As of today, there is no universally accepted definition as to what Neoliberalism (which is both an established theory and business philosophy) stands for. Partially, this can be explained by the fact during the recent few decades, the Neoliberal socioeconomic paradigm has undergone a qualitative transformation, which resulted in spawning a number of the theory’s discursive branches (such as “Progressive Neoliberalism”), on one hand, and causing many economists/political scientists to refer to Neoliberalism in terms of “post-Libertarianism”, on the other. Nevertheless, there can be very little doubt that in its very essence, Neoliberalism is concerned with promoting the idea that an individual’s social and entrepreneurial freedoms cannot be limited – even at the expense of allowing the society’s structural/functional integrity to be undermined from within. The theory’s another important provision that a free-market economy is self-regulative and that the government should refrain from meddling in economic affairs, with the latter being considered the main precondition of economic prosperity. As Birch (2016) noted, “Neoliberalism is a form of institutional restructuring involving the introduction of markets and market values into formal institutions, normative assumptions and cognitive principles” (p. 112). Moreover, there can also be only a few doubts that the US was the first country in which Neoliberalism has attained the status of the governmentally endorsed quasi-ideology as far back into the history as during the 20th century’s early nineties. In this respect, Brenner and Fraser (2017) came up with the insightful observation, “Neoliberalism developed in the United States over the last three decades and was ratified with Bill Clinton’s election in 1992” (p. 131). Therefore, it is indeed thoroughly appropriate discussing Neoliberalism in conjunction with what account for the contemporary socioeconomic realities in America – despite the fact that the election of Donald Trump as President did produce a considerable blow to the theory’s conceptual and utilitarian credibility. In my paper, will do just that while arguing that the theory of Neoliberalism is innately fallacious and exposing this theory’s main inconsistencies one by one.
The origins of Neoliberalism (as such that descended from classic Liberalism), can be traced back to the writings of Adam Smith, who is now commonly referred to as the theorist of “political economy”. The Liberal (or Capitalist) model presupposes that by growing increasingly specialized, a capitalist economy can ensure its overall operational effectiveness, which in turn enables the continuation of sociocultural progress. This model, however, also presupposes that there are certain limits to the economy’s ability to grow ever more complex, in the structural sense of this word, which in turn implies that eventually just about any capitalist economy is doomed to collapse. As a way to address such an eventual prospect, a free-market economy may never cease expanding into new markets – something that enables to postpone the impending “crisis of capital”, which always takes place when the extent of the economy’s specialization/complexity reaches a critical point. Neoliberalism is also closely affiliated with the names of Milton Friedman and Friedrich von Hayek – the 20th century’s most well-known advocates of “Capitalist industriousness” as a pathway towards progress and prosperity.
Because the idealization of “entrepreneurial liberty” still accounts for the theory’s most distinctive ideological feature, it does make much sense referring to contemporary American Neoliberalism as an evolutionary offspring of classic Capitalism. As Hardisty (2014) pointed out, “Neoliberalism is the economic, social, and political analysis that best describes the startlingly unequal distribution of wealth and power in the U.S. today. Neoliberalism, and the policies it undergirds, results from the triumph of capitalism and is sometimes called ‘late-stage capitalism’ or ‘super-capitalism’” (p. 2). Nevertheless, nowadays Neoliberalism became so much more holistic (all-inclusive) of a theory than what it used to be the case even as recent as twenty years ago. Because of this, there is now a prominent paradoxical quality to the socioeconomic concept in question, “In its U.S. form, Neoliberalism is an alliance of mainstream currents of new social movements (feminism, anti-racism, multiculturalism, and LGBT rights), on the one side, and high-end “symbolic” and service-based business sectors (Wall Street, Silicon Valley, and Hollywood)” (Brenner & Fraser, 2017, p. 131). This, of course, complicates even further the task of identifying the foremost axiomatic postulates of the Neoliberal theory. At the same time, however, there is nothing truly impossible about the mentioned task because, despite the extensive variety of the theory’s societal extrapolations, their significance can be assessed within the methodological framework of Marxism. The most prominently defined conceptual characteristics of American Neoliberalism can be outlined as follows:
- Promotion of economic Globalization. According to Neoliberals, Globalization is a dialectically predetermined process, which is why it is indeed thoroughly appropriate for the American-based companies to proceed with the practice of relocating their production lines to the Second and Third World countries (outsourcing) because of the abundance of cheap labor there. This also explains why Neoliberalism favors the lowering of trade tariffs in the US and across the world.
- Belief in the self-sustainability of the economy’s financial sector. The Neoliberal paradigm presupposes monetarism to be the most effective instrument of the economy’s revitalization. The rationale behind this point of view is that the more money is put into the circulation, the stronger is the motivation for entrepreneurs to consider investing in the long-term projects (such as the establishment of new manufacturing facilities), which in turn results in creating more jobs.
- Advocacy of the “corporate governance” concept. According to Birch (2016), “Neoliberalism is characterized by a distinct epistemic and social order when it comes to corporate governance and corporate form” (p. 116). The Neoliberal conceptualization of “corporate governance” is reflective of its promoters’ belief that the large transnational corporations (TNCs) are intrinsically interested in ensuring the ethical soundness of their business activities. In its turn, this implies the possibility for such corporations to be considered legitimate agents in the arena of international politics. Moreover, it also establishes a discursive premise for TNCs to play an active role within the context of how the government designs and enacts different social policies.
- Ideological indoctrination. The practical implementation of the Neoliberal provisions in the US public sphere came hand in hand with the governmental endorsement of the “political correctness” policy, which calls for the representatives of the racial/sexual minorities in America to be provided with special rights and privileges and presupposes that it is namely the specifics of one’s “lifestyle”, which contribute to the formation of the person’s sense of self-identity more than anything else does.
According to the advocates of Neoliberalism, the overall quality of just about any human society is merely the mechanistic sum of its members’ individual characteristics, reflective of the people’s presumed preoccupation with acting on behalf of their consumerist instincts. In its turn, this means that a manner, in which the society addresses economic challenges, continues to remain thoroughly reflective of how its members interact with each other on a one-to-one basis. Hence, the theory’s idealization of the “contractual” outlook on the actual force that defines the quality of the economic and societal dynamics within the society, “Neoliberalism… is based on the ‘presumption of freedom to contract’, which must then be protected by the law and/or state regulation” (Birch, 2016, p. 116). Consequently, this implies that there is simply no need for the government to exercise much authority in the domain of economics. In this regard, the Neoliberal line of logic is quite apparent – the increased demand for a particular commercial commodity naturally makes it possible for the newly created market niche to be claimed by the most industrious profit-seeking entrepreneurs, which in turn almost instantly takes care of the mentioned demand. As a result, the society continues to grow ever more prosperous – the situation from which ordinary citizens benefit as much as the representatives of the social elites.
Nevertheless, despite the instinctual soundness of the outlined Neoliberal outlook on the society’s functioning, as such that can be successfully governed by the “invisible hand of the market” alone, it is not scientifically credible. The reason for this is that being essentially material; human societies are, in fact, nothing but open thermodynamic systems. What this means is that the dynamics within a particular society only indirectly relate to the people’s consumerist agenda. Even though the profit-principle does determine the essence of the interrelationship between citizens on a personal level, this is far from being the case within the context of how they go about trying to attain self-actualization as the socially integrated beings. The above-mentioned correlates well with the Aristotelian idea that the “whole is greater than the sum of its parts”. This, of course, suggests the conceptual erroneousness of the Neoliberal idea that there can be no other but strictly economic incentives for the development of a free-market economy to take one turn or another. The reason for this is that, while interacting with each other, the society’s members create a qualitatively new discursive realm, which in turn defines the workings of the affiliated economy, and not vice versa.
As it was mentioned earlier, Neoliberalism advocates the idea that there no need for the government to try to control the functioning of large corporations, as the latter are more than capable of exercising self-control. Consequently, this established the prerequisite for the legitimation of the “corporate governance” concept, concerned with the incorporation of the Corporate Social Responsibility (CSR) principle within the operational algorithm of just about any large commercial entity in the US. The main theoretical premise behind the practical implementation of CSR is that, by choosing in favor of conducting their operations in a socially responsible (ethical/environmentally friendly) way, companies are able to contribute towards increasing the rate of these operations’ long-term commercial sustainability. In its turn, this premise reflects the idea that, due to being rational agents, both the owners of a particular commercial company, on one hand, and the rest of community members, on the other, are equally interested in ensuring the prolonged spatial well-being of their shared environmental niche. Hence, the main postulate of CSR – social welfare and corporate profitability are not only closely interrelated, but they derive out of each other (Mackey, 2014). This hypothesis, however, is merely theoretical and as such, it has very little practical relevance. The main reason for this is that the very idea that a particular company should benefit from investing in social projects is inconsistent the fact that, as of today, the debt-burdened economy of the US has grown utterly stagnant and consequently – vulnerable to financial crises, such as the one of 2008. And, in times of economic instability companies simply do not have any rational motivations to invest in the long-term projects. As Fooks, Gilmore, Collin, Holden and Lee (2013) pointed out, “Investments (in CSR) are particularly unlikely to pay off in the two to four-year time horizon that public companies, through demands of the stock market, often seem to require… investments in things like the environment or social causes become a luxury” (p. 288). Therefore, it comes as no surprise that nowadays most companies in the US advertise their affiliation with CSR as merely a part of the corporate PR-management, which has nothing to do with these companies’ de facto commitment towards conducting business in an ethically sound manner.
Even if the economic climate in the US did favor corporate investments in CSR, this essentially Neoliberal concept would still remain rather unworkable – all due to its inconsistency with fundamental principles of the free-market economy’s functioning. As Quairel-Lanoizelee (2016) aptly observed, “Competition is fundamental to a properly functioning market economy. Companies are economic agents and, theoretically, their decisions are made according to competitive (not societal) factors” (p. 135). Therefore, by continuing to insist that “corporate governance” is possible, the theory’s practitioners once again expose the overall inconsistency of the Neoliberal conceptualization of how the economy actually works.
Up until comparatively recently, it used to account for a commonplace practice among the supporters of the Neoliberal model to praise “economic liberalization” as such makes possible the generation of more wealth in the country – the would-be development deemed utterly beneficial to just about every American citizen, regardless of the particulars of his or her social status. While doing it, they often go as far as suggesting that the corporate agenda of the American-based transnational corporations is fully compatible with the cause of helping impoverished people in the Third World to enjoy better standards of living, “Neoliberal exponents of free trade claim that it increases economic prosperity and opportunity, especially among developing nations, enhances civil liberties and leads to a more efficient allocation of resources” (Kazi & Quddusi, 2015, p. 93). As one of the ways to substantiate such their point of view, these individuals often resort to referring to “liberalization” as something that came about because of the objective laws of historical progress. As the US former President Bill Clinton once suggested in his 1999 public speech, “Today we must embrace the inexorable logic of globalization. Globalization is irreversible. Protectionism will only make things worse” (Kazi & Quddusi, 2015, p. 92). Nevertheless, as practice indicates, the Neoliberal reign in the US (under Clinton, Bush, and Obama) resulted in only one thing – widening the already wide gap between the rich and poor in America. This simply could not be otherwise – despite the well-meaning sounding of the Neoliberal rhetoric (it usually focuses on “tolerance”, “economic empowerment”, “protection of human rights” and “promotion of democracy”), the promoters of Neoliberalism have always acted and will continue to act on behalf of the rich and powerful. This partially explains the outcome of the latest Presidential elections in the US. As Brenner and Fraser (2017) noted, “Continued by his successors, including Barack Obama, Clinton’s policies degraded the living conditions of all working people, but especially those employed in industrial production” (p. 131). Essentially the same can be said about the effects of the Neoliberalism’s institutionalization as the only viable socioeconomic paradigm on an international scale through the early nineties – the development that continues to exert a strong influence on the functioning of most international financial/trade organizations, such as the IMF and WTO. For example, to qualify for receiving a substantial monetary grant from the IMF, the government of a particular country must be willing to reduce (or eliminate altogether) its social spendings, to keep the National bank’s annual interest rate at no lower than 20% (whereas the annual interest rate in the West usually accounts for 0.5%-1%), and to pledge its commitment not to invest in the development of heavy industries as “economically unfeasible”. In other words, after having been taken over by Neoliberals, the international financial institutions serve the purpose of preventing the so-called “developing” countries from being able to become fully developed in any foreseeable future.
As time goes on, it becomes increasingly clearer to everybody that it is no longer appropriate to assume that Neoliberalism is solely concerned with the matters of economy. To exemplify the validity of this statement, we can refer to the well-known tendency of the theory’s high-ranking supporters (such as Hillary Clinton or Barack Obama) to advocate the idea that citizens have the right to celebrate “sexual diversity” and that this can be done even at the expense of severing all possible links between the practices of social governance in this country and the notion of sanity. Hence, the most “advanced” intellectual byproduct of the Neoliberal thought – the concept of “homonormativity”. According to Garwood (2016), “Homonormativity then describes the ‘normalisation’ and ‘hierarchisation’ of certain forms of homosexuality over others, particularly privileging (but not limited to) the gay or lesbian… married couple” (p. 9). As a result, throughout the last few decades, the “homonormative” discourse in the US continued to have an ever stronger effect on the shaping of this country’s not only domestic but also international policies. For example, it now became a commonplace practice in many American states to encourage high school students to attend classes on “sexual diversity” – despite the fact that this practice is clearly detrimental to the society’s biological well-being. Another example – up until recently, the US State Department used to turn a blind eye on the most heinous crimes committed by America’s “allies” – the Ukrainian neo-Nazis (who have seized the political power in Ukraine in 2014) and the representatives of the Syrian “moderate opposition” (who like cutting off off children’s heads and posting the videos on YouTube). And yet, as soon as Russia moved its troops to Crimea in 2014, to prevent the genocide of the overwhelmingly Russian-speaking residents by the Ukrainian neo-Nazis, the Department’s official spokesmen began to cry bloody murder about the “violations of gay rights” taking place in the Peninsula (Washington was behind Ukraine coup, 2015).
One may wonder – how is it possible for the adherents of Neoliberalism (a theory that is presumably concerned with only the economic affairs) to pay so much attention to the matters that clearly do not belong to the domain of economics (unless we consider the economic effect of the “homonormative” boost to the sales of sex toys)? There is, however, available a fully “economic” explanation to this seeming phenomenon. Apparently, the representatives of the Neoliberal social elites understand the importance of applying a continual effort into encouraging ordinary taxpayers to believe that their sense of existential self-identity can be concerned with just about anything, but these individuals’ affiliation with a particular social class. The reason for this is simple – “class-disfranchised” people are much less likely to put up an organized resistance against being exploited by the bourgeoisie representing the economy’s banking sector. The same can be said about the significance of the Neoliberal endorsement of the “multiculturalism” policy. After all, the policy’s practical implementation does serve the purpose of keeping Americans divided alongside the ethnocultural/religious lines – hence, making them a much easier object of economic exploitation.
Thus, there indeed appears to be a very little rationale in believing that the theory of Neoliberalism holds much water, in the conceptual sense of this word. After all, the theory’s exposed inconsistencies imply that Neoliberalism is:
- Non-systemic. The theory fails to take into account the systemic subtleties of the society’s functioning, which in turn define the conditional state of economic affairs within it and not vice versa.
- Economically destructive. The Neoliberal domination over America’s economy (and public life) resulted in the complete obliteration of a number of the economy’s manufacturing sectors due to outsourcing. In its turn, this effectively set the country on the path of deindustrialization, made the national economy extremely vulnerable to financial crises, and triggered the ongoing economic recession.
- Discursively erroneous. Despite the Neoliberal apologists’ claim that the enactment of the “free trade” policy is the key to progress and prosperity, the policy’s adoption resulted in benefiting only a few rich and powerful and preventing most citizens from being able to have their “share of the pie”. What is even worse, the continual economic empowerment of the corporate/banking sectors in the US during the Neoliberal era was achieved at the cost of pushing the “developing” countries even deeper into poverty.
- Socially counterproductive. The Neoliberals’ obsession with the protection of “gay rights” had a strongly negative effect on the society’s structural and operational integrity, which in turn resulted in the overall weakening of America’s geopolitical influence in the world.
Thus, it will be appropriate to suggest once again that Neoliberalism can no longer be considered even slightly legitimate, as both the theory of economic relations and a general philosophy of life. The reason for this is quite apparent – as of today, there is no even a single example of the implementation of a particular Neoliberal convention having proven long-term workable. And, there is nothing too odd about it – as I illustrated throughout the paper’s entirety, the most fundamental tenets of the Neoliberal economic paradigm do not correlate with the systemic realities of the 21st century’s living. I believe that this conclusion if fully consistent with the paper’s initial thesis.
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Garwood, E. (2016). Reproducing the homonormative family: Neoliberalism, queer theory and same-sex reproductive law. Journal of International Women’s Studies, 17(2), 5-17.
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