WHAT IS NEOLIBERALISM

The concept of neoliberalism or new liberalism was put forward in 1938 by

a group of bourgeois intellectuals, which included Alexander Rustow, Ludwig
von Mises and Friedrich Hayek. They defined it as upholding the
priority of the price mechanism, the free enterprise, the system of
competition and a strong and impartial state.
They adopted from Adam Smith the idea that the invisible hand of selfinterest in the free market results in the common good. They also believed
that the economic freedom of the entrepreneurs spells political freedom for
the entire society. In effect, they imposed the class interest of the monopoly
bourgeoisie on the working class and the rest of the people.
They considered sacred and inviolable the right to private property in the
means of production and put this at the core of the rule of law. They

vigorously opposed state ownership of any means of

production and state intervention in the economy. However,
they considered the state as an instrument to provide the private capitalists
with the means and opportunities for profit- making and capital accumulation
, including the expansion of money supply and credit, tax cuts, contracts with
the state, subsidies, investment guarantees and other incentives.
The concept of Neoliberalism is one which is essentially about making
trade between nations easier. It is about freer movement of goods,
resources and enterprises in a bid to always find cheaper resources,
to maximize profits and efficiency. To help accomplish this, neoliberalism
requires the removal of various controls deemed as barriers to free trade,
such as:

Tariffs

Regulations

Certain standards, laws, legislation and regulatory measures

Restrictions on capital flows and investment

Take note that the neoliberal economic policy has come to be known since
1989 as the Washington Consensus (coined by economist John
Williamson) because it has been designed and enforced by the
International Monetary Fund, World Bank and the US Treasury
Department, joined by the World Trade Organization since the
1990s.
The Washington Consensus imposes on the underdeveloped countries the
following prescriptions supposedly for development: fiscal policy
discipline; redirection of public spending away from industrial
development and self-reliance; tax reform to benefit foreign
investors at the expense of the people; market-determined interest
rates; competitive exchange rates; import liberalization, investment

liberalization, privatization of state enterprises, deregulation and

legal security for property rights.
The main points of neo-liberalism include:
(As summarized from What is Neo-Liberalism? A brief definition for activists by
Elizabeth Martinez and Arnoldo Garcia from Corporate Watch, the main points of
neoliberalism includes)

1. THE RULE OF THE MARKET - an unregulated market is the best way to increase
economic growth, which will ultimately benefit everyone."

Liberating "free" enterprise or private enterprise

Greater openness to international trade and investment
Reduce wages by de-unionizing workers and eliminating workers' rights
No more price controls

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,
ASIA and Africa.
Overlapping the above is also what Richard Robbins, in his book, Global
Problems and the Culture of Capitalism (Allyn and Bacon, 1999), summarizes
about some of the guiding principles behind this ideology of neoliberalism:

Sustained economic growth is the way to human progress

Free markets without government interference would be the most

efficient and socially optimal allocation of resources

Economic globalization would be beneficial to everyone

Privatization removes inefficiencies of public sector

Governments should mainly function to provide the infrastructure to

advance the rule of law with respect to property rights and contracts.
At the international level then we see that this additionally translates to:
Freedom of trade in goods and services
Freer circulation of capital
Freer ability to invest

Today then, neoliberal policies are seeing positives and negatives. Under free
enterprise, there have been many innovative products. Growth and
development for some have been immense.
Unfortunately, for most people in the world there has been an increase in
poverty and the innovation and growth has not been designed to meet
immediate needs for many of the worlds people. Global inequalities on
various indicators are sharp. For example,

Some 3 billion people or half of humanity live on under 2 dollars a day

86 percent of the worlds resources are consumed by the worlds wealthiest 20 percent