Tuesday, May 15, 2007

Neoliberalism Part 1|(global social pathogen)

I had the following list of Neoliberalism traits presented to me recently and it is derived from an article entitled: What is Neoliberalism? A Brief Definition for Activists. So let me go through them one at a time and express my thoughts:
1. 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 and environmental damage this causes.

Yes, liberating but not completely "Free" but more like "Freer" as Jagdish Bhwagwati would say. And NO-ONE wants no bonds, only sensible ones vs. like financial repression.

Strange nothing I read indicates that sort of intentions. Now of course the IMF denies that it supports Neoliberalism but it opponents seem to say that they do, but...
Social Issues
The program seeks to protect the living standards of the most vulnerable social groups. Spending on social safety net programs will be increased by 1 percent of GDP in 1996. A transportation subsidy was introduced to avoid an immediate increase in public transportation fares resulting from the rise in gasoline prices, and the social safety net will be improved further with the assistance of the World Bank and the Inter-American Development Bank.Press Release: IMF Approves Stand-By Credit for Venezuela

Now of course this is just one example but the IMF has shown an interest in the social safety net as soon as 96 as this shows.
3. DEREGULATION. Reduce government regulation of everything that could diminish profits, including protecting the environment and safety on the job.

Yes, it is true that many of the policies are aimed at reducing regulation not necessarily the elimination of regulations. It may be that we can not explain what bad regulation is but we sure can tell what it is when we see it-again like Financial Repression.
4. PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors.

Yes, but under a realization that there needs to sold at a decent price. And no where have I seen that all state owned enterprises must go, mostly ones that are draining resources from the government that could actually help the poor more effectively.
5. ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility."

No, public good or the commons is there in every society. And I do not see anyone advocating these points.

And now let us see what the Policies Advanced by Neoliberalism are.
The definitive statement of the concrete policies advocated by neoliberalism is often taken to be John Williamson's[3] "Washington Consensus" , a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the IMF and World Bank). These reforms are described by Dani Rodrik[4] as:

* Fiscal rectitude, meaning that governments would cut expenditures and/or raise taxes to maintain a budget surplus

OK, so sound Fiscal discipline. And no mention about where and how cuts to expenditures are to be made. Silva when he came into office cut the defense spending budget. The IMF also helps with devising tax schemes that will be the least distorting to the market and at the same time widen the tax base.
# Competitive exchange rates, whereby governments would accept market-determined exchange rates, as opposed to implemented government-fixed exchange rates, as had prevailed under the Bretton Woods System

Yes the IMF has been promoting this, and many do not follow their advice (Venezuela). But it must be pointed out that the BWS or more specifically the IMF was established primarily to establish the Fixed Exchange regime tied to a stable US dollar. Without fixed exchange rates then much of the reasons for the IMF also disappears.
In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members. (Article I - Purposes IMF)

No balance of payment problems if a country is on a floating exchange rate.
Free Trade, which means the removal of trade barriers, like tariffs and regulatory trade barriers

Yes, that sounds good, but must be realized that gradualism is probably the better option than shock therapy. Isolationist Ignorance in Action summarizes some of what I feel about isolationists especially Lou Dobbs.
Privatization, which means the transfer of previously-public-owned enterprises to the private sector.

Again this can be very good for the government, especially money losing enterprises that free markets can handle better.
Undistorted Market Prices, meaning that governments would refrain from policies that would alter market prices

For example Financial Repression, but again drastic changes overnight can disrupt the market, so gradualism and sequencing may be more important than getting there the fastest.
Limited Intervention, which the exception intervention designed to promote exports, education or infrastructural development.

Yes, and most include also a safety net for those displaced and/or are poor.

Well nothing to me indicates a "Global Social Pathogen".



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