neoliberalism and globalization essay

What Is ‘Neoliberalism’, and How Does It Relate to Globalization?

The scholarship on economic neoliberalism, its definition, proliferation, and effects, has been dominated by authors who are highly critical of the concepts underlying morality and effects on society (Boans and Gans-Morese 2009; Thorsen 2009). These authors argue that “[t]here has everywhere been an emphatic turn towards neoliberalism in political-economic practices and thinking since the 1970s” (Harvey 2005:2-3) and that neoliberalism has “become hegemonic as a mode of discourse […] to the point where it has become incorporated into the commonsense way we […] understand the world” ( Ibid. 2007:23). Similarly, these authors argue that neoliberalism is the main driver of globalization and that globalization itself can be seen as both the effect of, and the move towards, global neoliberalism (Litonjua 2008). Economic neoliberalism is an economic theory and an ideological conviction that supports maximizing the economic freedom for individuals and thus reducing the amount of state intervention to the bare minimum. In this regards, it does advocate the elimination of government-imposed restrictions on transnational movements of goods, capital and people (Harmes 2012: 64-9; Cohen and Centeno 2006:36). However, although these aspects are considered important aspects of globalization, this essay argues firstly that globalization is a much richer and multi-dimensional process that extends beyond transnational economic transactions. Secondly, the essay argues that evidence for the proliferation of neoliberalism, although often conceptualized correctly by the ‘critical’ literature, is sparse. Thirdly, this essay argues that there is little support for assuming that there is causation, or even a correlation, between neoliberalism and globalization. The lack of evidence for a neoliberal transition has been noted by Cohen and Centeno (2006:36-7) who argue that “available data suggests that the policy and macroeconomic changes realized under the neoliberal policy regime are more complex than is often assumed”. However, unlike these authors, this essay argues that the absence of neoliberal policies worldwide implies that the world may in fact not have undergone a neoliberal transition. Lastly, this essay will not engage with ethical discussions on the effects of either neoliberalism or globalization.

The essay proceeds by defining the concept of neoliberalism and differentiating it from the various other strands of liberal economic theory. This section finds that economic neoliberalism ought to be considered a fairly ‘extreme’ form of liberalism in its support for a minimal state. This section also provides clarification to the concept of globalization, its dimensions, historical lineage as well as the main features of the contemporary process of globalization. The second and third part of the essay examines the empirical support for the argument put forth by the ‘critical’ literature that there has been a global neoliberal transition and that this has facilitated globalization. The second part assesses the emergence of domestic neoliberal policies worldwide and finds that although there is evidence that countries have adopted liberal economic policies since the 1970s, there is little evidence to argue that countries have undergone a clear neoliberal transition. The last section of the essay addresses neoliberalism in relation to globalization and argues that globalization has been facilitated by numerous technological and political developments, few of which can be tied directly or even indirectly to economic neoliberalism.

Authors who are ‘critical’ of the concept’s attractiveness and effects have come to dominate the scholarship on neoliberalism (Boas and Gans-Morse 2009:139; Thorsen 2009:2). This literature normally defines neoliberalism as a collection of economic policies supported by an ideological commitment that argues for the reduction of state-intervention in the economy and a promotion of laissez-faire capitalism in order to promote human well being, economic efficiency (Kotz 2000:64), and personal freedom (Smith 2012; Hall 2011:706-8; Litonjua 2008:259-60; Harvey 2005:2-7). Critical writers often trace the ideological lineage of neoliberalism back to the Chicago School, the Austrian School, the Mont Pélérin Society (Davidson 2004/05:209) and the writings of Milton Friedman, Fredrich von Hayek, and James Buchanan (Henig 1989/90:653, 656). Policies following this line of thought would then entail a reduction or elimination of trade barriers and capital controls, as well as “redistributive taxation and deficit spending, controls on international exchange, economic regulation, public goods and service provisions, and active fiscal and monetary policies” (Centeno and Cohen 2012:318). However, the ‘critical’ literature is often more concerned with critiquing the effects of neoliberal doctrine, than providing clear conceptual definitions (Boas and Gans-Morse 2009:138; Thorsen 2009:3).

The primary problem with this definition is that it fails to differentiate economic neoliberalism from other forms of liberal economic theory such as neoliberal institutionalism, liberal internationalism as well as classical economic liberalism itself. These theories all support the central features associated with neoliberalism mentioned above but differs in their ethical assumptions and the perceived amount of appropriate state intervention in the economy. Classical liberal theory contains features from all the subsequent strands of liberal thought. These subsequent theories could then be considered various branches developed from classical liberal theory. Economic neoliberalism is primarily concerned with maximizing individual liberty the freedom of choice. This implies that the state should assume a highly minimal and purely regulatory form and should refrain from most forms of economic intervention, even in the face of market mechanisms leading to reduced economic efficiency (Howlett, Alex and Ramesh 1999:27; Thorsen 2009:15; Cordato 1980:396; von Hayek 1979). Nevertheless, the state has an important role to fulfil in securing private property rights and contract enforcement (Lindbeck 1987:3). Neoliberal institutionalism, on the other hand, advocates maximizing total economic gains. The theory believes that this can best be achieved by relying on automatic market mechanisms. However, it can allow a more interventionist government in order to correct inefficient market failures and detrimental externalities. Together with liberal internationalism it is also concerned with achieving peaceful relations internationally by promoting economic interdependence and creating international regimes and institutions (Harmes 2012:62; Held and McGrew 2002.101-2). Thus, where other strands of liberal economic theory can support state intervention in order to promote economic justice and correct market failures, neoliberalism firmly opposes such policies, even where they may contribute to increased aggregate economic gains. The ‘critical’ literature often fails to acknowledge this difference, even when it explicitly traces the neoliberal lineage back to the laissez – faire theorists. The most common conflation is between economic neoliberalism and neoliberal institutionalism. This could arise due to the terminological similarity and the superficial similarities in policy between these approaches. However, it is crucial to note that economic neoliberalism supports a relatively ‘extreme’ form of individual economic freedom whereas neoliberal institutionalism is more moderate in relation to taxation and macroeconomic intervention.

One problem that arises from the lack of conceptual rigour is that any policy that liberalizes the domestic economy can be seen as a tendency towards a minimal state. Another problem with this theoretical conflation is that it has led to the view that reductions in trade barriers and capital controls, elements considered fundamental to the proliferation of economic globalization, constitute evidence for the fact that globalization is primarily driven by neoliberal doctrine (Colás 2005:73; Kotz 2000:76). As Litonjua (2008:254) argues, “globalization is the global spread of the economic system of capitalism. Promoted by the ideology of neoliberalism, the goal is a wholly deregulated global market society”. However, if more moderate forms of liberalism are the drivers of globalization, it is possible that globalization is not a product of, or movement towards, a completely ‘deregulated’ global economy.

In addition, Litonjua’s definition of globalization is exceedingly narrow. Firstly, globalization is not one process driven by a hegemonic class committed to an extreme for of economic liberalism. Instead, it is more fruitfully conceptualized as “a process (or a set of processes) which embodies a transformation in the spatial organization of social relations and transactions” (Held et al . 1999a:16). More specifically, it entails increased and swifter interconnectedness and synchronization of social activities across territorial dimensions (deterritorialization) (Sheuerman 2010). In practice, its elements include increased international and cross-territorial communications and movement of goods and people. This has led Therborn (2000:154) to argue that globalization means the “tendencies to a world-wide reach, impact, or connectedness of social phenomena”. Secondly, globalization does not, and has not, affected the various social features and institutions of society equally or simultaneously throughout history. Specifically, Mann (2013a:1-5; 2013b:928) argues that there are four, or five, main areas of globalization: ideological, economic, military, political, and geopolitical. These areas function relatively autonomously or ‘orthogonally’ to one another, meaning that they “interact but not in a systematic way”. As such, globalization cannot be considered a unified process aimed at achieving a specific goal. Thirdly, globalization is a phenomenon that has existed throughout history, propelled by political and technological factors. Nevertheless, various ‘waves’ of globalization, and reductions in globalization, may be distinguished by the level and extent of global deterritorialization and interconnectedness. As such, it cannot be easily attributed to a single political process. Therborn (2000:163-4) argues that presently, the world is experiencing a sixth wave of globalization which has been facilitated specifically by political developments that include a reduction in economic protectionist measures, lower transportation costs, as well as the rise of new, cheaper, and more easily available Information and Communications Technologies (ICTs) such as the Internet (Naím 2009:29). It is frequently argued that the contemporary era of economic globalization is characterized by increases in international trade relative to world GDP, and the rise of Foreign Direct Investment (FDI) and Multinational Corporations (MNCs). FDI is the act of buying companies or production facilities in a different country (Cohen 2007:37-8). As such, FDI “is what MNCs do to become MNCs” ( Ibid. :38)

Hence, we see that a reduction in protectionism, which is associated with neoliberalism but also the other strands of liberal economic theory, is considered to be related to the present form of globalization. In order to assess whether or not the current wave of globalization is a product of economic neoliberalism specifically , it could be useful to assess countries’ commitment to neoliberal doctrine. Consequently, although globalization cannot in anyway be seen as synonymous with neoliberalism, it could in fact be a product of neoliberalism if this theory has instigated the political developments that have facilitated the current wave of globalization. This is the argument put forth by the ‘critical’ literature. The predominant account of the emergence of neoliberal policies argues that a series of economic crises during the 1960s and 1970s led to the denouncement of more interventionist state policies such as ‘Keynesianism’ or ‘embedded liberalism’. This shifts was notably instigated by the Thatcher and Reagan administrations, in the U.K. and the U.S. respectively. Ostensibly, the policies by these governments where then transported globally, either forcefully or through hegemonic discourse, by the International Monetary Fund’s (IMF) ‘structural adjustment programs’ and the formulation of a list of economic policy propositions known as the ‘Washington Consensus’ (Centeno and Cohen 2012:318-21; Mueller 2011:387, 391-7; Litonjua 2008:160; Harvey 2007:23-4; Harvey 2005:3, 11-5; Kotz 2000:76). However, Williamson (2009:7, 14-5), the author of the ‘Washington Consensus’ firmly opposes the view that the content of the list is ‘neoliberal’ and argues that it was never his intent to advocate a total and complete reduction of state intervention in the economy. Nevertheless, Davidson 2004/05:209-10) argues that the list could be considered neoliberal due to the fact that in the long run, it would lead to a neoliberal restructuring of society. Passing verdict on this debate is difficult due to the scope for different interpretations, as illustrated by Davidson’s argument. Furthermore, William’s original intention is largely irrelevant if the ‘Washington Consensus’ has in fact led to an adoption of, or a move towards adopting, neoliberal policies worldwide.

Harvey argues that the ‘Neoliberal’ revolution led to a wave of privatization of State Owned Enterprises (SOE) starting in the 1970s (Cohen and Centeno 2006:32-3). SOEs are companies where the state owns or controls a substantial part of the enterprise. Privatization is a loose concept but can be identified as the direct sale or the public listing of the entire, or a substantial part, of a SOE (Megginson and Netter 2001:321). Indeed, according to neoliberal theory, SOEs ought to be dismantled due to the constraining effects it would have on individuals’ freedoms to conduct business. This is contrary to the other strands of neoliberal theory that argue that relying on market mechanisms are a better way to ensure correct pricing and economic efficiency due to competition (Meginson and Netter 2001:329). Secondly, neoliberals’ scepticism to governments’ integrity leads them to argue that SOEs can incentivise ‘rent-seeking’ behaviour by lobbyists, which can lead to corruption. This is also an aspect covered by other neoliberal theory but these strands would potentially allow for more government regulation and control of enterprise if they deem it beneficial for the aggregate national economy. As such, the main difference between economic neoliberalism and other forms of liberal theory is that where the more moderate forms of economic liberalism would be likely to support privatization, economic neoliberalism necessitates it regardless of situational variations. None of the theories specify whether or not the movement should be a short- or long-run process.

The ‘critical’ literature is correct in asserting that starting in the late 70s and early 80s, the Thatcher government instigated large-scale privatization programs and that, since then, the world has seen an increased amount of privatization (Cohen and Centeno 2006:43-4; Brune, Garrett an Kogut 2004:196). However, Thatcher’s government did not show evidence of adhering to a neoliberal ideology. Rather, the implementation of privatization policies is considered to have followed as a pragmatic response to the economic difficulties of the 70s and the need to reduce government expenditure. As such, the policies could be inline with any form of economic liberalism or conservatism (Marsh 1991:459-63). The Thatcher government became a model for the U.S. Reagan administration, which, during the late 1980s, initiated a similar privatization program (Tingle 1988:229-30). However, unlike the Thatcher government, Reagan seemed more inspired by laissez-faire , neoliberal doctrine, and anti-government themes. This is evident from his platform, which, according to Henig (1989/90:661) advocated “the need to restrain meddlesome bureaucrats, reduce taxes, unleash the entrepreneurial spirit, [and] provide help to those who help themselves”. Furthermore, Henig ( Ibid.: 663) argues that these commitments led to privatization becoming a coherent political strategy. It was not until the late 80s that privatization became a worldwide phenomenon with the bulk of the privatization programs occurring in Latin America, and to a lesser extent in Asia and sub-Saharan Africa before peaking in the 90s with the liberalisation of the former Soviet-block European countries (Meggionson and Netter 2001:323-7). The ‘critical’ literature attributes this to the ideational hegemony of the U.S. as well as the conditionality of the loans provided by the IMF and World Bank. However, the IMF is clear in its argument that privatization is supported due to its perceived positive impact on economic performance (Brune, Garrett and Kogut 2004:196-9). As such, there is no evidence to support that what the ‘critical’ literature considers to be two of the three main drivers of global privatization have been driven by neoliberal considerations when they have initiated or advocated privatization.

In addition to privatization, the ‘critical’ literature argues that a main aspect of the proliferation of neoliberalism has been a commitment to ‘dissembling’ of the Keynesian welfare state and limiting redistributive taxation (Litonjua 2008:259; Kotz 2000:65). In fact, Smith (2012) argues that “neoliberalism has moved countries closer to adopting social Darwinism. According to neoliberal theory, taxation and redistributive policies are seen as an infringement on personal freedom and government interference with private property. Although the welfare state is considered to be positively associated with other forms of freedom, such as opportunities arising from the availability to health and educational provisions (Lindbeck 1987:4), the mechanisms to sustain the welfare-state are thought to constitute ‘theft’. Neoliberal theory, if realized, would thus require the abolition of the welfare state. Nevertheless, in contrast to privatization, evidence for a reduction in redistributive taxation and government welfare provision is highly mixed. Some authors have found no evidence to support the notion that there has been a decline in redistributive taxation while some argue that there is evidence to suggest that worldwide, the size of the welfare state has in fact increased (Meinhard and Potrafke 2012:280; Rudra 2002:414-6). Others find no significant changes (Cohen and Centeno 2006:37, 40-1), while some find that increased exposure to trade has had a negative effect on welfare provisions in both OECD countries (Garrett and Mitchell 2001:147) and sub-Saharan African countries (Rudra 2002:417-20. However, both these developments are attributed to effects from globalization, notably efficiency concerns in OECD countries and ‘collective action problems’ seen to arise from increased competition in labour intensive industries in sub-Saharan Africa. As such, if there has been a reduction in the welfare state, this has arisen after globalization commenced, and can thus not be seen as an independent variable that has affected globalization. Furthermore, a survey over welfare state provisions during the Keynesian epoch reveals that welfare provisions during this time was not as extensive as the ‘critical’ literature implies (Wincott 2013:812-8; Esping-Andersen 1999:1). This questions the very notion that there is a clear epochal distinction to be drawn between the Keynesian and neoliberal era. Hence, there seems to be no clear empirical grounds to argue that the proliferation of neoliberalism has led, or will lead, to a reduction or dissembling of the Keynesian welfare state.

As such, in summary, two of the main aspects that the ‘critical’ literature identified as key aspects of the global proliferation of neoliberalism, namely privatization and the abolition of the welfare state, have not been primarily driven by neoliberal doctrine nor have they been inconclusively materialized. This seriously undermines the very argument that neoliberalism has had a profound impact on policymakers worldwide, as well as the idea that neoliberalism has become the hegemonic political ideational discourse. Nevertheless, it is possible that although states have not illustrated a firm commitment to domestic neoliberal ideas, they may still have been influenced by its content in its foreign and trade policies. An important aspect that the ‘critical’ literature frequently draws attention to when outlining this argument is the importance that International Financial Institutions (IFIs) and the Washington Consensus have placed on the removal of trade barriers and capital controls in an attempt to liberalize the global economy (Centeno and Cohen 2012:319; Smith 2012; Cohen and Centeno 2006:45, 51; Kotz 2000:65). These aspects are considered to be highly influential causes of economic globalization, also outside the realm of ‘critical’ scholarship on neoliberalism. The most often-cited cause of liberalizing trade is the neoliberal institutionalist, or classical liberal theory of ‘Comparative Advantage’ formulated by Adam Smith and David Ricardo. This theory states that a country can maximize its economic gains by specializing in producing and trading goods that it can produce relatively cheaply. By contrast, the neoliberal argument is individualist and supports free trade on the notion that it provides individualists with increased consumer choices, freedom to conduct business transnationally, and a greater choice of where and with whom one wishes to conduct business.

Since World War II, there has been a clear reduction in trade barriers such as tariffs and quotas (Madsen 2009:404-5). Similarly, the amount of trade worldwide has increased sharply in relations to GDP and output (Hummels 2007:131). This development is often attributed to the efforts made by the General Agreement on Tariffs and Trade (GATT), which became the WTO in 1995, as well as the IMF (Easterly 2005:2-3). Especially the GATT/WTO, whose main purpose was to lower barriers to trade, is considered to have had a profound influence on international trade (Irwin 1995:325-6). However, in a historical perspective, reductions in protectionist measures have often been the result, rather than the cause, of increased international trade (Chase-Dunne, Kawano and Brewer 2000:87-93). Nevertheless, in relations to the GATT, it seems that trade has increased subsequently after each round of negotiation which has contributed to lowering trade barriers (Goldstein, Rivers and Tomz 2007:55-6, 61). This provides good grounds to argue that the GATT/WTO have indeed had an effect on economic globalization. Nevertheless, barriers to trade, notably in agriculture and textiles, are still prevalent. Hence, it is not the case that there has been a complete shift towards a deregulated economy. In addition, there has been a notable reduction in transportation costs since the last half of the 20 th century that is seen as a contributing factor to increased trade flows (Hummels 2007:136, 152). Moreover, at a glance, the GATT/WTO’s policies seem to be an outcome of neoliberal institutionalist theory as they emphasize economic efficiency and gains from trade that arises due to comparative advantage (The Case for Open Trade). Most importantly, global trade has had a relatively linear increase since the end of World War II and had already reached high levels before the 1970s and the decline of Keynesianism. The advent of neoliberalism can thus not be the cause of increased globalization (Cohen and Centeno 2006:44-6). Lastly, globalization has had an unequal effect on international trading patterns, with a disproportionate increase in trade growth occurring between countries that traded with each other before the 1970s (Helpman, Melitz and Rubinstein 2008:442-3, 447-8). Thus, lack of empirical evidence and the presence of rival explanations makes it highly doubtful whether or not it is possible to establish causality, or even a correlation, between neoliberalism and international trade.

Economic neoliberalism supports FDI for largely the same reasons they support international trade; to ensure individual freedom and increasing choices and options in business conduction (Harwell 2001:16; von Hayek 1965:92). As with international trade, FDI and the presence of MNCs have increased dramatically since the end of the Second World War. However, unlike trade, the boom in FDI seems to coincide with the alleged decline of Keynesianism (Chase-Dunne, Kawano and Brewer 2000:91-2). Despite U.S. outward direct investment starting in the 60s and 70s, it is not until the 1980s that we can perceive a sharp increase in FDI (Cohen 2007:48-52; Cohen and Centeno 2006:51-3). This trend strengthened in the 1990s when other countries, notably China, India and the newly liberalized countries of Western Europe, became large recipients of foreign capital inflows. In fact, in the 1990s, China became the world largest recipient of foreign funds (Cohen 2007:52). The importance of U.S. foreign investment coincides with the Reagan administration, which, as mentioned above, showed signs of a neoliberal inclination. However, China has for the period before, during, and after it assumed a position of global importance in international investment flows, maintained a strong interventionist state (Barboza 2013). Furthermore, the trend in increased FDI also coincides with the emergence of easily available ICTs, which are considered to have played a very important role in facilitating the possibility and coordination of international business transactions (Cohen 2007:52-3). Of course, Harvey (2005:3-4) argues that these technologies did not emerge exogenously of the neoliberal transition. Instead he argues that technological innovations were a direct result of a commitment by neoliberals to expand business transactions and their ideological doctrine globally. He provides no sources for this statement. On the contrary, it is commonly argued that the U.S. firstly developed the Internet for military purposes and not as an instrument for exporting economic theories (Mowery and Simcoe 2002:1383). Lastly, FDI, the emergence of MNCs, and the developments of ICTs, have largely been caused by the efforts of individuals and companies. It is impossible to assess these peoples’ ideological commitments or whether or not their choices to expand companies and invest overseas have been driven by a desire to alter the world order. However, from an intuitive perspective, it seems rather more likely that their actions were driven by opportunism and a desire to increase their companies’ revenues than a fundamental support for the doctrine of economic neoliberalism.

To conclude, the empirical evidence supports the notion that policymakers and IFIs have been influenced by liberal economic theory. However, there is little empirical evidence to argue that these processes have developed out of a commitment to enhance individual freedom. Instead, the economic policies adopted since the 1970s seem to have emerged as an attempt to increase economic gains. As such, globalization must be considered a separate and autonomous phenomenon from neoliberalism. However, this essay has operationalized a high amount of conceptual rigour in the discussion on neoliberalism. If this was slightly relaxed, which is often done in the ‘critical’ literature, and the concept of neoliberalism was expanded to include policies that did not specifically enhance individual liberty and instead was utilized to describe market-based economic policies, it is possible to argue that there has in fact been evidence for a neoliberal transition from the 70s and that this has contributed to increased globalization. Nevertheless, the purpose of the ‘critical’ literature is often to criticize, and warn against, the shift towards a completely deregulated global economy and the decline of the welfare state. Hence, if conceptual rigour were reduced, there would be no theoretical basis for these arguments. Lastly, this essay has demonstrated how a whole genre of literature has emerged which has been based on furthering arguments which are based on poor empirical research and terminological confusion. The ‘critical’ scholars ought to investigate the foundations for their claims more thoroughly before publishing volumes claiming that globalization is an attempt by rich elites to increase their economic gains at the expense on the majority of the world’s population.

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— Written by: Vilde Wikan Written at: University of Edinburgh Written for: Dr Jonathan Hearn Date written: 12/2014

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8 Neoliberalism, Globalization, and Late Capitalism: Capital, Ideology, and Making the World Market

Prof. Toby Carroll, Associate Professor, Department of Asian and International Studies, City University of Hong Kong

• Published: 14 February 2022
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This chapter details the mutually reinforcing relationship between globalization, neoliberalism, and late capitalism. The chapter emphasizes the dialectical and politically determined evolution of all three, explaining how intensifying patterns of competition have resulted in diminishing the power of progressive social forces and increasing the leverage of competitive fractions of capital and powerful capitalist states. Neoliberalism—often conveniently dismissed by liberals and conservatives alike as a nebulous concept—is explicitly defined as the application of market and market-like discipline to the reorganization of state and society. Forged out of a set ideas and reductionist assumptions emanating from orthodox economics, in its applied form neoliberalism comprises the evolving policy sets demanded by the most powerful (‘competitive’) fractions of capital and the states that represent their interests. In a structural sense, real-existing neoliberalism serves as the institutional ‘software’ of globalization, combining with the integrative techno-logistical infrastructure that makes the ongoing reorganization of production—‘globalization’—possible. Four decades of neoliberal reform and resultant globalization have produced what is often referred to as ‘late capitalism’. Late capitalism is characterized by hypercompetition between and within states, the heightened power of finance capital and grand contradiction—the latter including gross inequality and deprivation amid plenty, deindustrialization and the ‘death of development’, and systemic environmental decline. While resistance to neoliberalism is evident in many (sometimes reactionary) forms, the all-enveloping nature of late capitalism and the ongoing reinvention of neoliberalism as the ‘only’ solution to contradiction make the political task of reimagining and realizing alternative social orders formidable.

Introduction

As with the 2007–2008 global financial crisis (GFC) and the rise of populism, claims of neoliberalism’s impending demise are common once again. The COVID-19 crisis has entailed dramatic shifts from business as usual, impacting the flow of goods and people and providing governments the opportunity to re-legitimize themselves within a ‘post-political’/‘end of history’ world with interventionist action on both the national security and economic fronts ( Fukuyama 1992 ; Swyngedouw 2014 , 122–123). The swamping of health and other public services by the demands of the crisis has led to calls for a return of the state by social democrats and American liberals, while more explicitly market-oriented proponents have endorsed temporary interventionist efforts of grand proportions—as with quantitative easing during the GFC—to support furloughing and reignite demand to get things ‘back to normal’ as quickly as possible. What both of these ostensibly opposing positions are interested in safeguarding, however, is a hegemonic ideological and institutional tendency that has reconfigured states and societies in the Global North and South over the last four decades and played a fundamental role in constituting a more complete world market than ever before: neoliberalism. This tendency has evolved through three key stages, with change propelled by contradiction, political resistance, and concomitant attempts to re-legitimize market-led policy. Each of these stages has been undergirded by important theoretical positions and their assumptions (especially those emanating from North American economics and their European antecedents), with later positions—grounded in new institutional and behavioural economics—emphasizing (limited) adjustments to reductionist rationality postulates long fundamental to orthodox economics.

Despite being so central to understanding the current juncture, neoliberalism has proven conceptually challenging and controversial for some, even for scholars on the left ( Dunn 2017 ). 1 However, I argue that neoliberalism, in tandem with globalization and late capitalism, is crucial for making sense of a whole host of sociopolitical phenomena, including the most recent ascendancy and global spread of capital (including finance capital), the disempowerment of organized labour, the rise of inequality, the crowding out of developmental alternatives and the return of populism (both progressive and reactionary) ( Carroll and Jarvis 2017 ). Synthesizing various contributions within political economy, neoliberalism is defined here as reverence for and application of market and market-like discipline in the reorganization of state and society. This is a definition that demands moving beyond viewing neoliberalism in largely ideational terms or as some ostensibly sacrosanct script emanating from scholarly figures or particular bureaucracies at certain junctures. This is important for several reasons, not the least of which is that in both ideational and institutional senses neoliberalism has evolved beyond the ideas of the Mont Pèlerin Society (MPS), prominent US, European, and UK think tanks, the agendas of Margaret Thatcher and Ronald Reagan, or the Washington Consensus.

It is also vital that we tie neoliberalism back to the social forces that have used it to reconfigure state and society to their advantage. One of the many dangers of viewing neoliberalism in relation to founding intellectual figures and their ideas or, indeed, policy emanating out of particular governments or bureaucracies at certain moments, is that capitalism and capital (as a social force)—not to mention capital’s efforts to establish particular institutions to its advantage—disappear, making the comprehension of neoliberalism’s rise and systemic function illegible. It is one thing for an idea or set of policy prescriptions to be conceptually powerful in isolation—it is quite another for these to be vocally promoted by powerful interests and operationalized by bureaucracies at national and multilateral levels in a manner that fundamentally reshapes states and societies, supporting a level of global economic integration that now shapes lives almost ubiquitously. This last reality cannot be explained via an oversized focus on founding fathers and their ideas. Indeed, to do so is to elide the main event of our times. The embrace of neoliberal ideas and institutions must be understood, first and foremost, in relation to satisfying the interests of capital (de-reifying ‘the market’, as it were) and the constitution of an increasingly all-enveloping world market that permits transnational capital from the North unprecedented freedom and mobility to reorganize production to its advantage (leveraging labour cost advantages) and accessing resources and markets ( Cammack 2019 ).

Globalization, rather than some positive ideologically charged term ( Chilcote 2002 ), is characterized here simply as the ever-intensive patterns of economic integration made possible by important techno-logistical developments and the legitimating ideas and institutions of neoliberalism (‘globalization’s superstructure’): the rules, policies, norms, ‘common sense’ assumptions, and organizations that serve, first and foremost, the interests of the most powerful fractions of capital. Seen in this way, there is nothing automatically positive about globalization, reflecting as it does an order facilitating the exploitation of cheap labour, access to resources, and the opening of novel markets for transnational capital. Importantly, neoliberalism’s ascendancy and shape-shifting, and the fomenting of globalization to which the former and latter are intimately tied, both need to be specified in relation to capitalism in its late capitalist form. Late capitalism is both a product and catalyst of successive rounds of neoliberalism and more intensive degrees of globalization. Late capitalism constitutes the latest stage of capitalism and is composed of the following: the ideological and institutional elements of neoliberalism; a particular set of social relations (with an intensified capitalist division of labour in which certain sections of capital have increased their power substantially, labour has seen its relative power significantly diminished, while vast pools of precarious and surplus labour have emerged); advanced means of production (such as artificial intelligence, robotics, and knowledge-driven activities) in some settings and the opposite in others (labour intensive, low-value-adding activities; ‘uneven development’); the transnational disaggregation of production rendering non-neoliberal development extremely challenging; heightened dynamics of competition (between and within states, sections of capital, and labour); regular crises; increased inequality; and environmental exploitation and damage on a vast scale.

This chapter presents a historical materialist conceptualization of neoliberalism, globalization, and late capitalism as mutually reinforcing and politically produced. It moves beyond both Northern/North Atlantic and ideational analyses, illustrating how evolving neoliberal pushes have been tied to realizing the interests of Northern transnational capital and the formation of a world market that combines both North and South on highly uneven terms. The first section presents some of the more useful understandings of neoliberalism, undergirding the subsequent analysis with necessary conceptual precision. The second section focuses on the political production of neoliberalism’s three key phases (neoliberalism 1.0–3.0), detailing how each of these are symbiotically bound to the evolution and fomenting of globalization and late capitalism.

Defining Neoliberalism: It’s All About Capital (and Those That See It as a Positive Social Force), Stupid!

While not the case now, earlier adherents, such as members of the MPS—a network of right-leaning intellectuals that met in Mont Pèlerin throughout the post-war period to scheme ways to resist then-dominant Keynesianism and leftist positions of various forms—did once use the term ‘neoliberal’ positively and, indeed, self-referentially (see, for example, Friedman quoted in Peck 2010 , 3–4). What demanded the prefix ‘neo’ was the need to distinguish a novel position from other forms of liberal philosophy and policy, such as elements of classical liberalism, more dogmatic laissez-faire positions, and Keynesianism, with priority given over to the importance of economic competition and avoiding market intervention ( Peck 2010 , 48). 2 In a contemporary sense, perhaps what most distinguishes neoliberalism from classical liberalism is the degree of attention given to economic freedom (in comparison to political freedom) and the celebration of ‘the market’ more generally. While liberalism has traditionally included a wide variety of positions that emphasize the individual, and political and economic freedom (many members of the MPS, for example, were selective proponents of political freedom 3 ), neoliberals generally seek, first and foremost, to elevate economic freedom and market discipline, the latter entailing commodification and allowing the market to determine prices and the allocation of resources. It is in this last sense that neoliberalism is intimately tied to prioritizing competition and, policy-wise, maintaining market competitiveness (of country, capital and individuals) via adopting particular reforms.

The prioritizing of economic freedom, over and above political freedom, no doubt also derives from the manner in which neoliberalism escaped its ideological founding fathers in two important ways: first, as a political project supported and shaped by powerful segments of capital (the latter hardly wedded to political freedom when it impinges upon property rights) and, second, as an apparently technocratic policy agenda advanced by agencies such as the World Bank and International Monetary Fund (IMF) for countries to navigate a world in which powerful forms of capital were ascendant. While ‘true believer’ neoliberals have faith that prioritizing economic freedom is the best way to organize society and promote development, in policy circles globalized capitalism is assumed as the only developmental game left standing and neoliberal policies are deemed as crucial to compete within this order and attract foreign direct investment (FDI), as some divine ‘lifeblood’ of development ( Ness 2016 , 20–21), and incentivize entrepreneurialism, for example. Moreover, as we will see, when actual-existing neoliberalism has been implemented, the last thing technocrats and transnational capitalists want is to allow real political freedom (exercised by socialists or even a protectionist bourgeoisie, for example) to ‘distort’ market-opening and marketizing reform agendas. Notably, efforts in the 1990s under the aegis of the post–Washington Consensus were designed precisely to attend to the political economy of reform by deploying constrained forms of participation, partnership and ‘social protection’ to recraft state and society in a way that shielded certain state institutions from politics (see the next section).

That neoliberalism is, first and foremost, concerned with economic freedom and, in practice, freedom for the most powerful forms of capital, does not mean that it is static, homogeneous or some libertarian doctrine hostile to the state. Indeed, it has manifested in different forms over time, with some first-generation neoliberal thinkers and politicians holding more overtly extreme perspectives on the state and society, than later generations. However, despite this diversity, what unites these positions is their shared interest in placing the market at the centre of things. What has changed over time significantly relates to how the state is viewed (its ‘role’) and how market reform is to be realized (with brute force, the smashing of organized labour and conditionality or with ‘participation’, ‘partnership’, and—in the language of behavioural economics—‘nudging’).

Marxist geographer David Harvey defines neoliberalism, ‘in the first instance’, as ‘a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade’ ( Harvey 2007 , 2). This definition predominantly defines neoliberalism as a bundle of ideas and theoretical assumptions. However, Harvey extends this definition—connecting theory and ideas with power, policy, and interests—via his notion of ‘neoliberalization’, defining the latter ‘either as a utopian project to realize a theoretical design for the reorganization of international capitalism or as a political project to re-establish the conditions for capital accumulation and restore the power of economic elites’ ( Harvey 2007 , 19; emphasis in the original). Harvey emphasizes the second of these ‘objectives’—neoliberalization as ‘a political project to restore accumulation and class power’—as dominant within this dualistic notion. He also explains the historical rise of neoliberalism and neoliberalization in relation to the crises of postwar ‘embedded liberalism’ (variously characterized in the developed world by Fordism, Keynesianism, and social democracy) and efforts by the most powerful sections of capital to restore super-profits and class power.

Bob Jessop similarly argues for viewing neoliberalism as a political project, justified on philosophical grounds, that ‘seeks to extend competitive market forces, consolidate a market-friendly constitution, and promote individual freedom’ ( Jessop 2012 , 1). Crucially, rather than seeing neoliberalism as any sort of monolithic project, Jessop gives considerable latitude to the precise form that neoliberalism takes in certain settings and under particular alignments of political forces engaged in struggles emanating out of specific historical pathways or ‘path dependencies’. 4 Stephen Gill, working from a neo-Gramscian position, has long written in terms of disciplinary neoliberalism . For Gill, disciplinary neoliberalism constitutes a ‘mode of political economy that seeks to promote the power and disciplines of capital by reshaping global governance, state forms, regulation of markets and class relations more generally to favor large capital’ ( Gill 2017 , 638). Importantly, disciplinary neoliberalism in no way entails small or weak states—rather—in some affinity with the concerns of the Ordoliberal tradition (see note 2 ), it demands repurposing states to the task of enforcing property rights and realizing the other interests of large capital (more on this later).

What unites all three of these influential positions is the notion that neoliberalism must be understood in both ideological and politico-material interest terms, with careful attention given to its actual-existing manifestations in the policies and institutions that shape human behaviour, including those of the state. In sum, we can say the following: Neoliberalism entails theoretical and ideological reverence for the market as a superior means of allocating resources and organizing both state and society (in its most radical, though now marginalized, forms to the point where state and society are largely imagined away); In practice, neoliberalism involves the application of market and market-like discipline via evolving policy sets desired by the dominant sociopolitical forces of our time: the most ‘competitive’ and mobile (transnational) segments of capital and their host states. 5 This includes (though is not limited to) policies that seek to achieve the following: the privatization and commodification of services and infrastructure previously held in public hands; the elimination of interventionist and other regulatory efforts in terms of pricing; the liberalization of trade and capital flows; avoiding progressive or ‘excessive’ taxation; the protection of private property rights and equal treatment of international and domestic capital; the promotion of ‘flexible’ labour markets that permit, among other things, ease in hiring and firing workers; removing extensive regulatory impediments on commercial activity; the transformation of education towards building ‘human capital’ for market participation; and minimal forms of social protection to safeguard reform and minimize reform resistance. It is in eliminating borders and risks to capital that neoliberalism is rightly identified for its role in satisfying imperial interests and maintaining unequal exchange in a postcolonial world (see, for example, Cope 2019 ; Ness 2016 ). Without the market-making and market-opening agenda of neoliberalism and the institutions that accompany it, powerful segments of internationally mobile capital harking from the Global North simply cannot access labour, resources, and markets efficiently.

One of the most important (and confusing) aspects of neoliberalism for students and scholars relates to how neoliberals and organizations advocating neoliberal policy view the state. How the state is perceived by neoliberals —in both ideological and institutional terms—has changed over time, especially as political challenges and contradictions to earlier rounds of market reform in the 1980s and 1990s emerged and new political and intellectual figures and, indeed, new market-oriented policy agendas, ascended (Carroll 2010 , 2012 ). In its earliest variants—both as a set of ideas and a reform agenda, neoliberalism often involved avowedly hostile assaults on the interventionist state as a repository of ‘rent-seeking’, inefficiency, and an encumbrance upon economic dynamism. However, as is elaborated in the next section, beyond the first generation of ‘roll-back’ reforms of the Thatcher and Reagan periods and the Washington Consensus, over time neoliberalism has increasingly focussed on repurposing the state as an important bundle of institutions to be placed ‘beyond politics’ and to support ‘the market’. In contemporary policy vernacular, this is described as ‘market enabling’, with the state deemed central in establishing an ‘enabling environment’ for entrepreneurial and commercial activity. Here, drawing on the new institutional economics of scholars such as Douglass North, Elinor Ostrom, and Joseph Stiglitz (all Nobel laureates) that became considerably more influential in the 1990s, institutions are emphasized for their role in offsetting ‘market asymmetries’, ‘imperfect information’, and ‘transaction costs’ (reducing risks and disincentives to commercial activity) and providing minimum services to entail social reproduction and diminish the likelihood of resistance to ongoing reforms. This repurposing of the state entails ‘locking in’ these interests legally and constitutionally—what Gill (2000) dubs ‘the new constitutionalism’—ruling out alternative patterns of governance and development, and shielding these institutions from politics. Viewed as an entity that oversees and supervises market activity at ‘arm’s-length’ (rather than one that replaces, displaces, offsets, or intervenes in the market), others have dubbed the form of state demanded by modern neoliberal policy agendas as a ‘regulatory state’ or ‘competition state’ ( Cerny 2016 ; Jayasuriya 2001 ).

Neoliberalism’s Key Phases and Their Relationship to Globalization and Late Capitalism

Perhaps one of the best known periodizations of neoliberalism—especially as applied to developed world contexts—is Peck and Tickell’s (2002 , 41–43) notion of ‘roll-back’ and ‘roll-out’ neoliberalism. Here roll-back and roll-out respectively denote specific phases of neoliberal reform and their implications for the state. In a complementary sense, others working predominantly on neoliberalism’s diffusion beyond the developed world via development policy have periodized neoliberalism into three key phases, each of which has been propelled by political battles and legitimacy challenges. Within this developmental typology, we can locate what are frequently referred to as the Washington Consensus and the post–Washington Consensus (with each bearing some relationship to the roll-back and roll-out categorizations, respectively), and a third (current) phase that colleagues and I have dubbed ‘deep marketization’. I draw upon each of these approaches in periodizing neoliberalism’s three overlapping and interwoven policy phases (neoliberalism 1.0–3.0) 6 in both the developed and underdeveloped worlds and the manner in which they have been formative in knitting together a world market and fomenting the attributes of late capitalism more broadly.

Neoliberalism 1.0 (late 1970s – mid 1990s): Dismantling embedded liberalism and the Third World project

In a policy sense, neoliberalism 1.0 (the roll-back/Washington Consensus phase) begins in the late 1970s and early 1980s alongside grand contradictions in the global political economy—including ‘stagflation’ (stagnating growth and rising inflation), declining profit rates for capital, and the opportunities and competitive threats presented by ‘newly industrializing countries’ in Asia (NICs). While neoliberal policies were implemented in Chile under the stewardship of ‘the Chicago Boys’ after the coup against Allende during Pinochet’s dictatorship ( Dezalay and Garth 2002 , 45–46), the arrival of the Thatcher and Reagan governments set in train a tectonic policy shift in the United Kingdom and the United States, manifesting in sustained attacks on organized labour, Keynesianism, and attendant state forms. The shift in these two countries, and the related decline of interventionism in all its forms, would be accompanied by pivotal policy shifts within the international finance (‘development’) institutions (IFIs) in which developed countries and, in particular, the United States retained huge influence, and followed by market-oriented policy shifts by other governments of both the left and right elsewhere. Neoliberalism 1.0 combined a response from the parties (largely) of capital in the North to the macroeconomic crises of the late 1970s and early 1980s with a pivotal switch towards imposing market reform with conditional lending in the South. The latter would counter demands for a New International Economic Order (NIEO) and facilitate the ‘demise of the Third World Project, … so opening up the countries of the South to the new geography of production, and, subsequently, novel patterns of exploitation as development’ ( Prashad 2012 , 5).

For Colin Leys (2001 , 34), Thatcher—elected in 1979 and ruling for eleven years—was not primarily responding to ‘forces operating in an already-existing global economy’ but rather played a ‘leading part’ in constituting it, demonstrating how national class politics could catalyse a policy push that would play an important role in globalizing the world economy. Thatcher’s primary concern was to ‘save British capital from the threat posed by the Labour left and to reverse the social-democratic penetration of the state and public life that had resulted from the post-war settlement’ ( Leys 2001 , 34). However, a key part of the agenda also involved liberating British capital from its national binds to realize higher returns offshore and weaken the power of organized labour locally. Importantly, this push against labour would also be paired with important commodification efforts in the form of privatizing public housing, state utilities, infrastructure, and ‘contracting out’ of government services ( Leys 2001 , 34; Harvey 2007 , 88).

In the United States, Reagan’s election had also been preceded by macroeconomic crisis and a number of efforts (including significant reductions in capital gains and corporate tax rates, the targeting of inflation over the Keynesian preserve of targeting unemployment, and deregulation) that reflected a consolidating shift in class forces and accommodation of ‘the developing “supply side” consensus in Washington policy circles’ ( Panitch and Gindin 2012 , 14–16, 163–167). However, with Reagan’s victory, tax cuts to the working class were followed by ‘explicit class war’ ‘through cutbacks to welfare, food stamps, Medicare, public pensions, and unemployment insurance’. As in Britain, this was accompanied by assaults on organized labour (such as the breaking of the air traffic controllers’ strike and anti-union appointments to key federal labour agencies), reinstating class discipline after a period of militancy and significant gains by labour ( Panitch and Gindin 2012 , 171–172).

Taken together, the agendas of these two leading Northern governments—one former empire, one incumbent; both hosts to key bourses and with considerable power to act as rule-makers for transnational capital—to extinguish the power of labour and the ideas and institutions of the postwar period built around Keynesianism, social democracy, and the relative strength of organized labour (‘embedded liberalism’ ( Ruggie 1982 )), were a powerful harbinger of where things were heading. A world market was being born out of the death-throes of Fordism and Keynesianism, with a sea change in ideas (especially those associated with economics and development) and class contestation playing important roles.

Importantly, the shifts in the United Kingdom and United States would dovetail with a ‘counter-revolution’ in development policy that had begun in the 1970s but which gained hegemony in the 1980s, manifesting in key policy changes within the IFIs, most prominently the World Bank and IMF ( Toye 1987 , 22). Proposals to move towards structural adjustment policy-based lending had been suggested from within the IFIs in the late 1970s, however these did not gain approval until after Reagan took office and the escalation of the debt crisis, with the latter enmeshing Northern lenders with debtor countries of the Global South ( George 1989 , 36). While Reagan and those within his administration were ideologically hostile to multilateral development agendas, crisis and the limitations of tackling it using bilateral means would push them back towards using the IFIs as key components for realizing US foreign policy objectives, including ensuring that debt repayment to Northern capital was prioritized and markets were opened ( George 1989 , 47–55).

In agreeing to extend funding to the World Bank, the US administration ‘moved to advance its own policy perspectives’, with US Treasury playing a typically outsized role in advocating for ‘greater adherence to open markets and greater emphasis on the private sector as the main vehicle of growth’ ( Gwin 1997 , 230). 7 Importantly, there was agreement that lending be dependent upon policy reforms in recipient countries, establishing the conditions for the rise of policy-based lending and structural adjustment ( Gwin 1997 , 230). This move towards market-oriented conditional policy lending would be accompanied by the appointment of key neoliberal figures to influential positions within the IFIs and the disappearing of any remaining vestiges of structuralist thought ( Colclough 1991 , 22). While newly ascendant neoliberals within the IFIs were not all of one mind, or easily conflated with the positions of certain members of the MPS or those within the UK or US administrations, they were typically united in their hostility towards structuralist positions and identifying the state as a site of ‘rent-seeking’ and market distortion. Concern for the difference in structures between the developed and underdeveloped worlds—and tailored interventions addressing these—would increasingly be displaced by the methodologically individualist and utility-maximizing assumptions typical of rational choice theory and neoclassical economics.

The policy set advanced by the World Bank and the IMF using conditional lending instruments such as structural adjustment programmes and their like would later be dubbed by John Williamson (1990) as the Washington Consensus. This raft of policies constituting neoliberal development policy 1.0 had at its core reforms oriented towards curtailing or ‘rolling-back’ the state, especially in terms of interventionist economic activity, advocating marketizing and market-friendly changes that would expose countries and their populations, often facing dire economic circumstances and under considerable socioeconomic duress, to both austerity and world market forces, and largely end postcolonial experiments with different developmental paths. Washington consensus policies included fiscal discipline (including austerity), the redirection of public expenditure towards areas of higher economic return, tax reform (moving away from progressive rates), privatization of state-owned enterprises and utilities, deregulation, liberalization (of trade, capital flows, and interest rates), market-determined currency rates, and secure property rights. As such, the agenda not only entailed an effort to curtail state interventionism in all its forms but also presented huge opportunities for well-connected domestic elites and transnational capital.

Washington Consensus policies would first be implemented throughout the 1980s in sub-Saharan Africa and Latin America, with brutal results for the poor and working classes. Later the very same policies would be key components in the ‘shock therapy’ applied to countries of the former Soviet Union and as part of bailout packages that targeted key components of the developmental states in Asia after the 1997–1998 crisis. The outcomes of these policies—which were tied to what then World Bank President Barber Conable would describe in 1990 as a ‘lost decade of development’ for the poor, and which included vast corruption in countries of the former Soviet Union (such as that associated with privatizations), and accusations from civil society activists and scholars of unnecessary and prolonged misery and economic stagnation—would prompt a serious legitimacy crisis for neoliberalism 1.0 and the interests advocating it ( SAPRIN Secretariat 1999 ; World Bank 1990 , iv). However, the application of neoliberalism 1.0 in both the developed and developing worlds would play a key role in incorporating countries into one world market, setting in train pivotal competitive dynamics incentivizing further rounds of reform. This said, sustaining globalization in the face of often disastrous results for working-class people and peasants, for example, would entail a grand rethink in both imperial countries and the institutions in which they held significant power.

Neoliberalism 2.0 (mid-1990s to mid-2000s): The repurposing of state and society in service of globalization

Neoliberalism 2.0 arose with ‘Third Way’/‘New Democrat’ positions (such as those associated with Tony Blair’s government and Bill Clinton’s administration) in the developed world and the rise of what became known as the post–Washington Consensus in development circles. Fundamentally, neoliberalism 2.0 constituted an attempt by political elites and technocrats to re-legitimize market-led policymaking in the face of the contradictions and sociopolitical tensions of neoliberalism 1.0 and the intensifying impact of globalization that the former had catalysed. Notably, this response would initially be marshalled by liberals and governments of ‘the left’, with many of the key architects and proponents of the agenda viewing their efforts as a progressive counterforce to the earlier ‘market fundamentalist’ agendas of neoliberalism 1.0.

In the Global North, globalization—in no small way constituted by then rapidly expanding global value chains set in place by multinational enterprises from the Global North ( World Bank 2020 , 1, 3)—was now increasingly identified by the likes of Clinton and Blair as a reality to be grappled with, necessitating further market-oriented reforms and the pursuit of economic dynamism and competitiveness as a matter of survival. The postwar emphasis upon equality of outcome locked in by organized labour, it was argued, would need to give way to the promotion of equality of opportunity (via a focus on education, for example, that would be mirrored in World Bank emphases upon accruing ‘human capital’ as key to social advancement). While the rhetoric of social justice remained apparent (in contrast to Thatcher and Reagan), in reality, Third Way approaches preferred workfare over welfare. Public–private partnerships (or PPPs; a politically savvier approach to privatization that looked a little less like selling off the family silver) would be relied upon over public ownership and financing to facilitate greater participation of the private sector in the delivery of services and infrastructure. Coupled with this were free trade agreements (such as those of the World Trade Organization and regional and bilateral efforts such as the North American Free Trade Association [NAFTA]), all of which further cemented the globalization of economic relations and the interests of transnational capital, exposing workers and countries to world market forces.

Not surprisingly, none of this would be an easy sell to workers and other activists—with strong resistance to free trade and other neoliberal agendas prominent at key meetings of the WTO (‘the Battle of Seattle’), the World Bank, and the IMF. Notable also in the North, new forms of public sector reform (‘new public management’ [NPM]) would be ‘rolled out’, entailing ‘lessening or removing differences between the public and private sector and shifting the emphasis from process accountability towards a greater element of accountability in terms of results’ ( Hood 1995 , 94). Rather than focusing simply on ‘rolling back the state’, the state would be reimagined around ‘private sector styles of management’, ‘contract-based competitive service provision with internal markets and term contracts’, fiscal discipline, and forms of corporatization (96). Finally, financial deregulation would proceed apace during this period with, for example, the Gramm-Leach-Bliley Act (1999) dissolving the separation—instilled during the Great Depression—between commercial and investment banks in the United States.

Third Way positions in the North would be coupled with an important push to re-legitimize market-led notions of development in the South after the destructive experience with structural adjustment and conditional lending in the 1980s and the rise of activism and concern from member states about overreach, corruption, and waste. Much like the Third Way, in practice this politically conditioned shift would involve an extension of the market agenda, albeit with a kinder face, and become referred to as the post-Washington Consensus. The endorsement by Bill Clinton of the former investment banker James Wolfensohn for the presidency of the World Bank in 1995, and the later arrival of figures such as Joseph Stiglitz (a key figure within new institutional economics) as the Bank’s chief economist, were important indicators of a burgeoning shake-up at the world’s largest ‘development organization’ and within neoliberal development policy generally. At its heart, the post–Washington Consensus—often driven by liberals in the American sense—still had a core belief in the sanctity of markets. However, the state was ‘brought back in’ and reanimated (or ‘rolled-out’, as it were) as a ‘market enabling’ bundle of institutions. This position was significantly underpinned by then-ascending theory within new institutional economics that exchanged earlier conceptions of rationality for notions of ‘bounded’ or ‘limited rationality’ and which linked institutions to explanations of ‘market imperfection’, market failure, information asymmetries, and transaction costs.

As with Third Way efforts, rather than full privatizations (which during the transition in Central and Eastern Europe and elsewhere led to egregious elite capture and cronyism), PPPs and NPM-style reforms were promoted. Crucially, this technocratic repurposing of the state and reshaping of its boundaries was also coupled with important efforts to attend to corruption via the promotion of ‘good governance’ (a perennial concern with IFI operations and a key challenge to legitimizing market reforms such as privatization) and political resistance to market reform. These last two issues were to be addressed via a scaled-up agenda incorporating congenial elements of civil society into participating in market reform—assisting with reform implementation, transparency, and accountability—and encouraging deeper ‘partnerships’ with client countries (dubbed a ‘bottom-up’ approach in contrast to the ‘top-down’ approach of earlier structural adjustment). Successive World Development Reports (WDRs), from 1997’s A State in a Changing World on, captured this ‘institution building’ push well. In practice, however, the policies to be implemented using ‘bottom-up’ and ‘participatory development’ methods had been decided upon long before citizens, civil society, and government were invited to participate in proceedings, with structural adjustment and conditionality continuing on in a more inclusive guise ( Carroll 2010 ).

In both the North and South, neoliberalism 2.0 played a key role in establishing the institutional infrastructure of the world market and, in turn, further realizing the interests of transnational capital. By the turn of the millennium, almost three-quarters of the world’s countries had open trade policies (in contrast to 22% in 1960) and increasing numbers of countries—including previously dirigiste developmental states—had floating or free floating exchange rates. Moreover, indicative of the state’s changing role, between 1998 and 2008, the World Bank documented more than 10,000 privatizations, with many high-value transactions located in formerly centrally planned economies ( Wacziarg and Welch 2008 ; World Bank 2015a ). Increasingly too, the world’s workers were exposed to more competition than ever before from integrated trade and new supplies of labour from the former Soviet Union and China. More complex and flexible production (‘global value’) chains could form beyond those that accompanied important techno-logistical developments in the 1960s and 1970s, with the ever-present threat of capital flight and a lack of investment disciplining domestic political elites and constraining non-market-friendly policymaking. The increased diffusion of the ‘soft institutional’ infrastructure of globalization in the form of neoliberal institutions increasingly led to what is often referred to as a ‘race to the bottom’ in the form of countries desperate to attract FDI by accommodating capital. This regularly entailed satisfying the interests of international capital over domestic populations and eviscerating any remaining components of national development agendas.

Neoliberalism 3.0 (mid- 2000s to present): The expansion of finance capital’s hegemony and the deep marketization of development

By the mid-2000s, a considerable amount of the grunt work of neoliberalization and NPM had been accomplished in the Global North, with labour and capital increasingly exposed to world market forces. However, the 2007–2008 GFC would be infamous both as an example of how the most powerful forms of capital could escape regulation (despite their outsized role, for example, in developing collateralized debt instruments and the extension of loans to those unable to afford them) and in the degree to which losses could be socialized and abated with interventionist policy when systemic threat loomed (using bank bailouts such as the Troubled Asset Relief Program and ‘quantitative easing’ [QE], for example). Crucially, the GFC would see neoliberal austerity applied to vulnerable populations in a manner akin to neoliberalism 1.0, which, like the latter, would attract serious political resistance. In the United States, egregious inequality and outrage at the financial sector and corporate cronyism would underpin Occupy Wall Street and its anti-neoliberal/anti-capitalist/anti-inequality demands. In Europe, the so-called troika (comprising the IMF, the European Commission, and the European Central Bank) would unleash its eerily familiar European Adjustment Programmes (EAPs) upon Eurozone peripheral countries, including Greece, Ireland, Portugal, and Cyprus, which resembled the SAPs of the Washington Consensus ( Greer 2014 ). European austerity and dire economic conditions would also be met with stiff political resistance—for example in the form of the Indignados and Podemos in Spain and support for Syriza in Greece (before the accommodation of the terms of an EAP in 2015). Despite impressive resistance to neoliberalism and austerity, however, once the dust of the GFC had settled, what was telling was the degree to which the financial sector got off unscathed and policy suites remained significantly unchanged, reflecting the power of finance capital, Northern states and the embeddedness of neoliberalism.

However, it was in terms of development policy—in a world where a significant majority continue to live in poor countries ( King 2018 , 449, 452)—that neoliberalism 3.0’s biggest innovations were apparent. FDI flows to ‘emerging and frontier’ markets had diminished the leverage for conditional policy-based lending and the ‘institution building’ of the post-Washington Consensus. However, the ramping up of a new pro–private sector push would signal the degree to which development policy was now not just about the interests of capital but, more specifically, the interests of finance—including the mitigation of its risks. Within this period, for example, the private sector arm of the World Bank, the International Finance Corporation, would significantly increase its portfolio size substantially and play a key role—along with other regional development banks following its lead—in recrafting development policy to be, first and foremost, about increasing competitiveness, accommodating FDI and slotting into global value chains ( World Bank 2020 ). These multilateral organizations would also tread an increasingly fine line between the public and private (and attendant conflicts of interest), advising governments, while lending to and taking equity stakes in the private sector beneficiaries (often involving some of the world’s biggest multinational banks and corporations) of their aforementioned advice. The IFIs would also promote structural reform via new benchmarking programmes, such as the World Bank’s ‘Doing Business’ series, which would rank countries—signalling relative degrees of risk and cost to capital—in their provision of an ‘enabling environment’. Complementing this ‘naming and shaming’ approach towards market-oriented reform, would be interventions inspired by behavioural economics (in important ways an extension of the earlier new institutional economics) that sought to better understand human decision-making and entrenched patterns of thinking in designing and implementing ‘development policies and interventions that target human choice and action’, as if this was where the mystery of underdevelopment lay ( World Bank 2015b , 1). Direct to sector support for ‘access to finance’ institutions would see the penetration of international finance and financial instruments into the Global South like never before. Finally, the financialization of development would involve novel bond issuances and trading schemes—including to ostensibly assist countries address pandemics and tackle climate change and other extant environmental challenges, bequeathing capital with yet more opportunities to earn returns out of the chaos and uneven development of late capitalism ( Gross 2020 ).

The overlapping and intertwined iterations of neoliberalism 1.0–3.0 have been crucial in establishing a world market (‘globalization’) central to realizing the interests of transnational Northern capital. However, each of neoliberalism’s phases has been accompanied by dramatic and painful crises, highly uneven patterns of development, and myriad other contradictions characteristic of late capitalism. Unsurprisingly, each of these iterations has encountered formidable political resistance, prompting efforts ‘from within’ to re-legitimize market-oriented development. For some, the 2016 Brexit vote and the election of Donald Trump signalled a new era in which political figures appealed against ‘technocratic’ and other elites that were central to the promotion of neoliberalism. Moreover, the current trade war between the United States and China has also raised claims of a return to mercantilism and patterns of national capitalist development more broadly. Yet, unwinding global value chains and undoing the market-interfacing infrastructure of four decades of neoliberalism is no mean feat given the power and interests of transnational Northern capital and the states that support it. Perennial threats of capital flight within a globalized world instil fear in both governments and workers alike. Making matters even more challenging are the splitting of interests between labour in the North and South and the rise of phenomena such as the gig economy and casualization. In the short term, one could easily envisage an even more aggressive combining of Northern protectionism for the powerful with aggressive neoliberalism for the most vulnerable within and without. This said, the well-documented failures of neoliberalism over four decades and the vast challenges and crises of late capitalism would suggest that change of a revolutionary nature is required if we are to avoid settling upon accommodating capital, and a further descent into barbarism, as the only ‘rational’ way forward.

See, for example, Dieter Plehwe and Philip Mirowski’s contributions to an important volume on neoliberalism ( Mirowski 2009 ; Plehwe 2009 ).

Ideationally, the early roots of neoliberalism are frequently traced back to several key figures on both sides of the Atlantic, including Ludwig von Mises, Friedrich Hayek, and Milton Friedman, and references are commonly made to the ‘Ordoliberal’ tradition, and the Austrian and Chicago schools of economics. The German Ordoliberal tradition—prominent during the interwar period—emphasized a sort of ‘humanist form of market economics’ grounded in a strong legal and social order, viewing markets not as ‘spontaneously arising’ (an important component of the Austrian school associated with Ludwig von Mises and Hayek) but rather in need of creation and institutionalization by the state. The Chicago School, which ‘endowed the market with vigorously autonomous capacities’ was more avowedly anti-state and laissez-faire. All of these positions are crucial kernels for neoliberalism’s ideological emergence, with the MPS and figures such as Hayek playing important roles in binding the traditions ( Peck 2010 , 17).

As Slobodian (2018 , 14) notes: ‘In fact, neoliberals were key articulators of what Jan-Werner Müller calls ‘constrained democracy’. The tension was always between advocating democracy for peaceful change and condemning its capacity to upend order.’ He continues: ‘The need to defend the world economy led some neoliberals to seemingly illiberal bedfellows. The case of Augusto Pinochet’s Chile is notorious; the neoliberal relationship to apartheid in South Africa is less well studied (22).’

Jessop states: ‘The specific content and overall weight of these three desiderata vary, as do the motives of those who promote them. In addition, its overall economic, juridico-political, and sociocultural significance differs by spatiotemporal context and changes in the balance of forces, and the unfolding of its multiple effects over different periods ( Jessop 2012 , 1)’.

This is not to say that there is no contestation within these states over precise policy forms and their application. However, as is made clear in the next section, there is a clear association between the world’s leading states and the increased promotion of neoliberal policies over time. One only needs to look at the economic policies advocated internationally by the United States or Europe, or the multilateral organizations in which these countries hold significant sway: the World Bank, the IMF, the regional development banks, agencies within the UN system, and the Organization for Economic Co-operation and Development (see for example Cammack 2017a , 2017b , 2019 ; Carroll 2010 ; Jarvis 2017 ).

This draws upon earlier conceptions developed by the author and colleagues. See, for example, Carroll, Gonzalez-Vicente, and Jarvis (2019) .

The US Treasury has long been a key defender of the IFIs as crucial elements in defending US interests, and many members of US Treasury have taken up senior positions in the IFIs. One particularly revealing case of Treasury defending the IFIs was evident in its response to the far-ranging demands of the Report of the International Financial Institution Advisory Commission (also known as the Meltzer Commission Report): ‘The IFIs are among the most effective and cost-efficient means available to advance U.S. policy priorities worldwide. Since their inception, they have been central to addressing the major economic and development challenges of our time. They have promoted growth, stability, open markets and democratic institutions, resulting in more exports and jobs in the United States, while advancing our fundamental values throughout the world’ ( US Department of the Treasury n.d. ).

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Science and neoliberal globalization: a political sociological approach

• Published: 10 June 2011
• Volume 40 , pages 505–532, ( 2011 )

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• Kelly Moore 1 ,
• Daniel Lee Kleinman 2 ,
• David Hess 3 &
• Scott Frickel 4  

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The political ideology of neoliberalism is widely recognized as having influenced the organization of national and global economies and public policies since the 1970s. In this article, we examine the relationship between the neoliberal variant of globalization and science. To do so, we develop a framework for sociology of science that emphasizes closer ties among political sociology, the sociology of social movements, and economic and organizational sociology and that draws attention to patterns of increasing and uneven industrial influence amid several countervailing processes. Specifically, we explore three fundamental changes since the 1970s: the advent of the knowledge economy and the increasing interchange between academic and industrial research and development signified by academic capitalism and asymmetric convergence; the increasing prominence of science-based regulation of technology in global trade liberalization, marked by the heightened role of international organizations and the convergence of scientism and neoliberalism; and the epistemic modernization of the relationship between scientists and publics, represented by the proliferation of new institutions of deliberation, participation, activism, enterprise, and social movement mobilization.

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Moore, K., Kleinman, D.L., Hess, D. et al. Science and neoliberal globalization: a political sociological approach. Theor Soc 40 , 505–532 (2011). https://doi.org/10.1007/s11186-011-9147-3

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education, community-building and change

Naomi Klein: globalization, capitalism, neoliberalism and climate change

Naomi Klein has probably done more than any other commentator, to raise public understanding of the relationships between globalization, capitalism, neoliberalism and climate change. Here we explore her contribution.

Contents : naomi klein – life and contribution • no logo, corporations and globalization • the shock doctrine, neo-liberalism and the rise of disaster capitalism • this changes everything – capitalism vs. the climate • conclusion – where next • further reading and references • acknowledgements • how to cite this piece, introduction.

Naomi Klein (1970- ) is a Canadian journalist, writer and activist known for her critiques of globalization and consumerism, neoliberalism, and the role of capitalism in climate change. Her books – No Logo , The Shock Doctrine and This Changes Everything: Capitalism vs the Climate – became international bestsellers and have ‘done more to popularise the inseparability of capitalism and climate change than perhaps any other author’ (O’Brien 2019). In 2018, she joined Rutgers University, the State University of New Jersey as the inaugural Gloria Steinem Endowed Chair in Media, Culture and Feminist Studies.

Born in Montreal, Naomi Klein’s father was a paediatrician in a public hospital; her mother, a documentary filmmaker. They were both Jewish Americans who had made their way there through their resistance to US military action in Vietnam. Her paternal grandparents were also politically engaged. Involved with the Communist Party from the 1930s, like so many others, they left in 1956. Both were strong unionists. Writing in 2008, Larissa MacFarquhar suggests that the ‘political stories in which Klein places herself all begin in the thirties’.

The thirties and forties were the last time in America, she feels, that social movements were strong enough to force radical economic change in a progressive direction. They were also the last time that a certain kind of grand, bold political hope existed in her family—the last time before events combined to extinguish all thoughts, among Kleins, of utopia. (MacFarquhar 2008)

Unlike her brother Seth, as a teenager, Naomi Klein, ‘resented being dragged to demonstrations’ and reacted against her mother’s feminism and her parent’s hippiness. ‘All my parents wanted was the open road and a VW camper,’ she wrote. ’That was enough escape for them. The ocean, the night sky, some acoustic guitar’ ( op. cit. ).

In 1989 Klein began her studies in English and Philosophy at the University of Toronto. She had spent some time nursing her mother after she had a stroke (Bonny Sherr Klein 1993). During her first year, the École Polytechnique massacre (also known as the Montreal Massacre) took place. Fourteen women were targeted and killed (the perpetrator said he was ‘fighting feminism’). It was a ‘wake-up call’ for Naomi Klein. She had shied away from activism (Klein 2012a). Her mother’s feminism, work and involvement in, and commitment to, social movements now proved to be a compelling model. ‘Media starts a conversation, but then people take it and act’ (Klein 2012b). Naomi Klein had always wanted to be a writer. Now she began to combine it with activism – editing and writing for The Varsity the University of Toronto student paper.

Then deciding to interrupt her degree studies, Naomi Klein took up an internship with The Globe and Mail , the Toronto-based paper and then went on to edit This Magazine (which had been founded by a group of school activists in 1966) (see THIS ).

From No Logo to This Changes Everything

In the mid-1990s Naomi Klein returned to the University to complete her studies. There, according to Larissa MacFarquhar, she found students were no longer so concerned with identity politics but were now talking about economics.

There was a feeling in the air that corporations were getting too powerful—more powerful than governments, but not accountable to anyone except their shareholders. And, at the same time that big corporations were withdrawing physically from the United States and opening factories overseas, visually, even spiritually, they were everywhere, insinuating their logos into what had once been public space. Young activists found this especially objectionable, perhaps because one of the places into which corporations insinuated themselves most effectively was youth and activism, folding mutiny into advertising so deftly that resistance seemed futile. (MacFarquhar 2008)

Klein decided to write a book on branding culture rather than complete her studies. She had also met, and later married, Avi Lewis – a documentary filmmaker who had studied at Toronto. Completed in 1999 and published in 2000, No Logo coincided with, and articulated protests against consumerism and globalization, and the exploitation involved. The book was translated into over 30 languages and sold over a million copies. In The Guardian , it was rated as one of the top 100 non-fiction books of all time. Robert McCrum (2017) comments, ‘Naomi Klein’s timely anti-branding bible combined a fresh approach to corporate hegemony with potent reportage from the dark side of capitalism’.

No Logo was followed by a couple of books of collected essays; two further major – and highly influential – works; and two shorter books – one on the rise of Trump, the other concerned with resistance to ‘disaster capitalism’ in Puerto Rico.

The Shock Doctrine appeared in 2007. Subtitled ‘the rise of disaster capitalism’ this book divided reviewers with, broadly, those already critical of neoliberalism applauding it, and those supporting neoliberalism pointing out Naomi Klein’s ‘faults’. In 2019, The Guardian’s listing of the 100 best books of the 21 st century (fiction and non-fiction) put The Shock Doctrine in the top twenty:

In this urgent examination of free-market fundamentalism, Klein argues – with accompanying reportage – that the social breakdowns witnessed during decades of neoliberal economic policies are not accidental, but in fact integral to the functioning of the free market, which relies on disaster and human suffering to function.

Many of the negative reviews for the book came from academic and professional economists complaining of Naomi Klein’s lack of understanding, or appreciation, of economic theory. As we will see, an alternative reading is that Klein understood only too well the shallowness and ideological roots of that theory. Her work helped to prepare the way for the reception to Thomas Piketty’s (2014) work Capital in the Twenty-First Century which argued that neoliberalism produces vastly increased inequalities. Not unexpectedly, it too attracted criticism from economists, but this time they were attacking a critique that came from within.

This Changes Everything: Capitalism vs. the climate came out in 2014 – the same year as another influential work – Elizabeth Kolbert’s The Sixth Extinction – An unnatural history appeared. Both Klein and Kolbert were journalists but were coming at the deep problems of climate change from different directions. Elizabeth Kolbert was reviewing the science – charting five mass extinctions on Earth and how humans are causing another. She noted that ‘no creature has ever altered life on the planet’ in the way we are doing now.

Very, very occasionally in the distant past, the planet has undergone change so wrenching that the diversity of life has plummeted. Five of these ancient events were catastrophic enough that they’re put in their own category: the so-called Big Five. In what seems like a fantastic coincidence, but is probably no coincidence at all, the history of these events is recovered just as people come to realize that they are causing another one. When it is still too early to say whether it will reach the proportions of the Big Five, it becomes known as the Sixth Extinction. (Kolbert 2014: 8-9)

The “control of nature” is a phrase conceived in arrogance, born of the Neanderthal age of biology and philosophy, when it was supposed that nature exists for the convenience of man. The concepts and practices of applied entomology for the most part date from that Stone Age of science. It is our alarming misfortune that so primitive a science has armed itself with the most modern and terrible weapons, and that in turning them against the insects it has also turned them against the earth. (Carson 1962: 297)

Klein and Kolbert were able to marshal and generate coherent narratives of the processes of change that appealed strongly to those who were already concerned with the climate emergency. They were, of course, never likely to be listened to by hardened climate change deniers. But they could encourage those (like Naomi Klein herself) who had been avoiding the ‘real truth’ that:

… climate change isn’t an “issue” to add to the list of things to worry about, next to health care and taxes. It is a civilizational wake-up call. A powerful message—spoken in the language of fires, floods, droughts, and extinctions—telling us that we need an entirely new economic model and a new way of sharing this planet. Telling us that we need to evolve. (Klein 2014: 37)

And Naomi Klein had another pressing reason for the change – she had become a mother in 2012. In the past, when fears ’used to creep through my armor of climate change denial, I would do my utmost to stuff it away, change the channel, click past it. Now I try to feel it. It seems to me that I owe it to my son, just as we all owe it to ourselves and one another’ ( op. cit. ).

Recent work

The rise of Donald Trump led to Naomi Klein returning to the themes of The Shock Doctrine in 2017 . She quickly put together No is Not Enough , subtitled Defeating the new shock politics in the UK, and Resisting Trump’s shock politics and winning the world we need in the United States. Unlike the three earlier books which took three or four years to finish, it was written in a matter of months. ‘This book’s argument, in a nutshell,’ Klein (2017) wrote, ‘is that Trump, extreme as he is, is less an aberration than a logical conclusion—a pastiche of pretty much all the worst trends of the past half-century’. She continues:

Most of all, he is the incarnation of a still-powerful free-market ideological project—one embraced by centrist parties as well as conservative ones—that wages war on everything public and commonly held, and imagines corporate CEOs as superheroes who will save humanity. ( op. cit. )

Importantly, and an extension of some of her work in This Changes Everything , she also looks to the practical steps to be taken in order to resist.

At this point, Naomi Klein made some significant changes. She formally entered the academic world becoming in 2018 the inaugural Gloria Steinem Endowed Chair in Media, Culture and Feminist Studies at Rutgers University, the State University of New Jersey. Klein also became a senior correspondent at The Intercept , the online news site, that seeks to hold ‘the powerful accountable through fearless, adversarial journalism’ (Intercept undated). Based on work undertaken for The Intercept , she published The Battle for Paradise: Puerto Rico takes on the disaster capitalists in 2018. One consequence of these changes is that she had effectively become US-, rather than Canada-, based.

No logo, corporations and globalization

Some political books capture the zeitgeist with such precision that they seem to blur the lines between the page and the real world and become part of the urgent, rapidly unfolding changes they are describing. (Hancox 2019)

No Logo became a publishing phenomenon and ‘hit at this moment when a global movement was exploding and taking mainstream commentators entirely by surprise’ (Klein quoted by Hancox 2019). Naomi Klein makes clear that the title is not a literal slogan (as in No More Logos), or a post-logo logo.

Rather, it is an attempt to capture an anticorporate attitude I see emerging among many young activists. This book is hinged on a simple hypothesis: that as more people discover the brand-name secrets of the global logo web, their outrage will fuel the next big political movement, a vast wave of opposition squarely targeting transnational corporations, particularly those with very high name-brand recognition. (Klein 2000: xx)

That hypothesis has not (as yet) proved to be correct. However, twenty years on the changes she identifies and explores are there for all to see – and ‘are so much worse than we could have ever predicted’ (Hancox 2019).

No Logo is a book of four parts.

No Space examines how marketing has ensnared culture and education. Here, Klein includes a particularly significant attack on the branding of education ( op. cit. : 87-106).

No Choice reflects on the extent to which market-driven globalization may give the impression of diversity – but really homogenization is going on. ‘Dazzled by the array of consumer choices, we may at first fail to notice the tremendous consolidation taking place in the boardrooms of the entertainment, media and retail industries’ ( op. cit. : 129).

No Jobs examines the changing experience of work and the rise of self-employment, McJobs and outsourcing, as well as part-time and temporary work. ( op. cit. : 195-278)

No Logo argues that these forces involve an attack on ‘the three social pillars of employment, civil liberties and civic space’ and that this, in turn, is feeding anticorporate activism. ( op. cit. : xxiii)

One of the great strengths of No Logo is that evidence is drawn from across the globe and woven into an account of changing nature of corporations and the impact this has had on consumers and workers. Its themes were picked up by other writers such as Alissa Quart (exploring branding and teenagers) and Joseph Heath and Andrew Potter in The Rebel Sell: How the counterculture became consumer culture (2005). Heath and Potter comment that ‘ No Logo provides a stinging indictment of every aspect of the modern advertising-driven economy’. They continue:

… it is not just that corporations are exploiting our desire to be cool by selling us “cool” products; it is that they are actually creating the desire for those products. We are being systematically duped, manipulated, programmed into the consumerist cool mindset, tricked into buying products we otherwise would not really want. (Heath and Potter 2004: 204-5)

More generally, Naomi Klein was able to delineate and connect some key elements of globalization in a way that made sense to the growing numbers of people concerned about their experiences of education and culture, of contemporary consumerism, and of work. It linked the changing shape of corporations (and capitalism) to globalization. But in the end the ‘vast wave of opposition’ did not happen. The obvious problem with No Logo , according to Heath and Potter (2004: 329) ‘is that despite the rhetoric about the evils of consumerism and its call for “a more citizen-centered alternative to the international rule of brands” the book has very little to offer in the way of positive politics’. This criticism is unfair – and it says more about the writers’ perspective than Klein’s argument. She does set out engaging possibilities and is surely right to explore people-centred alternatives. However, her optimism and hope seem to have led to her underestimating the power of counterforces. Branding has become ubiquitous:

What’s more powerful now… is the idea that every single person has to be their own brand, and the application of the logic of corporate branding to our very selves. It’s an insidious change that has everything to do with social media (Naomi Klein quoted in O’Brien 2019).

The Shock Doctrine, neoliberalism and the rise of disaster capitalism

There are very few books that really help us understand the present. The Shock Doctrine is one of those books. Ranging across the world, Klein exposes the strikingly similar policies that enabled the imposition of free markets… Part of the power of this book comes from the parallels she observes in seemingly unrelated developments . (Gray 2007)

In The Shock Doctrine , Naomi Klein assembles and explores a wide range of material to critique the actions of politicians and corporate leaders who took on the neoliberal ideas of Milton Friedman and his associates in the Chicago school of economics. In particular, she is concerned with the shock doctrine that was applied in varying degrees to countries as disparate as China, Russia, Iraq, Bolivia, Chile and the UK and USA. Friedman, in a key passage written in 1982 summarizes the doctrine:

Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable. (1982: ix)

Milton Friedman and his followers – for more than three decades – had been developing this strategy: ‘waiting for a major crisis, then selling off pieces of the state to private players while citizens were still reeling from the shock, then quickly making the “reforms” permanent’ (Klein 2007: 18). Klein calls these ‘orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities’, disaster capitalism ( op. cit. : 15). It is a profoundly anti-democratic process. The only situation in which a population would accept such ‘reforms’ is when it is ‘in a state of shock, following a crisis of some sort—a natural disaster, a terrorist attack, a war’ (MacFarquhar 2008).

It wasn’t necessary for the rich and powerful to create catastrophes so that they could exploit them.

The truth is at once less sinister and more dangerous. An economic system that requires constant growth, while bucking almost all serious attempts at environmental regulation, generates a steady stream of disasters all on its own, whether military, ecological or financial. The appetite for easy, short-term profits offered by purely speculative investment has turned the stock, currency and real estate markets into crisis-creation machines, as the Asian financial crisis, the Mexican peso crisis and the dot-com collapse all demonstrate. ( op. cit. : 743-4)

‘Everywhere the Chicago School crusade has triumphed’, Naomi Klein claims, ‘it has created a permanent underclass of between 25 and 60 per cent of the population’. The outcome of the strategy was the creation of what Klein calls the ‘corporatist state’.

Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society. But because of the obvious drawbacks for the vast majority of the population left outside the bubble, other features of the corporatist state tend to include aggressive surveillance (once again, with government and large corporations trading favors and contracts), mass incarceration, shrinking civil liberties and often, though not always, torture. ( op. cit. : 32)

The extent to which corporations understand or control these processes is a matter for some debate, according to John Gray (2007) – just as there must be considerable doubt that ‘the neo-liberal ideologues who helped create it foresaw where it would lead. ‘[I]t is hard to resist the suspicion’ he continues, ‘that disaster capitalism is now creating disasters larger than it can handle’ ( op. cit. ).

This Changes Everything: Capitalism vs. the climate

Extinction Rebellion 2019

Naomi Klein’s This Changes Everything again caught a shift in public opinion – and one of great significance. In an article written in 2011 (and reprinted in Klein 2019) she notes that in 2007 a Harris poll found that ‘71 per cent of Americans believed that the continued burning of fossil fuels would cause the climate to change’. Klein continues:

By 2009, the figure had dropped to 51 percent. In June 2011, the number of Americans who agreed was down to 44 percent—well under half the population. According to Scott Keeter, director of survey research at the Pew Research Center for the People and the Press, this is “among the largest shifts over a short period of time seen in recent public opinion history.” Even more striking, this shift has occurred almost entirely at one end of the political spectrum… Today, 70–75 percent of self-identified Democrats and liberals believe humans are changing the climate, a level that has remained stable or risen slightly over the past decade. In sharp contrast, Republicans, particularly Tea Party members, have overwhelmingly chosen to reject the scientific consensus. In some regions, only about 20 percent of self-identified Republicans accept the science. (2011, reprinted in Klein 2019: 73-4)

Eight or more years on, the divide remains underpinned by a dangerous effort to question scientific research in the service of shoring up strong vested interests. The first part of This Changes Everything explores how these processes were added to by the 2007 financial crisis and the austerity programmes that followed – especially in terms of challenges to environmental movements. However, resistance to those vested interests and a resolve to deal with the climate emergency has subsequently strengthened – and the work undertaken by Klein, Kolbert and others has played a significant role.

The power of Naomi Klein’s approach lays in the way she pits capitalism against climate. The bottom line for her is that: ‘our economic system and our planetary system are now at war’ (Klein 2014: 30).  Very little she argues ‘has been written about how market fundamentalism has, from the very first moments, systematically sabotaged our collective response to climate change, a threat that came knocking just as this ideology was reaching its zenith’ ( op. cit. : 28). Her focus on the ways in which vested economic interests have orchestrated attempts to undermine reputable science, and the work of those highlighting the impact of environmental change in the social and political spheres, sheds considerable light on the situation.

[W]e have not done the things that are necessary to lower emissions because those things fundamentally conflict with deregulated capitalism, the reigning ideology for the entire period we have been struggling to find a way out of this crisis. We are stuck because the actions that would give us the best chance of averting catastrophe—and would benefit the vast majority—are extremely threatening to an elite minority that has a stranglehold over our economy, our political process, and most of our major media outlets. ( op. cit. : 27)

What concerns Klein is not so much the mechanics of the transition—the shift from brown to green energy etc. ‘than the power and ideological roadblocks that have so far prevented any of these long understood solutions from taking hold on anything close to the scale required. ( op. cit. : 34).

The blocks to progress that Klein critiques include what she describes as ‘magical thinking’. She highlights the ideas that:

• There can be some sort of technological fix to the problems of global warming ( op. cit. : 262-296).
• Green Billionaires can save us ( op. cit. : 237-260).
• Big business can work with the efforts of ‘big green’ organizations and not blunt them ( op. cit. : 199-233).

As Skocpol (2013: 11) argued,

Climate change warriors will have to look beyond elite manoeuvres and find ways to address the values and interests of tens of millions of U.S. citizens. To counter fierce political opposition, reformers will have to build organizational networks across the country, and they will need to orchestrate sustained political efforts.

Naomi Klein builds the case that progressive social movements can make a difference. She does this through a series of case studies. As she states, we now have a few models that ‘demonstrate how to get far-reaching decentralized climate solutions off the ground with remarkable speed, while fighting poverty, hunger, and joblessness at the same time’ ( op. cit. : 144).

The environmental crisis—if conceived sufficiently broadly—neither trumps nor distracts from our most pressing political and economic causes: it supercharges each one of them with existential urgency…. Even more importantly, the climate moment offers an overarching narrative in which everything from the fight for good jobs to justice for migrants to reparations for historical wrongs like slavery and colonialism can all become part of the grand project of building a nontoxic, shockproof economy before it’s too late. ( op. cit. : 144)

There are mixed lessons from previous social movements – whether it is the fight against slavery and discrimination, the exploitation of workers, or the struggle for women’s rights and around the ability to express our differing sexualities ( op. cit. : 457-73). However, the hopes that Klein was expressing in 2014 do appear to have had some life. The development of  Extinction Rebellion and the impact of Greta Thunberg and the school strikes for the climate are cases in point (see Klein 2019: 14-53).

John Gray (2014), in his review of This Changes Everything , comments that ‘Klein is a brave and passionate writer who always deserves to be heard, and this is a powerful and urgent book that anyone who cares about climate change will want to read’. He goes on to say that it is ‘hard to resist the conclusion that she shrinks from facing the true scale of the problem’. Neoliberalism and corporate capitalism certainly remain a significant threat to steps to combat climate change but so do geopolitics and the unpredictability of the activities of nation-states in, for example, the Middle East.

Conclusion – where next?

Before turning to the direction in which Naomi Klein is headed, it is worth reflecting on the qualities that she has brought to, and developed in, her work. Here I just want to highlight three.

The journalistic eye . A significant part of Naomi Klein’s contribution is borne of her grounding in journalism. She is not only there at press briefings and key events looking for a story, but she also peers beneath the surface and searches out hidden dynamics. To this must be added something that all the best journalists have, attentiveness to what a wider public might be – and should be – concerned about. This capacity is even more important as many academics have walked away from their responsibilities to enhance public understanding (although possibly less so on the ecological front – see, for example, Lewis and Maslin 2018; Bonneuil and Fressoz 2016). Disappearing into a closed world of journal citations and research assessment exercises, too many have lost sight of their civic responsibilities.

The ability to connect ideas and to communicate . As we have already noted, several reviewers and commentators have underlined Naomi Klein’s capacity to link what could at first seem to be disparate events and phenomenon to wider economic, social and political forces. However, this may have come to very little were it not for her talents as a researcher and writer. She has dug out material, organized it and been able to convey its meaning in an engaging and enlightening way.

A commitment to resisting inequality and injustice . Naomi Klein is dedicated to the causes she is writing about and this is carried through into activism and participation. This is writing that looks to encourage informed, committed action – praxis .

But we need not be spectators…: politicians aren’t the only ones with the power to declare a crisis. Mass movements of regular people can declare one too. Slavery wasn’t a crisis for British and American elites until abolitionism turned it into one. Racial discrimination wasn’t a crisis until the civil rights movement turned it into one. Sex discrimination wasn’t a crisis until feminism turned it into one. Apartheid wasn’t a crisis until the anti-apartheid movement turned it into one. ( op. cit. : 14)

So where next? We find some clues in On Fire: The burning case for a green new deal (2019).

The radicalizing power of climate science

In October 2018, the UN Intergovernmental Panel on Climate Change (IPCC) published a special report on Global Warming of 1.5°C . Global warming is likely to reach 1.5°C between 2030 and 2052 if it continues to increase at the current rate. As Klein (2019: 31) comments, ‘keeping temperatures below the 1.5°C threshold is humanity’s best chance of avoiding truly catastrophic unravelling. But doing that would be extremely difficult’. The press release issued by the IPCC put it like this:

Limiting global warming to 1.5°C would require rapid, far-reaching and unprecedented changes in all aspects of society… With clear benefits to people and natural ecosystems, limiting global warming to 1.5°C compared to 2°C could go hand in hand with ensuring a more sustainable and equitable society. (2018b)

The IPCC Report is significant for its ‘unequivocal clarity’ Klein concludes. When combined with direct and repeated experience with unprecedented weather:

… our conceptualization of this crisis is shifting. Many more people are beginning to grasp that the fight is not for some abstraction called “the earth.” We are fighting for our lives. And we don’t have twelve years anymore; now we have only eleven. And soon it will be just ten. (Klein 2019: 310)

The green new deal

Naomi Klein is also interested in the number of calls to respond to the climate crisis with a Green New Deal.

The idea is a simple one: in the process of transforming the infrastructure of our societies at the speed and scale that scientists have called for, humanity has a once-in-a-century chance to fix an economic model that is failing the majority of people on multiple fronts. Because the factors that are destroying our planet are also destroying people’s quality of life in many other ways, from wage stagnation to gaping inequalities to crumbling services to the breakdown of any semblance of social cohesion. Challenging these underlying forces is an opportunity to solve several interlocking crises at once. (2019: 32-3)

Whether or not this particular formulation has traction, and to take a leaf out of the ‘Disaster Capitalism’ book, we are approaching a moment of profound crisis in which action has to be taken – and this does provide an opportunity, Klein ( op. cit. ) suggests, to ‘shift to a dramatically more humane economic model’.

Further reading and references

Bonneuil, C. and Fressoz, J. B. (2016). The Shock of the Anthropocene. The earth, history and us . Translated by David Fernbach. London: Verso.

Carson, R. (1962) Silent Spring . Boston: Mifflin.

Friedman, M. (1982) Preface to Capitalism and Freedom . Chicago: University of Chicago Press.

Gray, J. (2007). The end of the world as we know it, The Guardian September 15. [ https://www.theguardian.com/books/2007/sep/15/politics . Retrieved February 4, 2020].

Gray, J. (2014). This Changes Everything: Capitalism vs the Climate review – Naomi Klein’s powerful and urgent polemic, The Guardian September 22. [ https://www.theguardian.com/books/2014/sep/22/this-changes-everything-review-naomi-klein-john-gray . Retrieved February 4, 2020].

Guardian, The (2019). The 100 best books of the 21st century, The Guardian September 21. [ https://www.theguardian.com/books/2019/sep/21/best-books-of-the-21st-century . Retrieved January 29, 2020].

Hancox, D. (2019). No Logo at 20: have we lost the battle against the total branding of our lives? The Observer August 11. [ https://www.theguardian.com/books/2019/aug/11/no-logo-naomi-klein-20-years-on-interview . Retrieved January 28, 2020].

Heath, J. and Potter, A. (2004). The Rebel Sell: Why the Culture Can’t be Jammed . Toronto: HarperCollins.

Heath, J., & Potter, A. (2005). The Rebel Sell: How the counterculture became consumer culture . Chichester: Capstone.

Intercept, The (undated). About the Intercept, The Intercept . [ https://theintercept.com/about/ . Retrieved January 28, 2020].

Intergovernmental Panel on Climate Change (2018a). Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty . Geneva, Switzerland: World Meteorological Organization [ https://www.ipcc.ch/sr15/ . Retrieved February 4, 2020].

Intergovernmental Panel on Climate Change (2018b). Summary for Policymakers of IPCC Special Report on Global Warming of 1.5°C approved by governments, Intergovernmental Panel on Climate Change  [ https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments /. Retrieved February 4, 2020]

Klein, B. S. (1993). We are Who You are. Feminism and Disability, Abilities 14 pp. 22-26. [ https://web.archive.org/web/20071011204526/http://www.enablelink.org/include/article.php?pid=&cid=&subid=&aid=673 . Retrieved January 28, 2020].

Klein, Naomi. (2000). No logo: No space, no choice, no jobs . London: Flamingo.

Klein, Naomi. (2002). Fences and Windows: Dispatches from the front lines of the globalization debate . London: Flamingo.

Klein, Naomi. (2007). The Shock Doctrine: The rise of disaster capitalism . London: Allen Lane. [Page numbers refer to the epub version].

Klein, Naomi. (2011). Capitalism vs. the Climate, The Nation, November 9. Reprinted in Naomi Klein (2019). On Fire: The burning case for a green new deal . London: Allen Lane.

Klein, Naomi. (2012a). The Montreal Massacre, Big Think . [ https://www.youtube.com/watch?v=eET3COi8DPY . Retrieved January 28, 2020]

Klein, Naomi. (2012b). Who are you? Big Think . [ https://www.youtube.com/watch?v=9nS_8KCikaI . Retrieved January 28, 2020].

Klein, Naomi. (2012c). Where are we? Big Think . [ https://www.youtube.com/watch?v=PpDN0HhzVDc . Retrieved January 28, 2020].

Klein, Naomi. (2014). This Changes Everything: Capitalism vs. the climate . London: Allen Lane / Penguin Books. [Page numbers refer to the epub version].

Klein, Naomi. (2017). No is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need . London: Penguin Books Ltd.

Klein, Naomi. (2018). The Battle for Paradise: Puerto Rico takes on the disaster capitalists . Chicago, Illinois: Haymarket Books.

Klein, Naomi. (2019). On Fire: The burning case for a green new deal . London: Allen Lane. [Page numbers refer to the epub version].

Kolbert, E. (2014). The sixth extinction: An unnatural history . London: Bloomsbury Press. [Page numbers refer to the epub version].

Lewis, S. and Maslin, M. (2018). The Human Planet. How we created the Anthropocene . London: Pelican Books.

MacFarquhar, L. (2008). Outside Agitator. Naomi Klein and the new left, The New Yorker December 1. [ https://www.newyorker.com/magazine/2008/12/08/outside-agitator . Retrieved January 28, 2020].

McCrum, R. (2017). The 100 best nonfiction books of all time, The Guardian December 31. [ https://www.theguardian.com/books/2017/dec/31/the-100-best-nonfiction-books-of-all-time-the-full-list . Retrieved January 29, 2020].

McKibben, B. (1989) The End of Nature. New York: Random House.

Mulgan, G. (2019). Social Innovation. How societies find the power to change . Bristol: Policy Press.

O’Brien, H. (2019). “It feels like everything could tip very quickly”: Naomi Klein takes on the climate crisis, New Statesman , October 30. [ https://www.newstatesman.com/politics/environment/2019/10/it-feels-everything-could-tip-very-quickly-naomi-klein-takes-climate . Retrieved February 4, 2020].

Piketty, T. (2014). Capital in the Twenty-First Century . Trans. Arthur Goldhammer . Cambridge, Mass: Harvard University Press.

Quart, A. (2003). Branded: The buying and selling of teenagers . London: Arrow.

Russell, S. (2019). Human Compatible. Artificial intelligence and the problem of control . London: Allen Lane.

Skocpol, T, (2013). Naming the Problem: What It Will Take to Counter Extremism and Engage Americans in the Fight Against Global Warming, paper presented at a symposium on the Politics of America’s Fight Against Global Warming, Harvard University, February. [ https://scholars.org/sites/scholars/files/skocpol_captrade_report_january_2013_0.pdf . Retrieved February 4, 2020].

Zuboff, S. (2019) The Age of Surveillance Capitalism. The fight for a human future at the new frontier of power . London: Profile Books.

Acknowledgements : Thanks to The Internet Archive for being such a great source of older texts.

Images : Naomi Klein presenta en Madrid su nuevo libro “Esto lo cambia todo: el capitalismo contra el clima” 2015. Adolfo Lujan | flickr ccbyncnd2 licence.

Starbucks: Photo by Y. Cai on Unsplash .

Extinction Rebellion 2019 is by Peg Hunter | flickr ccbync2 licence

How to cite this piece : Smith, M. K. (2020). Naomi Klein: globalization, capitalism, neoliberalism and climate change, infed.org . [ https://infed.org/mobi/naomi-klein-globalization-capitalism-neoliberalism-and-climate-change/ . Retrieved: insert date].

© Mark K Smith 2020

Last Updated on June 10, 2020 by infed.org

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Neoliberalism and economic globalization

The goal of neoliberal economic globalization is the removal of all barriers to commerce, and the privatization of all available resources and services. In this scenario, public life will be at the mercy of market forces, as the extracted profits benefit the few.

The thrust of international policy behind the phenomenon of economic globalization is neoliberal in nature. Being hugely profitable to corporations and the wealthy elite, neoliberal polices are propagated through the IMF, World Bank and WTO. Neoliberalism favours the free-market as the most efficient method of global resource allocation. Consequently it favours large-scale, corporate commerce and the privatization of resources.

There has been much international attention recently on neoliberalism. Its ideologies have been rejected by influential countries in Latin America and its moral basis is now widely questioned. Recent protests against the WTO, IMF and World Bank were essentially protests against the neoliberal policies that these organizations implement, particularly in low-income countries.

The neoliberal experiment has failed to combat extreme poverty, has exacerbated global inequality, and is hampering international aid and development efforts. This article presents an overview of neoliberalism and its effect on low income countries.

Introduction

After the Second World War, corporate enterprises helped to create a wealthy class in society which enjoyed excessive political influence on their government in the US and Europe. Neoliberalism surfaced as a reaction by these wealthy elites to counteract post-war policies that favoured the working class and strengthened the welfare state.

Neoliberal policies advocate market forces and commercial activity as the most efficient methods for producing and supplying goods and services. At the same time they shun the role of the state and discourage government intervention into economic, financial and even social affairs. The process of economic globalization is driven by this ideology; removing borders and barriers between nations so that market forces can drive the global economy. The policies were readily taken up by governments and still continue to pervade classical economic thought, allowing corporations and affluent countries to secure their financial advantage within the world economy.

The policies were most ardently enforced in the US and Europe in the1980s during the Regan–Thatcher–Kohl era. These leaders believed that expanding the free-market and private ownership would create greater economic efficiency and social well-being. The resulting deregulation, privatization and the removal of border restrictions provided fertile ground for corporate activity, and over the next 25 years corporations grew rapidly in size and influence. Corporations are now the most productive economic units in the world, more so than most countries. With their huge financial, economic and political leverage, they continue to further their neoliberal objectives.

There is a consensus between the financial elite, neoclassical economists and the political classes in most countries that neoliberal policies will create global prosperity. So entrenched is their position that this view determines the policies of the international agencies (IMF, World Bank and WTO), and through them dictates the functioning of the global economy. Despite reservations from within many UN agencies, neoliberal policies are accepted by most development agencies as the most likely means of reducing poverty and inequality in the poorest regions.

There is a huge discrepancy between the measurable result of economic globalization and its proposed benefits. Neoliberal policies have unarguably generated massive wealth for some people, but most crucially, they have been unable to benefit those living in extreme poverty who are most in need of financial aid. Excluding China, annual economic growth in developing countries between 1960 and 1980 was 3.2%. This dropped drastically between 1980 and 2000 to a mere 0.7 %. This second period is when neoliberalism was most prevalent in global economic policy. (Interestingly, China was not following the neoliberal model during these periods, and its economic growth per capita grew to over 8% between 1980 and 2000.)

Neoliberalism has also been unable to address growing levels of global inequality. Over the last 25 years, the income inequalities have increased dramatically, both within and between countries. Between 1980 and 1998, the income of richest 10% as share of poorest 10% became 19% more unequal; and the income of richest 1% as share of poorest 1% became 77% more unequal (again, not including China).

The shortcomings of neoliberal policy are also apparent in the well documented economic disasters suffered by countries in Latin America and South Asia in the 1990s. These countries were left with no choice but to follow the neoliberal model of privatization and deregulation, due to their financial problems and pressure from the IMF. Countries such as Venezuela, Cuba, Argentina and Bolivia have since rejected foreign corporate control and the advice of the IMF and World Bank. Instead they have favoured a redistribution of wealth, the re-nationalization of industry and have prioritized the provision of healthcare and education. They are also sharing resources such as oil and medical expertise throughout the region and with other countries around the world.

The dramatic economic and social improvement seen in these countries has not stopped them from being demonized by the US. Cuba is a well known example of this propaganda. Deemed to be a danger to ‘freedom and the American way of life’, Cuba has been subject to intense US political, economic and military pressure in order to tow the neoliberal line. Washington and the mainstream media in the US have recently embarked on a similar propaganda exercise aimed at Venezuela’s president Chavez.  This over-reaction by Washington to ‘economic nationalism’ is consistent with their foreign policy objectives which have not changed significantly for the past 150 years. Securing resources and economic dominance has been and continues to be the USA’s main economic objective.

According to Maria Páez Victor:

“Since 1846 the United States has carried out no fewer than 50 military invasions and destabilizing operations involving 12 different Latin American countries. Yet, none of these countries has ever had the capacity to threaten US security in any significant way. The US intervened because of perceived threats to its economic control and expansion. For this reason it has also supported some of the region’s most vicious dictators such as Batista, Somoza, Trujillo, and Pinochet.”

As a result of corporate and US influence, the key international bodies that developing countries are forced to turn to for assistance, such as the World Bank and IMF, are major exponents of the neoliberal agenda. The WTO openly asserts its intention to improve global business opportunities; the IMF is heavily influenced by the Wall Street and private financiers, and the World Bank ensures corporations benefit from development project contracts. They all gain considerably from the neo-liberal model.

So influential are corporations at this time that many of the worst violators of human rights have even entered a Global Compact with the United Nations, the world’s foremost humanitarian body. Due to this international convergence of economic ideology, it is no coincidence that the assumptions that are key to increasing corporate welfare and growth are the same assumptions that form the thrust of mainstream global economic policy.

However, there are huge differences between the neoliberal dogma that the US and EU dictate to the world and the policies that they themselves adopt. Whilst fiercely advocating the removal of barriers to trade, investment and employment, The US economy remains one of the most protected in the world. Industrialized nations only reached their state of economic development by fiercely protecting their industries from foreign markets and investment. For economic growth to benefit developing countries, the international community must be allowed to nurture their infant industries. Instead economically dominant countries are ‘kicking away the ladder’ to achieving development by imposing an ideology that suits their own economic needs.

The US and EU also provide huge subsidies to many sectors of industry. These devastate small industries in developing countries, particularly farmers who cannot compete with the price of subsidized goods in international markets. Despite their neoliberal rhetoric, most ‘capitalist’ countries have increased their levels of state intervention over the past 25 years, and the size of their government has increased. The requirement is to ‘do as I say, not as I do’.

Given the tiny proportion of individuals that benefit from neoliberal policies, the chasm between what is good for the economy and what serves the public good is growing fast. Decisions to follow these policies are out of the hands of the public, and the national sovereignty of many developing countries continues to be violated, preventing them from prioritizing urgent national needs.

Below we examine the false assumptions of neoliberal policies and their effect on the global economy.

Economic Growth

Economic growth, as measured in GDP, is the yardstick of economic globalization which is fiercely pursued by multinationals and countries alike. It is the commercial activity of the tiny portion of multinational corporations that drives economic growth in industrialized nations. Two hundred corporations account for a third of global economic growth. Corporate trade currently accounts for over 50% of global economic growth and as much as 75% of GDP in the EU. The proportion of trade to GDP continues to grow, highlighting the belief that economic growth is the only way to prosper a country and reduce poverty.

Logically, however, a model for continual financial growth is unsustainable. Corporations have to go to extraordinary lengths in order to reflect endless growth in their accounting books. As a result, finite resources are wasted and the environment is dangerously neglected. The equivalent of two football fields of natural forest is cleared each second by profit hungry corporations.

Economic growth is also used by the World Bank and government economists to measure progress in developing countries. But, whilst economic growth clearly does have benefits, the evidence strongly suggests that these benefits do not trickle down to the 986 million people living in extreme poverty, representing 18 percent of the world population (World Bank, 2007). Nor has economic growth addressed inequality and income distribution. In addition, accurate assessments of both poverty levels and the overall benefits of economic growth have proved impossible due to the inadequacy of the statistical measures employed.

The mandate for economic growth is the perfect platform for corporations which, as a result, have grown rapidly in their economic activity, profitability and political influence. Yet this very model is also the cause of the growing inequalities seen across the globe. The privatization of resources and profits by the few at the expense of the many, and the inability of the poorest people to afford market prices, are both likely causes.

Free trade is the foremost demand of neoliberal globalization. In its current form, it simply translates as greater access to emerging markets for corporations and their host nations. These demands are contrary to the original assumptions of free trade as affluent countries adopt and maintain protectionist measures. Protectionism allows a nation to strengthen its industries by levying taxes and quotas on imports, thus increasing their own industrial capacity, output and revenue. Subsidies in the US and EU allow corporations to keep their prices low, effectively pushing smaller producers in developing countries out of the market and impeding development.

With this self interest driving globalization, economically powerful nations have created a global trading regime with which they can determine the terms of trade.

The North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico is an example of free-market fundamentalism that gives corporations legal rights at the expense of national sovereignty. Since its implementation it has caused job loss, undermined labour rights, privatized essential services, increased inequality and caused environmental destruction.

In Europe only 5% of EU citizens work in agriculture, generating just 1.6% of EU GDP compared to more than 50% of citizens in developing countries. However, the European Common Agricultural Policy (CAP) provides subsidies to EU farmers to the tune of £30 billion, 80% of which goes to only 20% of farmers to guarantee their viability, however inefficient this may be.

The General Agreement on Trade and Services (GATS) was agreed at the World Trade Organization (WTO) in 1994. Its aim is to remove any restrictions and internal government regulations that are considered to be "barriers to trade". The agreement effectively abolishes a government’s sovereign right to regulate subsidies and provide essential national services on behalf of its citizens. The Trade Related agreement on International Property Rights (TRIPS) forces developing countries to extend property rights to seeds and plant varieties. Control over these resources and services are instead granted to corporate interests through the GATS and TRIPS framework.

These examples represent modern free trade which is clearly biased in its approach. It fosters corporate globalization at the expense of local economies, the environment, democracy and human rights. The primary beneficiaries of international trade are large, multinational corporations who fiercely lobby at all levels of national and global governance to further the free trade agenda.

Liberalization

The World Bank, IMF and WTO have been the main portals for implementing the neoliberal agenda on a global scale. Unlike the United Nations, these institutions are over-funded, continuously lobbied by corporations, and are politically and financially dominated by Washington, Wall Street, corporations and their agencies. As a result, the key governance structures of the global economy have been primed to serve the interests of this group, and market liberalization has been another of their key policies.

According to neoliberal ideology, in order for international trade to be ‘free’ all markets should be open to competition, and market forces should determine economic relationships. But the overall result of a completely open and free market is of course market dominance by corporate heavy-weights. The playing field is not even; all developing countries are at a great financial and economic disadvantage and simply cannot compete.

Liberalization, through Structural Adjustment Programs, forces poorer countries to open their markets to foreign products which largely destroys local industries. It creates dependency upon commodities which have artificially low prices as they are heavily subsidized by economically dominant nations. Financial liberalization removes barriers to currency speculation from abroad. The resulting rapid inflow and outflow of currencies is often responsible for acute financial and economic crisis in many developing countries. At the same time, foreign speculators and large financial firms make huge gains. Market liberalization poses a clear economic risk; hence the EU and US heavily protect their own markets.

A liberalized global market provides corporations with new resources to capitalize and new markets to exploit. Neoliberal dominance over global governance structures has enforced access to these markets. Under WTO agreements, a sovereign country cannot interfere with a corporation’s intentions to trade even if their operations go against domestic environmental and employment guidelines. Those governments that do stand up for their sovereign rights are frequently sued by corporations for loss of profit, and even loss of potential profit. Without this pressure they would have been able to stimulate domestic industry and self sufficiency, thereby reducing poverty. They would then be in a better position to compete in international markets.

Deregulation

Access to new markets and foreign resources is not enough. To fulfill the corporate agenda of increasing profits, a corporation must seek out favourable regulatory conditions that reduce costs and increase productive capacity. Regulations restrict profitability. Thus, the corporate call for liberalization is accompanied by a demand for deregulation in all sectors of commerce nationally and globally. Removing these restrictions allows corporations to have greater access to and use of resources and labour, and to move freely across borders. Whilst countries such as many in South America and Asia offer just such conditions, corporations actively engage in the influencing and changing of domestic and international law that can potentially create these favourable conditions universally. In order to achieve this, corporations have, over the past 150 years, secured their political influence in local, national and international governance structures and regulatory bodies.

Regulations and regulatory agencies exist to monitor corporate activities, protect human rights and safeguard the environment. In recent years corporate lobbying has seen governments cut budgets for regulatory agencies and regulatory laws have been repealed, allowing corporations free reign to operate with fewer public safeguards. Overall, regulatory bodies have shifted their focus from protecting the consumer to protecting the industry, as the neoliberal model is progressively assimilated at all levels of government and economic policy in developed countries.

Enron lobbied very effectively to deregulate the electricity market, then to deregulate the trading of energy futures, then to prevent the disclosure of futures contracts, then to repeal the regulated-auction requirement. This enabled it to trade without revealing any trade or financial details to regulators or the public. It proceeded to make record profits through illicit activities which soon lead to its collapse. The economic collapse in Argentine in 2001 is also widely attributed to extensive deregulation, enforced by the IMF and World Bank’s neoliberal development policies, which destroyed industry and caused mass unemployment.

Regulating corporate activity protects the public. Removing these regulations protects corporate profits. This battle for legal protection is rigged in favour of corporations, even though they represent a fraction of the global population. Corporations are able to have their own way on these matters as they have almost limitless financial resources to rally to their cause and close relationships with the political elite.

Global deregulation has created the transnational corporation, as business operations are increasingly moved abroad in the search of cheaper labour, tax incentives and less red tape. In effect, unemployment rises in the affluent countries that lose jobs, while corporations outsource these same jobs to sweatshops in developing countries where wages are relatively insignificant, employment standards are often irrelevant and there are very low environmental standards. Thus corporations increase their profits. In order to win back these corporations and create more jobs, the US and other countries also lower their standards and cut regulation. Thus the logical conclusion of liberalization and deregulation is a race to the bottom, where the lowest possible standards are sought after and legislated for globally, with little regard for individual workers, employment conditions, the community or the environment.

Deregulation also encourages monopolization. Corporations, whilst falsely quoting the free market and open competition that Adam Smith envisaged, form virtual monopolies through acquisitions and mergers. This allows them to manage competition through strategic alliances that exist between all major players. As such, an estimated 60% of US GDP is provided by the largest 1000 corporations, and the remaining 11 million companies account for the other 40% of GDP.

Privatization

Privatization is the transfer of ownership or control over the production and distribution of state-owned resources or services to private companies. This process is essential to increasing corporate profit and opportunity, and is currently the focus of much attention. The progressive privatization of the  global commons  has been the primary focus of neoliberal or free market policy since the 1980s. Until this very recent period in history, public resources were largely in the hands of local communities and nations who would distribute their benefits throughout society without an overriding profit imperative.

With key commodity, agricultural and manufacturing markets already dominated by a handful of corporations, privatization has opened up a seemingly endless array of profitable opportunities. Agricultural land, airwaves, water sources, energy sources, healthcare, banking, indigenous knowledge, plants, seeds and even ideas are now increasingly controlled and supplied by corporations for profit.

Of great concern is the recent privatization of education. The US education system is valued at around £800 billion, and it is estimated that 10% of this will be in corporate hands within the next 8 years. In the UK, 59 learning academies are replacing existing schools, most under direct sponsorship from the corporate community who provide substantial donations to the government. All these academies “give sponsors and governors broader scope and responsibility for ethos, strategic direction and challenge”. As a result, they have a substantial emphasis on business, enterprise and commerce, and are not accountable to the public in the same manner as ordinary schools. This is just one example of the corporate takeover of public services in the UK as part of the Private Finance Initiative (PFI). Government spin has ensured that the PFI is never referred to as privatization, although it plainly hands over substantial control of public services and resources in exchange for corporate financial aid.

Neoliberals claim that privatized services are more efficient than those run by the state. They believe that market competition and corporate efficiency can drive prices down for consumers. These arguments are used as a sales tool to convince the public and their governments, and privatization is rapidly advancing throughout the developed and developing world. However, these assumptions are basically incorrect and often irrelevant when considering the functions and purposes of public utilities. Essential services are provided to citizens by their governments to meet basic public welfare needs such as the provision of energy, water and healthcare. The provision of these services is a human right, and whether they are profitable is not a concern for the vast majority of people around the world.

There are many relevant arguments against privatization, and little empirical evidence that privately run services are either more efficient or better value to their customers. For example, privatization usually creates a natural monopoly, removing the possibility of competition that can benefit the consumer. In many sectors, such as energy, multinational corporations hold the reigns to the market, and through their strategic alliances they control critical aspects of the market such as price – again removing any theoretical market benefits. And when consumer prices are reduced or a corporation tries to increase profit levels, it often comes at the expense of decent wages, labour standards and the environment. The resulting economies of scale and efficiency gains come at too high a cost to society.

The main issues are those relating to human rights, democracy, ownership, control and accountability. The provision of essential services is a human right, although many in the developing world go without basic services. Where services are available, it is in the community’s interest that an accountable government body manages the utility. But corporations are not accountable to the public, only to shareholders – whose priority is profit, not service. The profit motive does not influence government facilities; it can run services at a loss if the social need demanded it. If a government cannot provide a service efficiently, they may be voted out of office by the public.

The issue of water privatization remains one of the most controversial, affecting even the most affluent countries. The UK, for example, is currently experiencing legal restrictions on public water usage, whilst the operators, Thames Water, waste 894 million litres a day through unfixed leaks alone. The company avoided regulatory penalties whilst announcing a 31% rise in pre-tax profits which totalled £346.5m. Water bills are expected to increase on average by 24% by 2010. This case highlights another point – corporations will not reinvest their profits in order to address a crisis. State owned suppliers on the other hand can reinvest profits to quickly improve standards.

Developing Countries

At the global level, the coercive influences of the WTO, IMF and World Bank have left little option for many developing countries other than to allow progressive privatization of their public goods and services. Through trade agreements and structural adjustment programs, the international financial institutions have secured a steady income for their corporate counterparts. Indeed, these ‘emerging markets’ are currently the prime targets for corporations who increasingly operate on a transnational scale, whilst maintaining strategic relationships with influential governments. Foreign investment in this way results in the foreign repatriation of profit – taking money out of a local system. This reduces industry in the country and undermines local social and economic development. In this situation, citizens are forced into dependency upon foreign companies and their goods and services, completing the vicious cycle.

Understandably, the privatization of basic services has mobilized widespread public protest - most famously in Bolivia in 2004/2005, which eventually led to the government rejecting the private water contract. Water privatization in Bolivia was enforced in 1997 as a condition to a loan by the World Bank, in partnership with private interests such as the French multinational Suez. Mass protest was sparked by a serious failure to extend water and sewage services to tens of thousands of impoverished families, and connection costs that exceeded more than half a year’s income for the average Bolivian.

This raises the question: ‘how can corporations profit from those who have little or no money to spend?’ Impoverished communities all over the world cannot afford to pay for water services; many live on less that 1 dollar a day. Almost one-fifth of the planet’s population lacks access to safe drinking water and 40 per cent lack access to basic sanitation. It is not profitable for a corporation to control water distribution in areas of deprivation; they have little incentive to supply to those most in need if they cannot pay for the service. Publicly owned and managed water facilities, with their primary focus on meeting welfare needs and not profit, is best placed to undertake this service.

The lobby for privatization often cites the presence of ‘corrupt’ governments as a major reason for the lack of global access to essential resources such as water, suggesting that in such cases government efforts must be superseded by private provision. However, it stands to reason that these ‘corrupt’ governments are not best placed to negotiate massive private contracts with transnational corporations, many of which command much larger economies than the developing country. These government failures must also be viewed in historical perspective and in terms of a country’s current level of impoverishment. Further analysis often reveals more complex causes to this impoverishment.

These range from unique environmental conditions, such as the lack of proximity to water in sub-Saharan Africa, to the cumulative effect of colonization, political interference and unfair trade structures imposed by dominant countries. In such countries, corporations can often reinforce corrupt practices. Commenting on a Transparency International survey, IPS reported in 2002 that “International conventions have not stopped multinational corporations from trying to secure valuable contracts by bribing government officials in the world's emerging economies - especially in the arms and defence, and public works and construction industries” and that such bribery was on the increase. In such cases international attention must focus on providing foreign assistance to create more efficient state controlled public services.

When essential services are privatized, a two-tier system is often created. Prices are set by the market and those who cannot afford to pay, go without. This is simply unacceptable when 45% of the global public struggle to survive on $2 a day. Poverty reduction and development can only occur when these basic services, which are often unavailable in poverty stricken areas, are guaranteed to all. Government commitment to provide basic human needs was affirmed in the UN Universal Declaration of Human rights, and as such governments must uphold their commitment and not succumb to neoliberal pressure to relinquish essential services to market forces and private interests.

Neoliberal ideology embodies an outdated, selfish model of economy. It has been formulated by the old imperial powers and adopted by economically dominant nations. Given the state of the global trade and finance structures, wealthy countries can maintain their economic advantage by pressurizing developing countries to adopt neo-liberal policies – even though they themselves do not. Understandably, many commentators have described this process as economic colonialism.

The ultimate goal of neoliberal economic globalization is the removal of all barriers to commerce, and the privatization of all available resources and services. In this scenario, public life will be at the mercy of volatile market forces, and the extracted profits will benefit the few.

The major failures of these policies are now common knowledge. Many countries, particularly in Latin America, are now openly defying the foreign corporate rule that was forced upon them by the international financial institutions. In these countries, economic ideologies based on competition and self interest are gradually being replaced by policies based on cooperation and the sharing of resources. Changing well-established political and economic structures is a difficult challenge, but pressure for justice is bubbling upward from the public. Change is crucial if the global public is to manage the essentials for life and ensure that all people have access to them as their human right.

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Globalization and Neoliberalism

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What Is Neoliberalism?

Understanding neoliberalism, characteristics of neoliberalism.

• Liberalism vs. Neoliberalism
• Neoliberalism Criticism

The Bottom Line

• Government & Policy

Neoliberalism: What It Is, With Examples and Pros and Cons

Liz Manning has researched, written, and edited trading, investing, and personal finance content for years, following her time working in institutional sales, commercial banking, retail investing, hedging strategies, futures, and day trading. 

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Neoliberalism is a policy model that encompasses both politics and economics. It favors private enterprise and seeks to transfer the control of economic factors from the government to the private sector.

Many neoliberal policies concern the efficient functioning of free market capitalism and focus on limiting government spending, government regulation, and public ownership.

Neoliberalism is often associated with the leadership of Margaret Thatcher , the prime minister of the U.K. from 1979 to 1990 (and leader of the Conservative Party from 1975 to 1990), and Ronald Reagan, the 40th president of the U.S. from 1981 to 1989.

More recently, neoliberalism has been associated with policies of austerity and attempts to cut government spending on social programs.

Key Takeaways

• The policies of neoliberalism typically support fiscal austerity, deregulation, free trade, privatization, and a reduction in government spending.
• Neoliberalism is often associated with the economic policies of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States.
• There are many criticisms of neoliberalism, including its potential danger to democracy, workers' rights, and sovereign nations' right to self-determination.
• It's also been accused of giving corporations too much power and worsening economic inequality.

Investopedia / Sydney Saporito

Neoliberalism is a political and economic philosophy that emphasizes free trade, deregulation, globalization, and a reduction in government spending. It's related to laissez-faire economics , a school of thought that prescribes minimal government interference in the economic issues of individuals and society.

Laissez-faire economics proposes that continued economic growth will lead to technological innovation, expansion of the free market, and limited state interference.

Additionally, neoliberalism is sometimes confused with libertarianism. However, neoliberals typically advocate for more government intervention in the economy and society than libertarianism. For example, while neoliberals usually favor progressive taxation, libertarians often eschew this stance in favor of schemes like a flat tax rate for all taxpayers.

In addition, neoliberals often do not oppose measures such as bailouts of major industries, which are anathema to libertarians.

Neoliberalism involves the belief that greater economic freedom leads to greater economic and social progress for individuals. It supports:

• Free enterprise, competition, deregulation, and the importance of individual responsibility
• Opposition to the expansion of government power, state welfare, inflation
• Minimizing government control of industry and boosting private sector ownership of business and property
• Free market capitalism and the efficient allocation of resources
• Globalization rather than heavily regulated markets and protectionism
• A reduction in government spending and lower taxes
• Less government control over economic activity to enhance the efficient functioning of the economy
• An increase in the impact of the private sector on the economy
• A reduction in union power and greater flexibility in employment
• Government intervention when it's needed to help implement, sustain, and protect free market activities

President Jimmy Carter's deregulation of the airline industry in 1978 is an example of a neoliberal policy in action. The Airline Deregulation Act removed government control over fares, routes, and who could enter the market.

Liberalism vs. Neoliberalism

At its core, liberalism is a broad political philosophy. It holds liberty to a high standard and defines all social, economic, and political aspects of society, including the role of government.

Neoliberalism is essentially an economic ideology. The policies of neoliberalism are more narrowly focused and are primarily concerned with markets and the policies and measures that influence the economy.

Criticism of Neoliberalism

There are many criticisms of neoliberalism.

Misguided Free Market Approach to Public Services

One common criticism of neoliberalism is that advocating for a free market approach in areas such as health and education is misguided because these services are public services. Public services are not subject to the same profit motivation as other industries.

More importantly, adopting a free market approach in health and education can lead to an increase in inequality and the underfunding of resources (health and education) necessary for the long-term health and viability of an economy.

The adoption of neoliberal policies in the Western world has run concurrently with a rise in inequality in both wealth and income. While skilled workers may be in a position to command higher wages, low-skilled workers are more likely to see stagnant wages.

Policies associated with neoliberalism are thought by some to encourage the presence of monopolies , which increase the profits of corporations at the expense of benefits to consumers.

Increased Financial Instability

Contrary to what proponents of neoliberalism typically claim, capital deregulation has not necessarily helped economic development. Rather, capital deregulation has led to an increase in financial instability including economic events that, at times, have sent shockwaves around the world.

In fact, an International Monetary Fund (IMF) report into neoliberalism reveals that an increase in capital flows has been a factor in the increased risk of adverse economic cycles.

Studies suggest that Neoliberal policies increase inequality. This inequality can hinder the long-term growth prospects of an economy. On one end of the spectrum, those who earn a low income have limited spending power. At the same time, those who become richer have a higher propensity to save.

In the latter scenario, wealth doesn't trickle down in the way that proponents of neoliberalism claim that it will.

Globalization

Finally, neoliberalism's emphasis on economic efficiency has encouraged globalization , which opponents see as depriving sovereign nations of the right to self-determination.

Neoliberalism's naysayers also claim that its call to replace government-owned corporations with private ones can reduce efficiency. While privatization may increase productivity, they assert, the improvement may not be sustainable because of the world's limited geographical space.

In addition, those opposed to neoliberalism add that it is anti-democratic, can lead to exploitation and social injustice, and may criminalize poverty.

What Is Neoliberalism in Simple Terms?

It's an economic model or philosophy that emphasizes that, in a free society, greater economic and social progress can be made when government regulation is minimized, government spending and taxes are reduced, and the government doesn't have strict control over the economy. Neoliberalism does not oppose all government intervention. However, it does wish to see it limited to only when it's necessary to support free markets and free enterprise.

What Are the Effects of Neoliberalism?

Some effects might be freer markets, access to more products and services to meet consumer demand, greater revenue, and higher profits. Price reductions due to greater competition can also be an effect. Savings can result from a more efficient allocation of resources. The better organization of workforces and the ability to hire needed talent for specific jobs can result from neoliberal policies, as well. Others might point out some of the adverse effects believed to be associated with neoliberalism. These could include economic inequality, the growth of monopolies, a lack of job security, the loss of jobs due to outsourcing, and an increasing indifference to the needs and well-being of individuals.

What Is an Example of Neoliberalism?

The North American Free Trade Agreement (NAFTA) is one example. By this agreement, Canada, Mexico, and the U.S. agreed to remove all trade restrictions between their countries to open up trade and increase the economic benefits for each.

Broadly speaking, neoliberalism is an economic policy stance that governments should take a limited role in economies and privatize all functions that can be. Similar to many economic policy ideas and theories, there are advantages and disadvantages to neoliberalism.

Mike Konczal, Katy Milani, Ariel Evans. " The Empirical Failures of Neoliberalism ," Page 12. The Roosevelt Institute, January 2020.

International Monetary Fund. " Neoliberalism: Oversold? "

Shahrazd Goudarzi, et. al. " Neoliberalism and the Ideological Construction of Equity Beliefs ," Perspectives on Psychological Science , Volume 17, Issue 5. Sep, 2022.

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