Neoliberalism is in the first instance, a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets.
Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture. State interventions in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit
Its foundations can be traced back to the classical liberalism advocated by Adam Smith, and to the specific conception of man and society on which he founds his economic theories.
Neoliberalism is, under this view, thought of as an entirely new “paradigm” for economic theory and policy-making – the ideology behind the most recent stage in the development of capitalist society – and at the same time a revival of the economic theories of Smith and his intellectual heirs in the nineteenth century.
A “great reversal” had taken place, where neoliberalism had replaced the economic theories of John Maynard Keynes and his followers. Keynesianism, as it came to be called, was the dominant theoretical framework in economics and economic policy-making in the period between 1945 and 1970, The theory stipulated that full employment is necessary for capitalism to grow and it can be achieved only if governments and central banks intervene to increase employment. These ideas had much influence on President Roosevelt’s New Deal, which did improve life for many people. The belief that government should advance the common good became widely accepted. But the capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate elite to revive economic liberalism. It was then replaced by a more “monetaristâ€Ÿ approach inspired by the theories and research of Milton Friedman is an ideology somewhat similar to and yet markedly different from much conventional conservative thought, and often hardly recognisable as a genuinely conservative that individual liberty depends on there being a free-market economy, where the state has voluntarily given up its ability to control the economy for the good of society as a whole, or the interests of its own citizens.
The main points of neo-liberalism include:
The rule of the market: Liberating “free” enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers’ rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone. It’s like Reagan’s “supply-side” and “trickle-down” economics, but somehow the wealth didn’t trickle down very much.
Cutting public expenditure for public service: 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.
Deregulation: Reduce government regulation of everything that could diminish profits, including protecting the environment and safety on the job.
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.
Eliminating the concept of 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.”
Neoliberalism has played a major role in redefining the nature of the welfare state. The fundamental problem with neoliberalism, is their perception that the market can cure all problems especially when dealing with the welfare system, which they believe has no reason to exist. They prefer to use either negative income tax or other market-based means to provide for them. What’s worse is they rationalize not giving welfare people through a variety of means which Linda Gordon typifies the problem in their perception with her enlightening and shocking article Who deserves Help? Who must provide? Within it she explicates how the neoliberals pressure the poorest people in a society to find a job, then blame them if they fail, as “lazy.” She then delves into of how “a major structural feature of the US welfare system is that stratification of entitlement justified by degrees of deservingness creates perception of deservingness and undeservingness.” [i] Many studies show that welfare recipients find welfare degrading and demoralizing, and greatly prefer the chance to work. There is no “incentive” for “lazy” people to enrol in welfare because the payments do not allow families to make ends meet. In the case of the US it’s gender based, more specifically for mothers (especially single ones.) Welfare mothers family’s rent and utilities cost more than the welfare check. Even for those few who receive housing assistance, very little is left over to cover all other monthly expenses, such as transportation, clothing, hygiene and school supplies. The typical food stamp allowance is insufficient, and many recipients actually go hungry near the end of the month. To make ends meet, mothers have to receive income from somewhere else. They do so because they cannot get jobs that pay better than welfare.
The very reason why they can’t get any jobs that pay better than welfare is a direct result of neoliberal practices that result in only low-wage work remaining in the West. As a result of outsourcing, factories and subsequently jobs, neoliberal countries do nothing to stop multinational corporations from doing so for they would be affecting “free trade.” Thus allowing jobs to leave the country and people being exploited elsewhere. As well the only real jobs that are really created in recent years have been predominantly retail and service jobs that are low paying and thus inadequate substitutes for the working poor or mother’s, to help themselves out of the poverty line.
In their article “welfare reform as race population control,” Kenneth Neubeck and Noel Cazenave continue Gordon’s path, by charting the evolution of welfare racism and the rationale behind this racism in the United States through a detailed analysis of specific case studies. They delve into welfare racism against black people, immigrants in general and black women. Beginning with the 1911 mother’s pensions (largely intended for white widowed women), Neubeck and Cazenave demonstrate that U.S. welfare policy has been racialized, gendered and stigmatized from its very inception, at times excluding and discriminating against African Americans, then eventually immigrants and at other times providing a limited form of highly stigmatized assistance. Using their concept of welfare racism as an analytical tool, the authors explain that: “welfare racism exists as a major force shaping contemporary public assistance attitudes, policies and practices â€¦ it serves three major functions, social stratification and social control functions for racialized societies and their ‘racial states.’” [ii] Welfare racism provides social prestige for the general white population, political and career power for its politicians and other elites, and economic acquisition for the nation’s economic elite in the form of a large and easily exploitable low-wage labour pool. This is what is needed to perpetuate neoliberalism it is integral to the continual expansion of profits upon which capitalism depends. Neoliberalism is constituted not simply by the exchange of “things” but is founded on the commodification (which the next article the Three worlds of Welfare Capitalism further delves into) and exchange of labour itself: the source of profit. This is the primary goal of this racialization. As well in tracing the ways that welfare racism exists, persists and changes, Neubeck and Cazenave reveal the mythical and erroneous and persistent characterization of African-American women as “welfare queens” or “welfare mothers.” This racism-centered framework provides an excellent lens for exploring the links between stigmatized welfare policy and stereotypes of poor racialized women and men in U. S. social and political discourse. The reason this becazme a popular notion, that of stereotyping black people, immigrants and mother’s (especially black ones) is that Neoliberalism is a failing policy, and has not been at all successful in reducing unemployment to the levels that free trade was purported to, in fact it’s increased ion every country that has implemented them, thus they have no choice but to rationalize this disaster of a policy by blaming not the economic component, but rather the people. Their either lazy, immigrants looking to freeload or welfare mothers who merely desire to have babies and again freeload off the system. Neoliberalism provides the jobs, they just don’t want to work them. Their rationale sadly isn’t backed up by statistics, for each year America and our country Canada loses major jobs in our manufacturing sector, which sadly service or retail based jobs we might gain don’t make up for this loss. Neoliberalism has proven itself to be an unsuccessful ideology in the way it treats its citizens and the next article “The three worlds of Welfare Capitalism” really delves deep into Neoliberalism’s commodification of its citizens.
I will commence my analysis of this article by addressing the concept of commodification. Furthermore, I will summarize the three theories presented and apply them to the concept of commodification. This will lead to the synthesis of themes presented and will, if my intentions are realized, provoke response to the idea of commodifying (or decommodifying) human labour.
Whilst reading about “commodified labour” images of workers with price tags and discount tickets floated through my subconscious in much the same way one might imagine a car lot. Rows of eager workers aiming to receive the best price for their resources and skills while at the same time guaranteeing they don’t get passed over in favour of the more appealing offer in the next row. Perhaps comparing human capabilities with a car lot appears crude and grossly dysfunctional, but the methodology behind such madness will become apparent. I shall, therefore, draw upon this analogy in order to develop an analysis of Esping-Anderson’s welfare regimes.
A commodified worker is, in simple terms, a worker with a price. On a purely micro level, the individual determines what he or she must earn in order to survive within the constraints of the cash nexus, a decision influenced by macro level factors such as the demand and price typically awarded for a particular skill or qualification. Within the market the neoliberalism appears justified: the worker can freely choose between alternative utilities, jobs, employers, and leisure trade-offs. Thus, in a model free market, the worker is able to make decisions freely and without negative ramifications. Conversely, it is the decommodification of the worker that Esping-Anderson aspires to as this definition of commodification implies that the market is indeed dogmatic. Furthermore, in reality the market is far from stable and is unrelenting to those unable to participate.
Referring to the analogy of car lots commodification requires several conditions including the stability previously mentioned. This would enable the worker to obtain a fair wage from an employer in much the same way a dealer would assess a fair price to a worthy vehicle. The absence of stability in the marketplace leads to the inability of workers to exercise freedom of choice. Faced with the dilemma of an injury (think a head-gasket or deflated tires) the worker must withdraw from the marketplace to recover. But unlike a car with easily replaceable parts return to the marker may not be as simple or prompt and the worker will require an alternative means of income. The inability to work decreases choice based on the sole premise that ones skills are no longer active and thus, no longer in demand as a commodity. The employer will seek out alternative labour just as a dealer purchasing new vehicles for the lot would move right along to the cars in the next row; after all who wants a car lot of faulty or less than optimal vehicles? The worker must find a means of survival. It is within this framework the humanistic element of welfare emerges. When a worker can no longer subsist independently, what resources exist to prevent degradation? It is this dilemma which introduces the humanistic element to the analogy. A car is easily replaced without much consequence to the defunct vehicle itself. A worker, while potentially easily replaced, most certainly does experience the negative consequences negative of commodification. For example, transition to a new job may require specific, time consuming, potentially costly retraining.
Esping-Anderson offers a critique of the three theories of welfare, feeling that although some attempt to solve the problem decommodifcation doesn’t exist from any of these approaches, it only deceptively convinces the masses that they are being aided.
The first theory is the social-insurance model. The adoption of the German social security approach by the Western European countries and the USA countries had two fundamental purposes; the first one to cover the human risks to guarantee a productive labour class; and the second one to maintain the security of the elites, through of control and the stabilization of the labour class. “It sought to achieve two simultaneous stratification results. The first goal was to consolidate divisions amongst wage earners by legislating distinct programs for different class and status groups, each with its own conspicuously unique set of rights and privileges designed to accentuate the individual’s appropriate station in life. The second objective was to tie the loyalties of the individual directly to the monarchy or in our case (state authority). The goal was to combat labour movements. [iii] The state is viewed largely as a minimal interventionist with any welfare allocated firmly upholding the stratification of society or maintaining the hierarchical/patriarchal structure.
The second tactic was Fraternal societies were voluntary mutual-aid associations. The principle behind the fraternal societies was simple. A group of working-class people would form an association (or join a local branch, or “lodge,” of an existing association) and pay monthly fees into the association’s treasury; individual members would then be able to draw on the pooled resources in time of need. The fraternal societies thus operated as a form of self-help insurance company. Sadly despite this supposedly being a fraternal collectivistic approach and an example of a true communalism, the end result was stratification for the weakest, “the most likely to need help wereâ€¦likely[to] be excluded.” [iv]
A third porposed methodology was universalism, which is an integral system based on the provision of social welfare for all through public or private institutions rather than partial and individuals subsidies. Programs are established universally to serve everybody and are financed by Government. In this approach institutions are obligated to deliver social services to all without constrains As a principle universalism focuses in Society as a whole; it does not distinguish by class, religion, age, race, sexual orientation, or gender. Universalism in social policy is a re-distributive institutional approach; it considers social welfare as a very important institution of society providing general services outside the market on the basis of the necessities’ principle. Of course, the reality of fully socialized welfare programs is minimal due to the overwhelming maintenance costs and the problems experienced by governments that try to convince the population to pay higher taxes in order to provide for those who do not compete in the market place, unwillingly or not. There are, however, several states which strive for high levels of decommodification the best examples situated in the countries comprising Scandinavia. For him, this model incorporates the redistribution’s system of available resources along time. However despite sounding equitable the end result was not what was intended.
Without verging upon the perimeter of repetition the following summaries of the three major theories presented by Esping-Anderson serve as the foundation for the ultimate link with commodification. This will illustrate the extent to which regime types with characteristics of any of the three regime-types embrace, or berate the decommodification of labour.
The neoliberal welfare regime argues that a free market will abolish class and inequality, while state intervention only strengthens issues of class. The neoliberal model argues that democracy and universal suffrage would be likely to politicize the distributional struggle, pervert the market, and fuel inefficiencies. In reality, however, the neoliberal regime, through the capitalist system, tends to commodify labour to such an extent that people were unable to survive outside of the market. Stripping society of the institutional layers that guaranteed social reproduction outside the labour contract meant the people were decommodified. This leads to a difficulty in class mobilization as workers are now nothing more than a commodity to be traded between industries. As such, they are unlikely to gain the political power to translate power into desired policies and reforms. Because the neoliberal regime is so reliant on market forces, the state will not intervene unless the familial or market institutions fail. Esping-Anderson refers to this structure as a residual or welfare state. Such a state is characterized by means-tested social assistance. This often punishes and stigmatizes recipients of social welfare and ultimately creates a system of class stratification, particularly between the middle class who relies on market social insurance and the poor who are reliant on state-sponsored social insurance programs. Generally, the benefits offered by the neoliberal regime are quite small, as social welfare is seen as a cause of poverty and unemployment, and may lead to laziness and “moral corruption.” The Social-insurance model disagreed with the idea of laissez-faire economic policies. Esping-Anderson suggests that Social-insurance model ideal “was the perpetuation of patriarchy and absolutism as the best legal, political, and social shell for capitalism without class struggle. [v] ” The Social-insurance model paradigm sees a more authoritarian state as better for everyone, as opposed to a more chaotic system based on free markets. As such, the corporatist model created its first social policies because the corporatists saw liberalism democracy and capitalism as destroying the old hierarchical structure. In sum, the Social-insurance model does not want to see people starve – commodification is morally repugnant. Rather, they want people to “subordinate self-interest to recognized authority and prevailing institutions. [vi] ” This idea is characterized in the modern social welfare regimes in that it is still reliant on many of the precommodification institutions. Rather than having people be slaves to the market, the corporatist model makes people reliant on the state. Lastly, the universalism model argues that the accumulation of capital disowns people of property. This leads to deeper class divisions. Additionally, social welfare initiatives like those posed by the neoliberal and corporatist model, is more conducive to ensuring class divisions in the name of stability, instead of actually addressing need . The universalism model expands on this premise, arguing that by bringing social policy into the parliament, workers will have less dependence on the market and employers. This, coupled with a strong coalition between labour and other groups, farmers perhaps, leads to a system of equality and socialism through the exercise of political power
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. The first clear example of neo-liberalism at work came in Chile (with thanks to University of Chicago economist Milton Friedman), after the CIA-supported coup against the popularly elected Allende regime in 1973. Other countries followed, with some of the worst effects in Mexico where wages declined 40 to 50% in the first year of NAFTA while the cost of living rose by 80%. Over 20,000 small and medium businesses have failed and more than 1,000 state-owned enterprises have been privatized in Mexico.
In the United States neo-liberalism is destroying welfare programs; attacking the rights of labour (including all immigrant workers); and cutting back social programs. The Republican “Contract” on America is pure neo-liberalism. Its supporters are working hard to deny protection to children, youth, women, the planet itself, and trying to trick Americans into acceptance by saying this will “get government off my back.” The beneficiaries of neo-liberalism are a minority of the world’s people. For the vast majority it brings even more suffering than before: suffering without the small, hard-won gains of the last 60 years, suffering without end.