29 August 1996
WHAT IS "NEO-LIBERALISM"?
A brief definition for activists
by Elizabeth Martinez and Arnoldo Garcia
"Neo-liberalism" is a set of economic policies that
have become widespread
during the last 25 years or so. Although the word is
rarely heard in the United States, you can clearly see
the effects of neo-liberalism here as the rich grow
richer and the poor grow poorer.
"Liberalism" can refer to political, economic, or even
religious ideas. In the U.S. political liberalism has
been a strategy to prevent social conflict. It is
presented to poor and working people as progressive
compared to conservative or Right wing. Economic
liberalism is different. Conservative politicians who
say they hate "liberals" -- meaning the political type
-- have no real problem with economic liberalism,
including neoliberalism.
"Neo" means we are talking about a new kind of
liberalism. So what was the old kind? The liberal
school of economics became famous in Europe when Adam
Smith, an English economist, published a book in 1776
called THE WEALTH OF NATIONS. He and others advocated
the abolition of government intervention in economic
matters. No restrictions on manufacturing, no barriers
to commerce, no tariffs, he said; free trade was the
best way for a nation's economy to develop. Such ideas
were "liberal" in the sense of no controls. This
application of individualism encouraged "free"
enterprise," "free" competition -- which came to mean,
free for the capitalists to make huge profits as they
wished. Economic liberalism prevailed in the United
States through the 1800s and early 1900s. Then the
Great Depression of the 1930s led an economist named
John Maynard Keynes to a theory that challenged
liberalism as the best policy for capitalists. He said,
in essence, that full employment is necessary for
capitalism to grow and it can be achieved only if
governments and central banks intervene to increase
employment. These ideas had much influence on President
Roosevelt's New Deal -- which did improve life for many
people.
The belief that government should advance the common
good became widely accepted. But the capitalist crisis
over the last 25 years, with its shrinking profit
rates, inspired the corporate elite to revive economic
liberalism. That's what makes it "neo" or new. Now,
with the rapid globalization of the capitalist economy,
we are seeing neo-liberalism on a global scale.
A memorable definition of this process came from
Subcomandante Marcos at the Zapatista-sponsored
Encuentro Intercontinental por la Humanidad y contra el
Neo-liberalismo (Inter-continental Encounter for
Humanity and Against Neo-liberalism) of August 1996 in
Chiapas when he said: "what the Right offers is to turn
the world into one big mall where they can buy Indians
here, women there ...." and he might have added,
children, immigrants, workers or even a whole country
like Mexico."
The main points of neo-liberalism include:
1) THE RULE OF THE MARKET.
Liberating "free" enterprise or private enterprise from
any bonds imposed by the government (the state) no
matter how much social damage this causes. Greater
openness to international trade and investment, as in
NAFTA. Reduce wages by de-unionizing workers and
eliminating workers' rights that had been won over many
years of struggle. No more price controls. All in all,
total freedom of movement for capital, goods and
services. To convince us this is good for us, they say
"an unregulated market is the best way to increase
economic growth, which will ultimately benefit
everyone." It's like Reagan's "supply-side" and
"trickle-down" economics -- but somehow the wealth
didn't trickle down very much.
2) CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like
education and health care. REDUCING THE SAFETY-NET FOR
THE POOR, and even maintenance of roads, bridges, water
supply -- again in the name of reducing government's
role. Of course, they don't oppose government subsidies
and tax benefits for business.
3) DEREGULATION. Reduce government regulation of
everything that could diminish profits, including
protecting the environment and safety on the job.
4) PRIVATIZATION. Sell state-owned enterprises, goods
and services to private investors. This includes
banks, key industries, railroads, toll highways,
electricity, schools, hospitals and even fresh water.
Although usually done in the name of greater
efficiency, which is often needed, privatization has
mainly had the effect of concentrating wealth even more
in a few hands and making the public pay even more for
its needs.
5) ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or
"COMMUNITY" and replacing it with "individual
responsibility." Pressuring the poorest people in a
society to find solutions to their lack of health care,
education and social security all by themselves -- then
blaming them, if they fail, as "lazy."
Around the world, neo-liberalism has been imposed by
powerful financial institutions like the International
Monetary Fund (IMF), the World Bank and the Inter-
American Development Bank. It is raging all over Latin
America. The first clear example of neo-liberalism at
work came in Chile (with thanks to University of
Chicago economist Milton Friedman), after the CIA-
supported coup against the popularly elected Allende
regime in 1973. Other countries followed, with some of
the worst effects in Mexico where wages declined 40 to
50% in the first year of NAFTA while the cost of living
rose by 80%. Over 20,000 small and medium businesses
have failed and more than 1,000 state-owned enterprises
have been privatized in Mexico. As one scholar said,
"Neoliberalism means the neo-colonization of Latin
America."
In the United States neo-liberalism is destroying
welfare programs; attacking the rights of labor
(including all immigrant workers); and cutting back
social programs. The Republican "Contract" on America
is pure neo-liberalism. Its supporters are working hard
to deny protection to children, youth, women, the
planet itself -- and trying to trick us into acceptance
by saying this will "get government off my back." The
beneficiaries of neo-liberalism are a minority of the
world's people. For the vast majority it brings even
more suffering than before: suffering without the
small, hard-won gains of the last 60 years, suffering
without end.
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Elizabeth Martinez is a longtime civil rights activist
and author of several books, including "500 Years of
Chicano History in Photographs." Arnoldo Garcia is a
member of the Oakland-based Comite Emiliano Zapata,
affiliated to the National Commission for Democracy in
Mexico. Both writers attended the Intercontinental
Encounter for Humanity and against Neoliberalism, held
July 27 -August 3,1996, in La Realidad, Chiapas.
