Neoliberalism

Neoliberalism has also fostered a value chain that begins with theoretical activity in academia and various research institutions and feeds into various institutional vehicles that uphold and promote particular aspects of the neoliberal paradigm, right up to the production and reproduction of policy advisors and implementers who attempt to sustain and implement the policy implications of the paradigm at national and international levels. Neoliberalism has benefited from the support of key national and global-level corporations whose influence is exerted through their ability to shift funds instantaneously across the globe in response to changing environmental conditions, through financing various activities in the value chain and influencing policy in the government of developed countries, and through key multilateral and bilateral financial, trade, and development agencies.

The neoliberal agenda has had a tendency to effectively close out any competing ways of looking at economics and economic policy. At the political level, the promotion of neoliberalism approached tyrannical levels with some governments, such as the United States and the United Kingdom, seeing any challenge to neoliberalism as a challenge to a national way of life—and, indeed, to the protection of this way of life. This has been used as a justification to initiate campaigns for regime change in some countries. More generally, fairly effective sanctions and incentives are deployed throughout the value chain to ensure compliance with, or promotion of, the neoliberal agenda. However, neoliberalism has negatively affected large numbers of people though retrenchments, degradation of work, misuse of the environment, increased poverty, and marginalization of nationalities and households, particularly those in the non-formal sectors of the developing world, while the net social gains have been spurious and remain quite open to debate. It is clear, however, that some financiers and corporations (and some countries in the developed world) have benefited immensely.

Nevertheless, it appears that neoliberalism has peaked as its presumed benefits have become more questionable and as the ideology is challenged from a number of quarters. The empirical evidence supporting neoliberalism is mixed in the developed world and is particularly dismal in the developing world. In the developed countries, the social implications of neoliberal policies have undermined social safety nets with no viable substitutes emanating from the market. In developing economies, particularly those in Africa, the pursuit of structural adjustment and stabilization programs has not yielded the desired benefits in either inclusive or equitable growth, which should be the aim of development. In these countries neoliberalism has had the consequence of jettisoning any semblance of development or strategic planning that those countries had attempted prior to the adoption of the recent economic reforms, so that the economies are currently in dis-array. The early-twenty-first-century consensus on the creative manner in which the East Asian Tigers (Taiwan, South Korean, Singapore, and Hong Kong) combined the roles of the market and a proactive state have also done much to deflate the dogmatic opposition to the state advocated by neoliberals. At the theoretical level, the contributions arising from the new institutional economics, the economics of information, and the economics of risk and uncertainty are beginning to question neoliberal assumptions and prescriptions regarding the role of the state. And at the social and political level, global movements have arisen to challenge neoliberal policies.

In the wake of these challenges, shifts have begun to occur in the neoliberal camp in the early twenty-first century, and new syntheses of approaches have been proposed. The neoliberal agenda has begun to include welfare issues by supporting the promotion of sustainable livelihoods, social safety nets, and poverty reduction. In addition, given that neoliberal policies have tended to be unilaterally imposed, particularly in developing economies, there has been a shift to accommodating popular participation and good governance, as in the development of Poverty Reduction Strategy Papers (PRSP) associated with the Highly Indebted Poor Countries (HIPC) debt initiative of the Bretton Woods Institutions. More generally, there is less of a dogmatic stance on the nature and content of policy packages comprising economic reform initiatives, yielding what has been labeled the "post-Washington Consensus." At another level, some have worked toward synthesizing lessons from neoliberalism with those from social democracy, resulting in the proposal for a "third way." Finally, from a philosophical point of view, the assumptions underlying the neoliberal model have also been challenged, particularly as to whether methodological individualism assumed in the model, to the exclusion of other plausible assumptions that could be made, is necessarily the most appropriate or adequate assumption to guide formulation of social theories; and, if it can be contended that a particular proclivity of human beings is natural and inevitable, such a proclivity must necessarily be pandered to as a normative ideal. Thus, while as deductive theory and approach neoliberalism may appear unchallengeable and highly persuasive, its benefits are increasingly viewed as unsustainable on intellectual, philosophical, social, and political grounds.