This week’s reading by David Harvey provides an interesting and useful historical perspective on the rise of neoliberalism. While critical in its assertion of the impact neoliberalization had on the United States (flattening of wages of the working class, greater social inequality, restoration of economic power to the upper class), this argument ignores a few important aspects of the problem.
1. Globalization and the rise of technology
Late 1970s witnessed the decline of both labor unions and the middle class share of national income. Harvey attributes these changes to Reagan’s policies of deregulation, tax cuts, budget cuts, and direct attacks on labor unions and professional power (p.27). However, he omits to mention one of the major factors motivating Republican neoliberalism reforms: competitiveness. As more American manufacturing was beginning to move abroad, many employers felt they had no choice but to limit labor unions' power in order to maintain their competitiveness vis-a-vis other (un-unionized) American companies, as well as foreign companies that were beginning to compete for the same market. In other words, two underlying factors that propelled Reagan’s neoliberal policies were: globalization and technology. Prof. Robert Reich (UC Berkeley) makes a compelling argument for a more holistic approach to the study of late 1970s changes in the US. For a great summary of his position, see a recently released documentary “Inequality for All”:
2. Neoliberal policies and poverty alleviation
While it is true that inequality has (globally) increased over the past thirty years, neoliberalism seems to have had a positive impact on the average standard of living of the poorest people. Harvey’s article says nothing about how much of the world population has been brought out of poverty in India and China due to neoliberal policies. In fact, the last thirty years witnessed the fastest transition out of complete poverty (less than 1$ Purchasing Power Parity per day) of the largest amount of people in the shortest amount of time. Doesn’t that problematize the anti-neoliberal critique?
3. Keynes vs. Hayek
Harvey discusses the emergence of neoliberalism primarily in the context of Keynesian policies failing. However, he does not sufficiently contextualize Hayek’s and Keynes’ arguments. The real difference between these two philosophers lies in their understanding of what causes crisis.
On the one hand, Keynes believed that people have ‘animal spirits’ and they either get very excited or depressed. When they are depressed, the state should step in and spend. When they are back on their feet, state retreats and lets the market function. On the other hand, Hayek argued that crises and distortions are due precisely because of state’s intervention.
In other words, Keynes (whom Harvey favors) did not argue for state’s constant intervention. Rather, he believed that the state should intervene only during crises and that governments should get out of the way as soon as the recession is over.
In a crisis-free situation, these two philosophers have more in common than Harvey wants to admit. Keynes would not be in favor of state spending during expansions. Rather, he strongly emphasized a generally limited role of the state and a high need for an economic integration between countries (especially in Europe) - a point fully neglected by the author, who is using Keynes as a foil against neoliberalism. Consideration of these similarities could add complexity to the overall argument.
Here is the most entertaining (and surprisingly comprehensive) summary of the Hayek vs. Keynes debate :-)
As a side note, the many critiques of marketing that we read this semester made me think of a 2012 Chilean drama by Pablo Narrain: “No”. The movie problematizes our discussion on the negative effects of branding and commodifying all parts of our lives by presenting a historical case of an advertising campaign which helped to get rid of general Pinochet in Chile.
American branding tactics used against a US-supported dictator starring Gale Garcia Bernal:
No comments:
Post a Comment