3 - Neoliberalism: A Critique

Summary

In evaluating neoliberalism as a social and economic theory, one should avoid the trap of attributing all the virtues and/ or faults of contemporary capitalist society to neoliberalism. Often critics link the practices of governments which they dislike to political and economic outcomes having no, or only an indirect, affinity to any neoliberal ideology or policy. Many denounce or praise ‘the way things are’ as consequences of neoliberalism. Consider Alan Greenspan's list of the achievements of global neoliberalism:

During the past century, economic growth created resources far in excess of those required to maintain subsistence. That surplus in democratic capitalist societies has, in large measure, been employed to improve the quality of life along many dimensions. To cite a short list: (1) greater longevity, owing first to the widespread development of clean, potable water, and later to rapid advances in medical technology, (2) a universal system of education that enabled greatly increased social mobility, (3) vastly improved conditions of work, and (4) the ability to enhance our environment by setting aside natural resources rather than employing them to sustain a minimum level of subsistence. At a fundamental level, we have used the substantial increases in wealth generated by our market-driven economy to purchase what many would view as greater civility.

However valid such endorsements of economic and civilisational advancements may be, these achievements may not be consequences solely of neoliberal policies. Advances in scientific technologies, provision of universal education and improvement in working conditions would have happened anyway as they occurred in statist societies such as Nazi Germany, social democratic Britain, the socialist USSR, and contemporary China – all countries operating under different economic and political systems to neoliberalism. Capitalist countries have adopted neoliberal policies on a piecemeal basis and their introduction has been mediated by the history and institutions of the societies in which they are embedded. Advanced capitalist economies with neoliberal governments, for example, often manipulate interest rates, subsidise failing industries and support welfare subsidies.

As a contribution to economic theory, neoliberalism has made some advances. The network idea of catallaxy is superior to Adam Smith's concept of the ‘invisible hand’. The elimination of entry barriers to labour markets has led governments to further policies of inclusion and diversity and to enhance the upward mobility of labour.