beacon Press, New York. Reuters, September 13, 2012. Chinese Test Limits of Friendship. Daily News. Rowden, R., 2009. The Deadly Ideas of Neoliberalism: How the IMF Has Undermined Public Health and the Fight against AIDS. Zed Books, London. Sachs, J., 2005. The End of Poverty: How We Can Make it Happen in Our Lifetime. Penguin Books, London. Saul, J.S., 2006. Development after Globalization: Theory and Practice for the Embattled South in a New Age Imperialism. UKZN Press, Scotsville. Zed Books Ltd, London. Schram, S.F., Silverman, B., 2012. The end of social work: neoliberalizing social policy implementation. Critical Policy Studies 6 (2), 128–145. Sewpaul, V., Hölscher, D., 2004. Social Work in Times of Neoliberalism: A Postmodern Discourse. Van Schaik Publishers, Pretoria. Sewpaul, V., 2005. Feminism and globalization: the promise of Beijing and neoliberal capitalism in Africa. Agenda 64, 104–113. Sewpaul, V., 2006. The global-local dialectic: challenges for African scholarship and social work in a post-colonial world. British Journal of Social Work 36, 419–434. Sewpaul, V., 2008. Social work education in the era of globalization. Caribbean Journal of Social Work 6 (7), 16–35. Steger, M.B., Roy, R.K., 2010. Neoliberalism: A Very Short Introduction. Oxford University Press, New York. Stiglitz, J., 2006. Making Globalization Work. Penguin Books, London. Tormey, S., 2012. Occupy wall street: from representation to post-representation. Journal of Critical Globalisation Studies 5, 132–137. Wacquant, L., 2001. The penalization of poverty and the rise of neoliberalism. European Journal on Criminal Policy and Research 9, 401–412. Wight, C., 2012. Riot, why wouldn’t you? Journal of Critical Globalisation Studies 5, 161–166.
Relevant Websites African Development Bank, 2011. The Revolution in Tunisia: Economic Challenges and Prospects. Available online: http://www.afdb.org/fileadmin/uploads/afdb/Documents/ Publications/North%20Africa%20Quaterly%20Analytical%20Anglais%20ok_North% 20Africa%20Quaterly%20Analytical.pdf (accessed 3.06.12.). Amin, S., June 2001. Imperialism and globalization. Monthly Review 53 (2). Available online: http://www.monthyreview.org/0601amin.htm (accessed 3.10.12.). Fortunato Jr., S.J., July–August 2005. The soul of socialism: connecting with the people’s values. Monthly Review 57 (3). Available online: http://www. monthlyreview.org/0705fortunato.htm (accessed 30.06.12.). Gibson, C.C., 2009. Neoliberalism and Dependence: A Case Study of the Orphan Care Crisis in Sub-Saharan Africa. Graduate School Theses and Dissertations. Available online: http://scholarcommons.usf.edu/etd/1983 (accessed 1.11.12.). Haiven, M., 2011. From NYC: “Occupy Wall Street Has No Agenda” is an Alibi for Apathy, Halifax Media Co-op. Available online: http://www.mediacoop.ca/blog/maxhaiven/8378 (accessed 1.11.12.). Hook, L., 2012. Zuma Warns on Africa’s Ties to China. Available online: http://www.ft. com/cms/s/0/33686fc4-d171-11e1-bbbc-00144feabdc0.html#axzz27MqYq8Us (accessed 26.09.12.). International Labour Organization Report, 2009. Available online: http://www.ilo.org/ wcsmp5/groups/public/dgreports/dcomm/documents/publication/wcms/ 101461.pdf. Keynes, J.M., 1933. National self-sufficiency. The Yale Review 22 (4), 755–769. Available online: https://www.mtholyoke.edu/acad/intrel/interwar/keynes.htm (accessed 25.09.12.). Lara, M.S., 2011. Kinship Care Policy: Exacerbating Women’s Oppression Through Neoliberal Familialization. Open Access Dissertations and Theses. Paper 6375. Available Online: http://digitalcommons.mcmaster.ca/opendissertations/6375 (accessed 23.07.12.). Obama, B., 2009. Inauguration Address. Available online: http://www.nytimes.com/ 2009/01/20/us/politics/20text-obama.html. The Cabinet Papers 1915–1982. Available online: http://www.nationalarchives.gov.uk/ cabinetpapers/themes/sterling-devalued-imf-loan.htm (accessed 19.07.13.). World Commission on the Social Dimensions of Poverty, 2004. A Fair Globalization: Creating Opportunities for All. International Labour Organisation, Geneva. www.ilo. org/public/english/fairglobalization/report/index.htm (accessed 25.09.12.).
Abstract This article teases out the concept of neoliberalism as ideology, as a form of governmentality, and as a policy paradigm. It provides a brief history of neoliberalism and then discusses the consequences of neoliberalism in respect of unfair trade, the destruction of domestic production and markets, poverty, and inequality. It concludes with the argument that despite the ideological hegemony of neoliberalism, the current crisis and trends of global social justice movements, which social workers can be engaged in, hold potential to create alternative socioeconomic and political systems in support of a more just world.
Introduction Neoliberalism has its ideological roots in classical liberalism articulated by early theorists such as John Locke, Adam Smith, and David Ricardo and in the twentieth-century theories of Friedrich von Hayek and Milton Friedman (Harvey, 2005; Pierson, 1991; Steger and Roy, 2010). The neoliberal revolution was consolidated during the regimes of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States from the early 1980s onward. A related significant event during this period was the opening up of the economy of China, the world’s emerging superpower, by Deng Xiaoping in 1978. According to Harvey (2005), events in the United Kingdom, the United States, and China during this period “spread and reverberated to remake the world around us in a totally different image” (p. 1). The breakdown of Soviet communism also played a decisive role in entrenching neoliberalism as the dominant ideology. The past few decades have witnessed the increasing dominance of neoliberalism as discourse and practice on a global level, which has remolded health, education and welfare, and global flows of finance, trade, and labor (Abramovitz and Zelnick, 2010; Schram and Silverman, 2012; Sewpaul, 2008; Rowden, 2009). Classical liberalism is characterized by a global laissez-faire that holds the market to be sacrosanct, self-regulating, and entirely rational. This was the appeal of Adam Smith’s idea that “markets and the pursuit of self-interest would lead, as if by an invisible hand, to economic efficiency” (Stiglitz, 2006: p. xiv). Referring to contemporary neoliberalism, the collapse of markets; the implosion of the American financial system, beginning with the subprime mortgage crisis that began in August 2007; and the bail-out of banks, Gray (2009) reiterated his belief of 1998 that: “Today’s regime of laissezfaire will be briefer even than the belle époque of 1870 to 1914, which ended in the trenches of the Great War” (p. xii). Obama’s (2009) inaugural address in which he warned that, “without a watchful eye, the market can spin out of control” also made some people believe that the end of neoliberalism was imminent. Yet, the “world failed to shake the ‘Washington Consensus’” (Bond, 2010: p. 59) – a consensus between the International Monetary Fund (IMF), the World Bank (WB), and the United States Treasury that fostered fiscal austerity, privatization, and market liberalization
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(Stiglitz, 2006) that are defining features of neoliberalism. However, there is now hope as the majority of the world’s dispossessed (symbolically represented as the 99%) is reacting to global capitalism as seen in the recent Arab spring, the Occupy movement, and protests in many parts of the world. This article teases out the concept of neoliberalism, provides a brief history of it, and then discusses the consequences of neoliberalism. It concludes with the argument that despite the ideological hegemony of neoliberalism, the current crisis and trends of global social justice movements hold potential to create alternative socioeconomic and political systems in support of a more just world, which constitutes a central goal of social work education, research, and practice.
Conceptualization of Neoliberalism Neoliberalism refers to a combination of socioeconomic and political discourse and policy choices based on the values of an unregulated market; the rarefaction of individual freedom and choice; as well as the faith that market fundamentalism, and not state intervention, would promote economic growth, efficiency, progress, and distributional justice, primarily through trickle-down effects. Harvey (2005) defines neoliberalism as “a theory of political economic practices” (p. 2), rather than an unadulterated political ideology. Although neoliberalism has its roots in classic liberalism, it has come to span diverse political leanings and is associated with center-left politics, moderate right-wing conservatism, and autocratic dictatorships, embraced by and/or imposed on almost all countries across the globe. The author draws on the works of Larner (2000) and Steger and Roy (2010) to conceptualize neoliberalism as an ideology, as a form of governmentality, and as a policy paradigm. These dimensions are mutually constitutive and overlapping.
Neoliberalism as Ideology Duménil and Lévy (2011) maintain that the neoliberal revolution was engineered by class and imperialist objectives, serving the interests of a privileged minority and a few powerful countries, with the United States occupying a unique
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hegemonic power. They argue that ideology was not the engine of the neoliberal revolution but that “the hegemony of the upper classes was deliberately restored [.] A neoliberal ideology emerged, the expression of the class objectives of neoliberalism” (p. 18). Whether a precursor to and/or an outcome of the neoliberal revolution, ideology has come to play a huge role in its reproduction. While the crisis that began in 2007, with the crash in October 2008, held the potential to create cracks in the consciousness of people about the moral and pragmatic limits of a system regarded as inviolate (Sewpaul, 2008), the opportunities seem to be lost. Although Stiglitz (2006) claimed that there is little intellectual defense of market fundamentalism left, a claim supported by a reading of the vast body of literature that almost unanimously speaks of the negative consequences of neoliberalism, there is yet a marked failure to disrupt the Washington Consensus. Given the power of ideology, the disjuncture between popularly held neoliberal values and empirical data, and the lack of political debate on neoliberalism in mainstream politics, this is understandable. Fortunato Jr. (2005) described the “manufacture of consent” (p. 4) by the mass media that serves the interests of the corporate world and political elites and that ensures that capitalism succeeds through ideological control of consciousness designed to make us believe that neoliberalism is in our interests and is inevitable. Neoliberalism was engineered and gained ground primarily on account of the lure of the language of liberal theory with its emphases on individualism, ownership, choice, flexibility, and competition that mask “the grim realities of the restoration or reconstitution of naked class power” (Harvey, 2005: p. 119). It is not only the manufacture of consent that is created by the media but also the “manufacture of desire” (Leonard, 1997: p. 37) as the market seduces people into constructing themselves as good consumers where their moral worth is determined by their ability to make the right purchasing choices (Bauman, 1992). Bauman (Bauman and Tester, 2001: p. 87) speaks of the “disguise of the individual’s freedom of choice,” which is so taken for granted that it “seldom has a chance of being examined and questioned [.] an old sinister temptation [.] left to be exploited by commercial markets.” These views are suggestive of Gramsci’s (1977) thesis of ideological hegemony exercised by the state and civil society to control the consciousness of people, not through repression or coercion but by gaining popular consent in the reproduction of class relations. While most theorists are quick to comment on the dangers of neoliberalism, few are willing to critique the liberal democracy that underpins it. There is a general taken-for-granted assumption of a convergence between the market and democracy, with American liberalism and capitalist hegemony touted as the source of morality and democratic practice, which is furthest from the truth (Amin, 2001; Fortunato Jr., 2005; Harvey, 2005). Samir Amin (2001), a postcolonial writer, cogently raises a number of critical questions in relation to liberal democracy and neoliberalism, concluding that “Convergence theory – the notion that the market and democracy converge – is today pure dogma with much of the talk about democracy reflecting the imposition of policy makers who have usurped power in the United States” (p. 9). Gray (2009) declares that “democracy and the free market are
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competitors rather than partners” (p. 213), a view supported by Stiglitz (2006) who proclaims that neoliberal globalization is not consistent with democratic principles. Citing several groups of power elites that serve as the main advocates of neoliberalism Steger and Roy (2010: pp. 11–12) argue that: “These individuals saturate the public discourse with idealized images of a consumerist, free-market world [...] neoliberal decision-makers function as expert designers of an attractive ideological container for their market-friendly political agenda.” Neoliberalism does not get reproduced in a vacuum. We are all complicit. “We all consume [.] we all participate in hierarchies of race, class gender and privilege. No one is a pure victim in this economic system, though almost everyone is ultimately a loser” (Haiven, 2011: p. 1). Harvey (2005) describes how neoliberalism penetrates daily consciousness so much so that it is normalized and naturalized, and it is considered necessary for social order despite the gross inequalities and poverty that it engenders.
Neoliberal Governmentality The treatise on neoliberalism as a mode of governance borrows from Foucault’s concept of governmentalities that provides a means of understanding the relationships between knowledge, power, and technologies of the self (Foucault, 1984; Leonard, 1997; Lemke, 2002). From this perspective, neoliberalism refers to “a political rationality that tries to render the social domain economic and to link a reduction in (welfare) state services and security systems to the increasing call for ‘personal responsibility’ and ‘self-care’” (Lemke, 2002: p. 203). While neoliberalism guarantees personal and individual freedom, each person is held responsible for his or her own actions and well-being. Thus, poverty and hardships are seen as personal failings rather than being attributed to any structural barriers to unemployment and the consequences of exclusions based on race, class, caste, gender, and/or disability. Steger and Roy (2010) assert that: A neoliberal governmentality is rooted in entrepreneurial values such as competitiveness, self-interest, and decentralization [...] Rather than operating along more traditional lines of pursuing the public good (rather than profits) by enhancing civil society and social justice, neoliberals call for the employment of governmental technologies that are taken from the world of business and commerce. (p. 12)
Thus, along with neoliberalism, there is entrenching of new managerialism into all spheres of life, including social work and welfare. New managerialism emphasizes getting the job done, with checks and balances in the shortest space of time as well as with the imposition of economy, efficiency, and effectiveness manifesting in such tangibles as performance measurement, inputs and outputs, outcomes, and targets (Dominelli, 1996). One example of this, in the South African context, is the Financing Policy for Welfare, which speaks of business plans, contracts, affordability, efficiency, outputs, performance audits, outsourcing, venture financing, and service purchasing, thus effectively reconstructing users of welfare services as customers (Sewpaul and Hölscher,
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2004). This trend, replicated in many parts of the world, found its origins in Britain and the United States. The 1989 Community Care White Paper in Britain (cited in Sewpaul and Hölscher, 2004) promoted choice, flexibility, and innovation, which was to be achieved through a prospering private welfare sector and outsourcing of government services. The introduction of competition between providers is aimed at increasing value for money, efficiency, accountability, and quality of the services provided. Banks (2011), writing within the British context, observes an intensification of “procedures, measurement and centrally defined targets” (p. 10) and the adoption of depersonalized ethics that focus on predetermined standards, contracts, and procedural manuals. New managerialism relegates the importance of other ethical values such as autonomy, critical reflection, care, equality, solidarity, interdependence, reciprocity, respect, and trust in favor of narrowly defined economic priorities (Bottery, 2000).
Neoliberalism as Policy As a policy package, neoliberalism is associated with spread of global capitalism and consumerism that has engineered the attacks on, and dismantling of the welfare state (Chomsky, 1999; Harvey, 2005; Steger and Roy, 2010), expressed in what Steger and Roy (2010: p. 14) call the “D-L-P formula,” which is deregulation of the economy, liberalization of trade, and privatization of state assets, which provided the ideological basis for the restructuring, privatization, and retrenchment of social policy and welfare programs, and for managerial approaches to social work practice (Clarke, 2007). Neoliberalism is a discourse and practice, which rarefies individual interests where transnational corporations (TNCs) and a few, rich powerful elites dominate the market primarily interested in profit making. Following this individualistic logic, the state uses neoliberal socioeconomic policies to allow it to abdicate its responsibilities in relation to the welfare of its people. Evocative of Foucault’s (1984) governmentality and technologies of the self, the most dominant neoliberal discourses in social work and welfare have been on the promotion of self-reliance, the importance of individuals and families taking responsibility for their own well-being, and shifting responsibility from the state to local communities. This neoliberal policy doctrine is reflected in the voice of a manager in the South African context: “The State is an entrepreneur of its own. It must make a profit where it can [.]. The state must be minimalist, it must really do the least and the last. Civil society, empowered civil society is to do the most” (Sewpaul and Hölscher, 2004: pp. 84–85), a doctrine that had become quite universal in the 1990s, reflecting the hegemony of neoliberalism. Apart from the use of ideological manipulation that engineered this, there was the use of military force and sanctions, or threats of sanctions by the United States against governments in the developing world that deviated from the US ideal of liberal capitalist democracy (Harvey, 2005; Sewpaul, 2006; Steger and Roy, 2010). In some countries like the United Kingdom, there continues to be the strategic use of budgets and legislation, thus avoiding political discourses on the nature of the welfare state and of social work.
Neoliberalism: A Brief History There are three distinct periods of lasting and deep structural crises in the history of modern capitalism: the crisis of the 1890s, the Great Depression, and the crisis of the 1970s, with the contemporary crisis of neoliberalism ushering in a new phase (Duménil and Lévy, 2011). Mid-Victorian England saw the demolition of social markets (which combined a regulated market with issues of social justice, with, for example, universal health care and extensive social security) and the introduction of deregulated, free markets that functioned independently of social needs, based on the theories of classical liberals like Adam Smith and David Ricardo (Gray, 2009; Steger and Roy, 2010) who were convinced that economic difficulties were the consequence of government failures, particularly from state interference. People were seen to be creatures of economic rationality and, in accordance with modernist thinking, as opposed to premodern conceptions of an unquestionable divine order (Howe, 1994), evolved the idea of the human being as subject, “an autonomous self who is the source of his or own action” (Sewpaul and Hölscher, 2004: p. 18), thus imposing no duty on the part of the public to provide, or any right on the part of the destitute to claim any relief. Gray (2009) argues that the removal of agricultural protectionism, free trade, and the Poor Laws of 1834 formed the cornerstones of the unregulated market of mid-Victorian times that has influenced all subsequent neoliberal policies. The Poor Law Act of 1834 was one of the most demeaning and stigmatizing pieces of legislation based on laissez-faire ideology, reflected in the activities of the nineteenth-century charities, particularly that of the Charity Organisation Society whose activities “rested on a belief in moral character as the decisive feature in people’s circumstances – no structural issues of power, unemployment or marginalization entered the moral calculus” (Clarke, 1993: p. 9), hence “individuals were solely responsible for their own welfare” (Gray, 2009: p. 9). The laissez-faire ideology reduced the role of the state to that of “night watchman” (Steger and Roy, 2010: p. 5) where the state takes responsibility only for the most basic aspects of public order, and it entrenched casework as the basis of social work while marginalizing the more structural approaches to the profession, as reflected in the work of the Settlement House Movement. This laissez-faire governance was legislated out of existence from the 1870s onward and, by the end of World War I, markets had become, in the main, reregulated in the interests of public health and welfare. However, individualism and free trade characterized Britain until the Great Depression of the 1930s that paved the way for Keynesian economics underscored by egalitarian or embedded liberalism, which held sway from the mid-1940s until the 1970s (Gray, 2009; Stiglitz, 2006; Steger and Roy, 2010). This was not the product of a natural evolution. Leonard (1997) posits that the political masses played a central role in establishing the Keynesian welfare state in the West, including the United States, although working class consciousness was weaker and more transitory there than in the social democracies of Europe. Keynesian egalitarianism involved state intervention, regulation of the market, the involvement of organized labor to promote full
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employment and growth, and some state ownership of crucial national enterprises like railroads, public utilities, and energy companies (Keynes, 1933). Keynes in 1933 (unpaged) argued that, “Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.” The salience of his reflections for our contemporary world is expressed in the following:
Experience accumulates to prove that most modem processes of mass production can be performed in most countries and climates with almost equal efficiency [...]. National self-sufficiency [.] though it costs something, may be becoming a luxury, which we can afford, if we happen to want it.
Karl Polyani also made significant contributions to economic thinking during this period. In 1944, combining issues of economic and environmental justice, he prophetically wrote: “To allow the market mechanism to be the sole director of the fate of human beings and their natural environment [.] would result in the demolition of society” (Polyani, 1957: p. 73). Polyani, like Keynes, believed that sustainable economic relationships needed to be embedded in a framework of regulations, institutions, and social norms. In the three decades following World War II, Keynesianism, which inspired the American New Deal, the British welfare state, and the Scandinavian Social Democratic welfare model, produced impressive economic growth, low inflation, high wages, and exceptional levels of human well-being and social security. The benefits of Keynesianism, however, eluded most of Africa (Harvey, 2005), which continued to be the biggest loser throughout history and as neoliberalism intensified into the 1990s. Keynesianism came to a halt with the economic crises of the 1970s, with the oil shocks that raised the price of petrol, and induced high inflation and rising unemployment (Harvey, 2005; Steger and Roy, 2010; Stiglitz, 2006). The structural crisis of the 1970s allowed for the reassertion of the dominance of finance (Duménil and Lévy, 2001) revitalizing the earlier creed of classical liberalism under conditions of globalization. The welfare state in Britain was one of the casualties of the imposition of IMF conditions in 1976 when Britain borrowed US$3.9 billion. The loan came with a heavy price as it introduced policy changes away from full employment and social welfare toward inflation and public expenditure controls (The Cabinet Papers 1915–82). The early 1980s saw the consolidation of first wave neoliberalism, characterized by conservative Thatcherism and Reaganomics, based on reducing taxes, liberalizing exchange rate controls, deregulation, privatization, and diminishing the power of labor unions, “interlaced with the geopolitical imperative to stop the spread of communism and socialist developmentalism in the Third World” (Steger and Roy, 2010: p. 47), directed primarily at the maintenance of US hegemony through its imperialist roles in the WB, the IMF, and the economies of Latin America, Africa, and Asia (Stiglitz, 2006; Gray, 2009). The introduction of structural adjustment policies and programs, the changes in the US monetary policies toward price stability before full
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employment, and their associated debt crises produced untold burdens for Third World countries (Stiglitz, 2006; Duménil and Lévy, 2011): “A strategy for development [.] transformed into an actual catastrophe by a decision emanating [.] within leading capitalist countries, with a total indifference for the hardship imposed on the Third World” (Duménil and Lévy, 2001: p. 595). Second-wave neoliberalism has been identified with the policies of Tony Blair and Bill Clinton, that began in the 1990s and sought to strengthen “social solidarity without dropping the neoliberal ideal of market-oriented entrepreneurship” (Steger and Roy, 2010: p. 50), with a corporate-led globalization that entrenched further inequalities within countries and between the North and the South (Sachs, 2005; Saul, 2006). Despite its success, Keynesian economics was vilified by classical liberals like Von Hayek and Milton Friedman, whose doctrines dominated the 1944 Bretton Woods conference, which saw the introduction of a system of free trade with fixed exchange rates tied to the US dollar and the establishment of the International Bank for Reconstruction and Development, later renamed the WB, and the IMF (Harvey, 2005; Stiglitz, 2006), initially designed to provide loans for Europe’s postwar reconstruction but later expanded to fund various industrial projects in developing countries. The General Agreement on Tariffs and Trade (GATT) was established in 1947 in order to enforce multilateral trade agreements. In 1995, the World Trade Organization (WTO) was founded as a successor to GATT. In the mid-twentieth century, given that national economies were still relatively closed, governments were able to regulate capital movements, which allowed for a period of relative stability and economic growth that enabled the implementation of Keynesian policies that formed the structural basis of the welfare state (Sewpaul and Hölscher, 2004). But following the recession, in 1971, the United States denounced the fixed exchange rate linked to a fixed gold price, a move followed in 1973 by the introduction of flexible exchange rates and the abolition of capital controls by the United States in 1974, followed by Britain in 1979, and by the early 1990s, most of the other 32 Organisation for Economic Cooperation and Development (OECD) countries (Pierson, 1991). The increase in international trade provoked greater financial speculation and fluctuation of exchange rates, with a steady growth of TNCs. These developments altered the economic context within which the welfare state operated in the context of OECD countries, yet they failed to stem the recession that they were aimed at addressing. Pierson (1991) avers that: “Governments throughout the developed West were simultaneously failing to achieve the four major economic policy objectives – growth, low inflation, full employment and balance of trade – on which the post-war order had been based” (p. 145). With monetary policy increasingly being set by the WB, the IMF, and the United States; the ability of capital to move freely; and the growing presence of TNCs that provided capital with an exit option from one national economy to another, the bargaining power of governments was weakened. Yet, the neoliberal agenda was and continues to be a product of strong governments and cannot function without them. The attack on the World Trade Center on 11 September 2001 led to another phase where the profoundly “anti-democratic
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nature of neoliberalism [is] backed by the authoritarianism of the neoconservatives” (Harvey, 2005: p. 205) and where neoliberal discourses are increasingly tied up with the penalization of poverty (Wacquant, 2001) and with antiterrorism and Islamophobic discourses. On 11 September 2001, radical Islamic forces attacked what they considered to be the symbols of economic oppression – the World Trade Centre and the Pentagon in the world’s most neoliberal society. Steger and Roy (2010) rightly concluded that “Bin Laden articulated a criticism of neoliberal market globalism that was shared by opponents of neoliberalism across the Left/Right ideological divide – though the principles and horrific methods of alQaeda have been unambiguously denounced by the leaders of the global justice movement” (p. 123). Despite growing inequality and crises engendered by neoliberalism, and the global manifestations of resistance against it, neoliberalism endures largely on account of the taken-for-granted assumptions that are reproduced among people on a daily basis.
Consequences of Neoliberalism The current crises, which is seeing marked decreases in the living standards of people, has reverberating effects in all parts of the globe, as reflected in the crises of Wall Street, the deepening of the Eurozone crisis, the economic slowdown of some of the Asian countries including India and China, and the entrenching of uneven development and greater inequality within and across countries. Duménil and Lévy (2011) contend that, as a class project, neoliberalism has been exceptionally successful as it has worked in the interests of privileged minority capitalist classes with the divides between the rich and the poor having deepened. Neoliberalism has contributed to distorted development between the North and the South, to greater levels of inequality within nation-states, to the further marginalization of women and to a greater feminization of poverty, especially among Black women (Dominelli, 2002; Gibson, 2009; Lara, 2011; Sewpaul, 2005; Stiglitz, 2006; Gray, 2009; Steger and Roy, 2010). The World Commission on the Social Dimensions of Globalization (2004) concluded that the levels of global imbalances were “morally unacceptable and politically unsustainable” (p. x), while some authors like Dominelli (2012) and Nixon (2010) warn that the great threat is also against environmental sustainability. In a survey of 73 countries, the Commission found that apart from South Asia, the United States, and the European Union, unemployment increased between 1990 and 2002, with global unemployment reaching a high of 185.9 million, and that 59% of the world’s people were living in countries with growing inequality. While countries in Africa, Asia, and Latin America have long been the biggest losers within global capitalism with austerity measures imposed as conditionalities of structural adjustment programs (Dominelli, 2008; Rowden, 2009; Bond, 2005; Stiglitz, 2006; Gray, 2009), patterns of capital accumulation and consumption are now becoming more complex, with many of the rich core capitalist countries now being subject to stringent austerity measures. There are new configurations of global power with, for example, a growing Chinese imperialism that
challenges the hegemony of the United States. Also, while many companies have been relocating production to low-wage countries for many years, India has become very successful in attracting high-skilled jobs in computer programming and customer services. The North–South divide is giving way to a new international division of labor where the “familiar pyramid of the core-periphery hierarchy is no longer a geographic but a social division of the world economy” (Hoogvelt, 1997: p. xii). The current manifestation of these is the rising levels of unemployment and inequality and the severe austerity measures sweeping across the globe, with the United States and several European countries like Italy, Greece, Portugal, Britain, and France being extremely hard hit. In the United States, between 2000 and 2008 household incomes declined 1%, while corporate profits rose 70%; the gap between the rich and the poor is higher than at any time since 1930; and the rates of poverty and those living without health insurance has increased by 20% (Nixon, 2010). Economic growth in itself does not translate into a better life for the majority of people, and the ‘trickle-down’ notion of capitalism has proved to be a myth. The International Labor Organization (ILO, 2009) predicted that the crisis would wipe out at least 20 million jobs by the end of 2009, bringing global unemployment to an unprecedented number of over 200 million. Accompanying neoliberal policy choices are the weakening of trade unions and labor power; tax cuts for big business and the rich; the erosion of meaningful and egalitarian democracy; cutbacks in state expenditure in sectors such as health, education, and welfare; the relocation of labor to areas of least production costs; and the creation of sweatshops and economic processing zones that compromise workers’ rights (Gray, 2009; Stiglitz, 2006; Klein, 2000; Sewpaul, 2006; Steger and Roy, 2010). Trade liberalization and unfair trade has often resulted in massive imports, which undermine local production and prices, and increased unemployment, which places enormous strains on poor people, and contributes to children dropping out of school, women and child trafficking, engaging in dangerous work, starvation, and xenophobic outbursts, issues that social workers engage with on a daily basis. The WTO remains a site of marked resistance on account of unfair trade practices, with the US government using it to protect the market for its multinational corporations with devastating effects on smaller-scale business within the developing world (Gray, 2009; Nixon, 2010; Stiglitz, 2006; Steger and Roy, 2010). The subsidies, what Nixon (2010: p. 260) calls perverse subsidies that amount to about US$2 trillion a year, include subsidies from rich country governments like the United States, Europe, and Japan that produce cheaper agricultural imports against which farmers in the developing world cannot compete. This practice exposes the hypocrisy of rich countries that argue no subsidies for agricultural products while doing precisely that in their own countries. Another player on the global bloc, threatening domestic production and employment, is China, with an influx of Chinese trade across the globe setting ablaze anger at the destruction of domestic livelihoods (Reuters, 2012). Local producers cannot compete against a range of cheap Chinese imports of clothes, shoes, toys, crockery, and electronics. Chinese goods accounted for 18% of South Africa’s imports in 2012, up from 2% in 1995. With the
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Eurozone crisis and a declining European market, China has been increasingly turning its trade interest to Africa, with Africa now accounting for about 70% of the revenue of some Chinese companies (Reuters, 2012). With growing intolerance for lack of government regulation, people are taking measures into their own hands with violence and threats of violence. One Malawian merchant was reported to have said: “One day there will be blood” (Reuters, 2012: p. 13). In South Africa, xenophobic attacks, linked to socioeconomic deprivations, has seen blood and this seems to be spilling over to Chinese migrants. In November 2011, four Chinese were murdered in South Africa (Reuters, 2012). In August 2012, Kenyans protested with placards that said: ‘Chinese must go.’ If no attempts are made to regulate trade, it is likely that there will be increased backlashes against cheap Chinese imports. Yet, political leaders go against their own professed understandings. In July 2012, Jacob Zuma in Beijing talked about the importance of exercising caution “when entering partnerships with other economies” and he said that the trade relationship was “unsustainable in the long term” (Hook, 2012: p. 1, my emphasis). But it is in the immediate and short term that people have to feed, clothe, educate, and care for themselves and their children. The consequences of these discourses and policies for social work practice are self-evident, as social workers are at the forefront of dealing with the various manifestations of poverty and inequality.
Conclusion The austerity measures imposed by the WB and the IMF and liberalization of trade continue to have devastating effects upon people, culminating in the current neoliberal crisis, which heralds a new multipolar world with the emerging economies of China, India, and Brazil being less dependent on the United States (Duménil and Lévy, 2011), and which has generated a range of oppositional movements. From small-scale protest actions in various parts of the world to the Arab Spring and the international Occupy Movement, lies the core-underlying theme of citizen intolerance of political authoritarianism, poverty and inequality, and exclusion in its various forms (Tormey, 2012; Wight, 2012). However, whether or not the current neoliberal crisis will allow for a transition toward a new world order beyond neoliberalism is open to question. Steger and Roy (2010: p. 137) predict that if the crisis continues or deepens “both third-wave neoliberalism (of a more moderate kind than its two predecessors) and a global new deal (built on Keynesian principles) are distinct possibilities for the second decade of the twenty-first century” (p. 137), while Duménil and Lévy (2011) are optimistic that the crisis might “favor a transition evocative of the New Deal” (p. 333). Given the hegemony of neoliberalism and its entrenched institutions and practices in favor of capitalist elites, who are not willing to give up their privileged positions, this will require a very strong counterhegemonic discourse to neoliberalism, envisioning another and a better world based on egalitarianism and emancipatory politics (Stiglitz, 2006; Nixon, 2010) and ensuring that popular global justice movements continue the pressure in
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challenging global capitalism. The hope for a better world is borne out of the ongoing struggle of the Arab revolution and in people becoming aware of the legitimating power of neoliberal capitalism, as seen in the international Occupy Movement.
See also: Disposable Youth in America in the Age of Neoliberalism; Governmentality; Liberalism, Anthropology of; Liberalism: Historical Aspects; New Managerialism and New Public Sector Management; Policy Knowledge: New Liberalism; Poverty Policy; Poverty, Geography of; Poverty, Sociology of; Trade Unions and Social Work: Lessons from Canada; Welfare Economics; Welfare Reform; Welfare Retrenchment; Welfare State, History of.
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