Neoliberal Philosophy - A Globalization Dynamic

Introduction

Globalization has multiple meanings, and is used differently in academic and policy discourses as well as in everyday conversations. According to Osterhammel and Petersson, globalization “summarizes a wide spectrum of experiences shared by many people” (as cited in Rowan, 2006, p.459). In other words, globalization is a phenomenological collective term for multiple aspects of human and national affairs. Globalization is also a form of internationalism. In the phenomenon of globalization, socio-political and economic dynamics have been increasingly internationalized since the late 1970s (Armbuster-Sandover, 1999; Veltmeyer, UNK).

Although the phenomenon of globalization has multiple meanings deriving from various impacts on different spheres of human life, this paper cannot cover all of them; therefore, it will focus exclusively on the economic side of globalization. From now on, globalization refers to economic globalization in line with the view that economic globalization constitutes integration of national economies into the global market through trade, direct foreign investment, capital flows and international flows of workers and technology (Bhagwati, 2004).

According to many observers in the literature, the main philosophical background for economic globalization and associated policies has been neoliberalism. Neoliberalism and economic globalization are conceptual partners (Makwana, 2008).

In a neoliberal economy, markets are largely unregulated in the interests of free trade (Desai & Potter, 2008). Today, a majority of states have embraced some version of neoliberalism, voluntarily, or in compliance with conditions in agreements with such international governing bodies as the International Monetary Fund (IMF), the World Bank (WB), or the World Trade Organization (WTO). These trends have knitted many nations into a market friendly global environment where the dynamics of the market prevail (Harvey, 2005).

The neoliberal orientation of globalization is a controversial issue. Academics in several disciplines and politicians have cited neoliberalism as a decisive factor in debates about the pros and cons of globalization. That is to say, the concept of neoliberalism has received much attention in arguments about the positive and negative effects of globalization. Exponents of globalization refer to neoliberalism favourably, seeing it as rhetoric for international expansion of economic opportunity and democratic government. Sceptics of globalization counter that neoliberal ideas foster exploitative approaches to human resources and tolerance for income disparities, phenomena which produce poverty and undermine democracy.

This paper, speaking sometimes in a first person voice, acknowledges these antagonistic perspectives of the partnership of globalization and neoliberalism. Thus, notwithstanding its thesis, stated below, it tries to present a balanced discussion of globalization in the following 4 sections: Section one will be a sketch of the historical development of neoliberalism, including theoretical elements; section two, which is the major area of the paper, will survey some of the major critiques of the neoliberalism-globalization duet; section three will present alternatives to a neoliberal basis for globalization; and lastly, section four, will contain the conclusion, which will summarize my thesis, that a neoliberalism type globalization is deficient, because it is ethically weak. This ethical weakness heightens the risks in an unmediated market. No make-over of the globalization project will succeed without a strong ethical interlocution to speak for the interests of everyday citizens.

Neoliberalism

According to Saad-Filho and Johnston (2005), the age of globalisation is equally the age of neoliberalism, and a chief characteristic of this age is the concentration of wealth and exponential power in elite groups and transnational corporations (TNCs) that has followed an international adoption and adaptation of the ideology of neoliberalism. Thus, Saad-Filho and Johnston (2005) resonate with Noam Chomsky’s (1999, p.7) view that neoliberalism defines “the politics and processes through which a relatively small group of capital owners manages to control wide fields of the social life, in order to maximize their personal profit.”.

Chomsky’s (1999) depiction of neoliberalism projects a system for inequity and injustice. It is most unlikely that this was the intention of two thinkers from the school of classical liberalism, whose scholarship is associated with the philosophical roots of neoliberalism, Jeremy Bentham and John Stuart Mill, who saw the government’s role as minimal, the market as the central determinant of social values, and the individual as the core unit of society (Naiman, 2008). Clarke (2005, as cited in Saad-Filho & Johnston, 2005, pp.50-59), Harvey (2005), and Naiman (2008) explain that although neoliberalism can be seen as a variant of classical liberalism, it demonstrates a new paradigm for economic praxis, in that it consists strictly of economic prescriptions whilst classical liberalism subsumes many economic and social interests, among them freedom of speech and freedom of religion. In this vein, it is noteworthy that Bentham and Stuart Mill expounded their theories in an era when elitist government presided over an egregiously inequitable socio-economic paradigm. A socially responsible conscience broods in Bentham’s discourse: in the conclusion of The Theory of Legislation, where he calls his philosophy “science,” Bentham (as cited in Brunius, 1959, p.74) speaks with antique eloquence and moral forcefulness for social justice, in language that Chomsky and other critics of neoliberal globalization should approve heartily:

The science of which the basis has been investigated in this work can be pleasing only to elevated souls who are warmed with a passion for the public good...We are here employed upon the greatest interests of humanity; the art of forming the manners and the character of nations; of raising to the highest point the security of individuals; and of deriving results equally beneficial from different forms of government. Such is the object of this science; frank and generous; asking only the light; wishing nothing exclusive; and finding no means so sure to perpetuate the benefits it confers as to share them with the whole family of nations.

One cannot associate neoliberalism with the classical liberalism of Bentham and ignore the ethical heritage that this association implies.

A common observation of the rise of neoliberalism is that it represents an intellectual and political adversarial reaction to stereotypical Keynesianism, the economic philosophy of John Maynard Keynes, which was dominant in Western macroeconomic approaches in the decades immediately after the end of World War II, in 1945. The cornerstone of Keynesianism is strategic government intervention in the market to shore up employment through measures that sustain incomes and spending by corporations and individuals. In the late 1970s, after the ravages of inflation, and, as nations confronted massive public sector debts, Keynesianism fell out of favour for reasons which this paper will not explore. In its place, neoliberalism offered another approach: this new set of policies rejected ‘Keynesian’ goals such as full employment and alleviation of poverty, and instead argued for less state involvement and greater emphasis on stability in economic policy, which ensured the free flow of global capital without being hindered by any government restrictions (Palley, 2005, as cited in Saad-Filho & Johnston, 2005, pp.20-29; Naiman, 2008).

Harvey’s exposition of the concept of neoliberalism (2005, p.2) deserves at length quotation at this stage:

Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can be best advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework appropriate to such practices. The state has no guarantee, for example, the quality and integrity of money. It must also set up those military , defence, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of the markets. Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture. State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit.

This exposition has an echo of Bentham’s thought about “wishing nothing exclusive” in economic processes. Unfortunately, most critics of neoliberalism are deaf to this echo, because, in neoliberalism, they hear, above all, opposition to government intervention in the market. Take, for example, the thoughts of Naiman (2008, p.206) and McQuaig (1992, p.13, as cited in Naiman, 2008, p.206): the former argues that, ironically, national governments have embraced neoliberalism although neoliberal theory expresses strong opposition to government intervention; the latter charges that neoliberalism provided cover for “a massive transfer of wealth and power to the corporate sector.” Naiman (2008) and McQuaig (1992) miss key notes in Harvey’s exposition above. In Harvey’s (2005) account, a neoliberalism approach does not exclude an interventionary role for government: it proposes that governments shape and maintain the field for economic activity through structures such as law enforcement and physical infrastructure, but that governments should avoid policies that distort allocation of resources, and, concomitantly, predetermine winners and losers in the market. So, neoliberalism specifies a particular agency for government in the economy; it does not proscribe this agency. The points of view in this paragraph should linger in the mind as we proceed through the next section, “Critical views of the neoliberalism-globalization duet.”

Critical Views of the Neoliberalism-Globalization Duet

Naiman (2008, p.206) explains the internationalisation of neoliberalism in the larger context of globalisation:

There are a number of distinct but interconnected components to neo-liberalism, which have been enforced around the world via what have been termed structural adjustment policies. These policies were implemented by the World Bank and the International Monetary Fund.

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