{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Harvey 2005_A Brief History of Neoliberalism-1

Harvey 2005_A Brief History of Neoliberalism-1 - A Brief...

Info icon This preview shows pages 1–19. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
Image of page 11

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 12
Image of page 13

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 14
Image of page 15

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 16
Image of page 17

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 18
Image of page 19
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: A Brief History of Neoliberalism David Harvey “10.05 OXFORD- UNIVERSITY PRESS Introduction to proclaim the emergence of a new kind of ‘information society’). These technologies have compressed the rising density of market transactions in both space and time. They have produCed a particur larly intensive burst of what I have elsewhere called ‘time—space compression’. The greater the geographical range (hencethe . emphasis on ‘globalization’) and the shorter the term of market contracts the better. This latter preference parallels Lyotard’s famous description of the postmodern condition as one where ‘the temporary contract’ supplants ‘permanent institutions in the pro— fessional, emotional, sexual, cultural, family and international domains, as well as in political affairs’.‘ The cultural consequences of the dominance of such a market ethic are legion, as I earlier showed in The Condition afPastmodemity.3 - While many general accounts of global transformations and their effects are now available, what is generally missing—and this is the gap this book aims to fill—is the political—economic story of where neoliberalization came from and how it proliferated so com— 7 prehensively on the world stage. Critical engagement 'with that story suggests, furthermore, a framework for identifying‘and con— structing alternative political and economic arrangements. I have benefited in recent times from conversations'with Gerard Duménil, Sam Gindin, and Leo Panitch. I have more long— standing debts to Masao Miyoshi, Giovanni Arrighi, Patrick Bond, Cindi Katz, Neil Smith, Bertell Ollman, Maria Kaika, and Erik Swyngedouw. A conference on neoliberalisrn sponsorcd'by the Rosa Luxemburg Foundation in Berlin in November 2001 first sparked my interest in this topic. I thank the Provost at the CUNY Graduate Center, Bill Kelly, and my colleagues and students prir marin but not exclusively in the Anthropology Program for their ' interest and support. I absolve everyone, of course, from any responsibility for the results. gagg-iumeWMammy-maway-naewmyxaye-{wWJWm-w-WMMMWMV -.- l Freedom’s Just Another Word . . . For any way of thought'to become dominant, a conceptual appar— atus has to be advanced that appeals to our intuitions and instincts to our values and our desires, as well as to the possibilities inherenf 1n the social world we inhabit. If successful, this conceptual appar» atus becomes so embedded in common sense as to be taken for granted and not open to question. The founding figures of neolib— eral thought took political ideals of human dignity and individual freedom as fundamental, as ‘the central values of civilization’. In so domg they chose wisely, for these are indeed compelling and seductive ideals. These values, they held, were threatened not only by fasc1sm, dictatorships, and communism, but by all forms of state intervention that substituted collective judgements for those of individuals free to choose. Concepts of dignity and individual freedom are powerful and appealing in their own right. Such ideals empowered the dissident - movements in eastern Europe and the Soviet Union before the end of the Cold-War as well as the students in Tiananmen Square. The student movements that swept the world in 1968~—from Paris and Chicago to Bangkok and Mexico Citymwere in part animated by the quest for greater freedoms of speech and of personal choice. More generally, these ideals appeal to anyone who values the ability to make decisions for themselves. The idea of freedom, long embedded in the US tradition has played a conspicuous role in the US in recent years. ‘9/11’, was 1mmediately interpreted by many as an attack on it. ‘A peaceful world of growing freedom’, wrote President Bush on the first anniversary .of that awful day, ‘serves American long—term inter— ests, reflects enduring American ideals and unites America’s allies.’ ‘Humanity’, he concluded, ‘holds in its hands the opportunity to 5 Freedom’s Just Another Word . . . offer freedom’s triumph over all its age—oldqfoes’, and ‘the IJnited States welcomes its responsibilities to lead in this great missmn . This language was incorporated into‘the US lfational Defenfie Strategy document issued shortly thereafter. ' Freedolmlflis1 t e Almighty’s gift to every man and woman in this world , eblater said, adding that ‘as the greatest power on earth we have an o iga— tion to help the spread of freedom’.1 ‘ I I When all of the other reasons for engaging in a pre—emptive war against Iraq were proven wanting, the president appealed to the idea that the freedom conferred on, Iraq was in and of itself an adequate justification for the war. The Iraqis were free, and that was all that really mattered. But what sort of freedom is envis— aged here, since, as the cultural critic Matthew Arnold long ago thoughtfully observed, ‘freedom is a very good horse to ride, but to ride somewhere’.2 To what destination, then, are the Iraqi people expected to ride the horse of freedom donated to them by force of arms? I . ' The Bush administration’s answer to this question was spelled out on 19 September 2003, when Paul Bremer, head of the Coali— tion Provisional Authority, promulgated four orders that included ‘the full privatization of public enterprises, full ownership rights by foreign firms of Iraqi businesses, full repatriation of foreign profits . . . the opening of Iraq’s banks to foreign control, national ' treatment for foreign companies and . . . the elimination of nearly all trade barriers’.3 The orders were to apply to all areas of the economy, including public services, the media, manufacturing, ‘ services, transportation, finance, and construction. Only oil was exempt (presumably because of its special status as. revenue pro— ducer to pay for the war and its geopolitical Significance). The labour market, on the other hand, was to be strictly regiilated. Strikes were effectively forbidden in key sectors and the-right to unionize restricted. A highly regressive ‘flat tax’ (an ambitious tas— reform plan long advocated for implementation by conservatives in the US) was also imposed. I ‘ These orders were, some argued, in Violation of the Geneva and Hague Conventions, since an occupying power is mandated tq guard the assets of an occupied country andnot sell them off. Some Iraqis resisted the imposition of what the London Economist 6 n ’P-w-wr‘q—EP-‘wn"M‘WW‘N‘P‘IN Freedom’s Just Another Word . . . called a ‘capitalist dream’ regime upon Iraq. A member of the US— appointed Coalition Provisional Authority forcefully criticized the imposition of ‘free market fundamentalism’, calling it ‘a flawed logic that ignores history’.5 Though Bremer’s rules may have been illegal when imposed by an occupying power, they would become legal if confirmed by a ‘sovereign’ government. The interim gov— ernment, appointed by the US, that took over at the end of June 2004 was declared ‘sovereign’. But it only had the power to con— firm existing laws. Before the handover, Bremer multiplied the number of laws to specify free—market and free—trade rules in minute detail (on detailed matters such as copyright laws and intellectual property rights), expressing the hope that these institutional arrangements would ‘take on a life and momentum of their own’ such that they would prove very difficult to reverse.6 According to neoliberal theory, the sorts of measures that Bremer outlined were both necessary and sufficient for the ore ation of Wealth and therefore for the improved well—being of the population at large. The assumption that individual freedoms are guaranteed by freedom of the market and of trade is a cardinal feature of neoliberal thinking, and it has long dominated the US stance towards the rest of the world.7 What the US evidently sought to impose by main force on Iraq-was .a state apparatus whose fundamental mission was to facilitate conditions for profit— able capital accumulation on the part of both domestic and foreign capital, I call this kind of 'state apparatus a modifiers] state. The freedoms it embodies reflect the interests of private property owners, businesses, multinational corporations, and financial cap— ital. Bremer invited the Iraqis, in short, to ride their horse of freedom straight into the neoIiberal corral. The first experiment with ncoliberal state formation, it is worth recalling, occurred in Chile after Pinochet’s coup on the ‘little September llth" of 1973 (almost thirty years to the day before Bremer’s announcement of the regime to be installed in Iraq). The coup, against the democratically elected government of Salvador Allende, was promoted by domestic business elites threatened by Allende’s drive towards socialism. It was backed by US corporations, the CIA, and US Secretary of State Henry Kiss— inger. It violently repressed all the social movements and political 7 Freedom’s Just Another Word . . . organizations of the left and dismantled all forms of popular organization (such as the community health centres in poorer neighbourhoods). The labour market was ‘freed’ from regulatory or institutional restraints (trade union power, for example). But how was the stalled economy to be revived? The policies of import substitution (fostering national industries by subsidies or tariff protections) that had dominatedLatin American attempts at eco— nomic development had fallen into disrepute, particularly in Chile, where they had never worked that well. With the whole world in economic recession, a new approach was called for. ' A group of-economists known as ‘the Chicago boys’ because of their attachment to the neoliberal theories of Milton Friedman, then teaching at the University of Chicago, was summoned to help reconstruct the Chilean economy. The story of how they were chosen is an interesting one. The US had funded training of Chil— ean economists at the University of Chicago since the 19505 as part of a Cold War programme to counteract left»wing tendencies in Latin America. Chicago—trained economists came to dominate at the private Catholic University in Santiago. During the early 19705, business elites organized their opposition to Allende through a group called ‘the Monday Club’ and developed a work— ing relationship with these economists, funding their work through research institutes. After General Gustavo Leigh, Pino— chet’s rival for power and a Keynesian, was sidelined in 1975, Pino— chet brought these economists into the government, where their first job was to negotiate loans with the International Monetary Fund. Working alongside the IMF, they restructured the economy according to their theories. They reversed the nationalizations and privatized public assets, opened up natural resources (fisheries, timber, etc.) to private and unregulated exploitation (in many cases riding roughshod over the claims of indigenous inhabitants), pri— vatized social security, and facilitated foreign direct investment and freer trade. The right of foreign companies to repatriate profits from their Chilean operations was guaranteed. Export-led growth was favoured over import substitution. The only sector reserved for the state was the key resource of copper (rather like oil in Iraq). This proved crucial to the budgetary viability of the state. since copper revenues flowed exclusively into its coffers. The immediate 8 l i s ,. t i l Freedom’s Just Another Word . . . revival of the Chilean economy in terms of growth rates, capital accumulation, and high rates of return on foreign investments was short—lived. It all went sour in the Latin American debt crisis of 19.82. The result was a much more pragmatic and less ideologically driven application of neoliberal policies in the years that followed. All of this, including the pragmatism, provided helpful evidence to support the subsequent turn to neoliberalism in both Britain (under Thatcher) and the US (under Reagan) in the 1980s. Not for the first time, a brutal experiment carried out in the periphery became a model for the formulation of policies in the centre (much as experimentation with the flat tax in Iraq has been proposed under Bremer’s decrees).3 - I i The fact that two such obviously similar restructurings of the state apparatus occurred at ‘such different times in quite different parts of the world under the coercive influence of the United States suggests that the grim reach of US imperial power might lie behind the rapid proliferation of neoliberal state forms throughout the World from the mid—19705 onwards. While this has undoubta edly occurred over the last thirty years, it by no means constitutes the whole story, as the domestic component of the neoliberal ‘turn in Chile shows. It was not the US, furthermore, that forced Maru garet Thatcher to take the pioneering nEoIiberal path she took in 1979. Nor was it the US that forced China in 1978 to set out on a path of liberalization. The partial moves towards neoliberalization in India in the l980sand Sweden in the early 19905 cannot easily be attributed to the imperial reach of US power. The uneven geographical development of neoliberalism on the world stage has evidently been a very complex process entailing multiple determinations and not a little chaos and confusion. Why then did the neoliberal turn occur, and what were the forces that made ii 50 hegemonic within global capitalism? Why the Neoliberal Turn? The restructuring of state forms and of international relations after the Second World War was designed to prevent a return to. ' the catastrophic conditions that .had so threatened the capitalist order in the great slump of the 19305. It was also supposed to 9 Freedom’sjust Another Word . . . prevent the ire—emergence of inter—state geopolitical rivalries that had led to the war. To ensure domestic peace and tranquillity, some sort of class compromise between capital and labour had to be constructed. The thinking at the time is perhaps best represented by an influential text by two eminent social scientists, Robert Dahl and Charles Lindblom, published in 1953. Both capitalism and communism in their raw forms had failed, they argued. ‘The only way ahead was to construct the right blend of state, market, and democratic institutions to guarantee peace, inclusion, well—being, and stability.9 Internationally, a new world order was constructed through the Bretton Woods agreements, and various institutions, such as the United Nations, the World Bank, the IMF, and the Bank of International Settlements in Basle, were set up to help stabilize international relations. Free trade in goods was encour— aged under a system of fixed exchange rates anchored by the US dollar’s convertibility into gold at a fixed price. Fixed exchange rates were incompatible with free flows of capital that had to be - controlled, but the US had to allow the free flow of the dollar beyond its borders if the dollar was to function as the global reserve currency. This system existed under the umbrella protecw tion of US military power. Only the Soviet Union and the Cold War placed limits on its global reach. A variety of social democratic, Christian democratic and dirigiste states emerged in Europe after the Second World War. The US itself turned towards a liberal democratic state form, and japan, under the close supervision of the US, built a nominally demo— cratic but in practice highly bureaucratic state apparatus empowered to oversee the reconstruction of that country. What all of these various state forms had in common was an acceptance that the state should focus on full employment, economic growth, and the welfare of its citizens, and that state power should be freely deployed, alongside of or, if necessary, intervening in or even substituting for market processes to. achieve these ends. Fiscal and monetary policies usually dubbed ‘Keynesian’ were widely _ deployed to dampen business cycles and to ensure reasonably full employment. A ‘class compromise’ between capital and labour was generally advocated as the key guarantor of domestic peace and tranquillity. States actively intervened in'industrial policy and , 10 ,l ‘ .1» “ma... '. wa.mszvy..m»vueww W. a... WMMWW . Freedom’s Just Another Word . . . moved to set standards for the social wage by constructing a variety of- we‘lfare systems (health care, education, and the like). This form of political—economic organization is now usually referred to as ‘embedded- liberalism’ to signal how market pro- cesses and . entrepreneurial and corporate activities were surrounded by a web of social and political constraints and a regu— latory environment that sometimes restrained but in other instances led the way in economic and industrial strategy.10 State»- led planning and in some instances state ownership of key sectors (coal, steel, automobiles) were not uncommon (for example in Britain, France, and Italy). The neoliberal project is to disembed capital from these constraints. Embedded liberalism delivered high rates of economic growth in the advanced capitalist countriesduring the 1950s and 19605.“ In part this depended on the largesse of the US in being prepared to run deficits with the rest of the world and to absorb any excess product within its borders. This system conferred benefits such as expanding export markets (most obviously for Japan but also unevenly across South America and to some other countries ‘of South—East Asia), but. attempts to export ‘development’ to much of the reSt of the world largely stalled. For much of the Third World, particularly Africa, embedded liberalism remained a pipe dream. The subsequent drive towards neoliberalization after 1980 entailed little material change in their impoverished condition. In the advanced capitalist conntries, redistributivc politics (including some degree of political integration of working—class trade union power and support for collective bargaining), controls over the free mobility of capital (some degree of financial repression through capital controls in particular), expanded public expenditures and welfare state—building, active state interventions in the economy, and some degree of planning of development went hand in hand with relatively high rates of growth. The business cycle was successfully controlled through the application of Keynesian fiscal and monetary policies. A social and moral economy (some~ times supported by a strong sense of national identity) was fostered through the activities of an interventionist state. The state in effect became a force field that internalized class relations. Working—class institutions such as labour unions and political ll. Freedom’s Just Another Word . . . parties of the left had a very real influence within the state apparatus. . ‘ - By the end of the 19605 embedded liberalism began. to break down, both internationally and within domestic econom1es..Signs of a serious crisis of capital accumulation were everywhere appar— ent. Unemployment and inflation were both surging everywhere, ushering in a global phase of ‘stagflation’ that lasted throughout much of the 1970s Fiscal crises of various states (Britain, for example, had to be bailed out by the IMF in 1975—6) resulted. as tax revenues plunged and social expenditures soared. KeyneSJan policies were no longer working. Even before the Arab—Israeh War and the OPEC oil embargo of 1973, the Bretton Woods system of fixed exchange rates backed by gold reserves had fallen into disu array. The porosity of state boundaries withrespect to capital flows put stress on the system of fixed exchange rates. US dollars had flooded the world and escaped US controls by being deposited in European banks. Fixed exchange rates were therefore abandoned in 1971. Gold could no longer function as the metallic base of international money; exchange rates were allowed to float, and attempts to control the float were soon abandoned. The embedded liberalism that had delivered high rates of growth to at least the advanced capitalist countries after 1945 was clearly exhausted and was no...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern