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Neoliberalism -a short course
Sources:- El Fisgón "Como sobrevivir al neoliberalismo sin dejar de ser Mexicano" Grijalbo Press (excellent comic book)
Walden Bello"Dark Victory: The United States, Structural Adjustment and Global Poverty" Pluto Press & Food First San Fran. (indispensible concise analysis of the last 50 years)
If we can identify a dominant ideology behind the current globalization project it is "Neoliberalism". Neoliberalism is the European term. Neoconservativism the US term. These are just new words for the 200 year old doctrines of "Laissez faire". "Laissez faire" is just a fancy French word for "allow to do", meaning not that the poor should be allowed to raid the houses and bank accounts of the rich, but that business should be free of nasty regulations, taxes and red tape like pollution and labor laws which limit their capacity to do business. "Laissez faire", "free market" are all terms that mean "unregulated business". The term liberal is mistakenly applied to progressive or even leftwing politics in the United States. As should be clear, liberal actually means conservative in economic terms. However liberal has come to signify in the US a reformed state-capitalist position.
"Laissez faire" ideology regards government intervention in the economy to be the source of all the ills of society. If only the market were left free to operate, boundless wealth would be created and we would all be better off. Margaret Thatcher put it concisely:- "It is our job to glory in inequality and see that talents and abilities are given vent and expression for the benefit of us all".
"Laissez faire" ideology universalizes the interests of business to the whole community.
Classic Liberalism

Classic liberalism is attributed to late 18th century english philosopher Adam Smith among others. His belief was that if individuals pursued their selfish interests producing, buying and selling in a free meaning unregulated market, then wealth is created and prosperity grows, benefitting everyone as Thatcher asserted.
In particular Smith advocated that the state should interfere as little as possible in free markets. State interference he believed always distorted their beneficial machinery. The term the staterefers to the collected institutions of government, judiciary, police and army, which have assumed a monopoly of law making and enforcement over society.
Smith was writing in a time when the industrial revolution was just beginning, before massive factory production, assembly lines, limited liability companies and transnationals. His ideal of a market was of small artisans and merchants trading in a local marketplace.
There were transnationals in Smith's time, but they were imperial state companies like the East India Company, exactly the sort of state involvement in commerce that Smith deplored. Smith also deplored slavery violence and coercion of all kinds, regarding these as the exact opposite of the theoretically non-violent activities of the market. He exalted competition and deplored what he called conspiracy or combination, criticising the obvious tendency of merchants to conspire together to fix prices and to use the state in their favor, but equally the tendency of workers to do the same by forming unions. Hence the liberal ideal of the state is as a neutral entity, writing and enforcing laws without partisanship.
Smith's ideal of the free market is promptly wrecked on the realities of social relations. In the liberal ideal atomised individuals resolutely avoid any cooperation or resort to force, and stick to trading peacefully and competitively. The glaring defect of this idealisation is that markets do not exist in some social vacuum.
Individuals and corporations have historically pursued their interests in whatever way that society permits them to. There is no absolute ethic of business other than this central principle. If slavery is permitted then slavery there will be. The important issue is not markets which in any case are an inevitable human activity, even in the most centralised Stalinist or Drug -War regime, but rather how such social mores and laws are developed and enforced- is every citizen a genuine participant or is power concentrated in few hands usually in the pay of the rich?
David Ricardo and Thomas Malthus writing a little later than Smith turned liberal ideas into attacks on the poor rather than the state. Peasants were at that time flooding into English cities where they served as cheap expendable labor for the Industrial Revolution.
Ricardo denied any inherent human right to food, clothing or housing other than what they could get by selling their labor or products on the free market. Malthus added that this was an iron law of nature. The starving of the poor was a simple result of their population exceeding the food supply, and hence a natural corrective that it would be wrong and futile to try and redress through social action.
The fact that this poverty was created by collusion between the wealthy and the state to usurp (or enclose) the common lands of the people, while ruthlessly suppressing popular rebellion, was strangely absent from their analysis. We must not forget that private property is routinely carved out of communally held resources by the well-heeled, using the power of the state. The latest enclosure movement of so-called "intellectual property" for purposes of capitalist agriculture is one contemporary example.
The shabby propaganda trick still being pulled by liberals and their descendents is the confoundment of personal liberty, freedom from state surveillance and persecution, and freedom of personal expression, culture and belief, with the liberty to do business. These rights are not of the same order. Indeed the freedom of business continues to be the greatest threat to personal liberty.
Capitalism, Marxism and Reformism
Capitalism is the system whereby production is controlled by private owners of the machinery, land and finance components of production. The other factor being labor. Under slavery even labor was owned. Private owners come to form a class, the bourgeousie, that live primarily by returns on investment of the capital, rather than by working to produce goods themselves. In earlier times, individual entrepreneurs brought together capital, land and labor to produce goods for market sale.
These days, entrepreneurs have largely disappeared from industry. Start-up firms long for the day when they can be bought out and retire. Planning and operations are now the province of hired managers, employees. The owners to a large extent are numerous shareholders usually dominated by a few big holders, for whom the company stock is just another commodity to be traded for profit in a stock market.
Economists of the 19th century soon discovered that "laissez faire" capitalism, although founded in competition, leads inevitably to monopoly. A small, wealthy, unelected and unaccountable elite slowly develops, garnering control of productive resources and crucially, the state apparatus. Thus, "laissez faire" capitalism is historically deadly for both the free market and democracy.
The monopolies that developed in late 19th century US such as Rockefeller's Standard Oil or Sam Zemurray's United Fruit, were in the 20th century dissolved by a reformist state applying "anti-trust" laws to recreate at least an oligopolistic facade of a "free" market.
There were two strains of reaction to capitalist industrialisation in the past century
Liberal reformers, shocked by the horrors of capitalist industry backed away from the radical anti-state position. While advocating the need to leave the capitalist system alone as much as possible, they advocated that in the interests of social stability the state should make reform laws against slavery, child labor, unsafe workplaces, dangerous products, monopolies and so on. The groundswell of resistance to capitalism by labor unions, through strikes and protests and the threat of revolution, ultimately forced this role onto the state in many countries. We do not have to look into history books to understand these horrors. They are all around us still, particularly in this current phase of "laissez faire" which has rolled back working conditions everywhere.
Of one contemporary example among many consider the story of Cosme Damian Sastre Sanchez, 25 years old, murdered by cops in Tijuana on Oct 2nd 1999. The cops said he strangled himself with his own T-shirt. Cosme, an activist in the Frente Zapatista was supporting his two infant children, his father who was disabled in a maquila, and his mother who was fired from her job because she became pregnant and the maquila didnt want to pay the 3 months leave they are required by law to pay.
Or listen to this comment "People weren't getting bathroom breaks, and even urinated in their clothes on the line. The line speed was tremendous, and lots of workers showed symptoms of carpal tunnel sndrome. But management sent spies into our groups and everyone involved in the effort was fired." Guatemala? Indonesia? No, a priest helping Latin American workers organise at Greater Omaha meat packing plant, Nebraska 1998.
The much vaunted "efficiency" of free market business is largely a fraud, the result of a relentless effort to externalise or socialise real costs (like pollution, workplace safety, product safety etc) while internalising and maximizing profits, principally by driving down wages and replacing employees with machines.
The second reaction was working class revolution, foreseen as inevitable and actively promoted by Karl Marx and Frederich Engels in the mid 1800s. Marx and Engels believed that the capitalist class had "sown the seed of their own destruction" by creating a huge detribalised working class or proletariat that would eventually unify and overthrow the capitalist class and the state, place ownership of production under social rather than private control, that is, socialism, and abolish private property and redistribute real wealth "according to need", or communism. The central hope was for the abolition of the state as we know it, to be replaced by free confederations of democratic workers councils.
The Russian Revolution of 1917 gave birth very briefly to this sort of system until it was ended by the Bolshevik coup d'etat, who suppressed the autonomy of the Soviets, dissolved parliament and imposed a state-socialist dictatorship by the Communist Party under Lenin and later Stalin, with the infamous history we know all too well.
Keynesian State Capitalism

Despite reforms, "laissez faire" capitalism self-destructed in 1929 plunging the capitalist world into the Great Depression. This corroborated a central plank of Marxist analysis, namely, the inevitability of crisis in capitalism that results from a simple positive feedback loop. Overproduction results from the drive to reduce wages and number of employees. Reduced wages and unemployment depress capacity for consumption. The resulting crisis in low consumption and high production causes widespread business failure. The universal way out of the crisis was for the state to step in and regulate markets in capital through a Central Bank, and stimulate production and consumption by public works investment, taking steps toward but pulling up far short of a socialist solution.
This approach was given theoretical shape by John Maynard Keynes during the second world war. Wartime production was heavily state controlled in both fascist and allied countries. In the post war years,the role of the state in regulation and stabilization of the economy became a normal expectation in state-capitalist countries.
Partial redistribution of wealth by progressive taxation, public works and social welfare, originally introduced as a pacifier of working class unrest, broadened spending power and the production/consumption cycle boomed. In the US, postwar production was stabilised largely by creating a permanent war economy- a kind of military Keynesian system.
The insurgent Third World
Newly decolonised nations of the Third world during the 1950s and 1960s had been demanding that the rich nations help them develop.
Their idea was that development aid should be freely given in recompense for centuries of colonialism. Seeing how the rich nations pulled out of depression by protectionism and state investment, the poor nations wanted to follow their example. They demanded creation of a UN development fund. This was not to happen, largely thanks to the US. The rich nations conceived of "aid" as loans at interest, with which poor nations would buy capital goods and technical knowhow.
One of the complaints of the Third World, that protectionist trade policy in the First World limited their capacity to export, was answered in the US by the development of the Generalized System of Preferences. However, it was to become a weapon for blowing open the much weaker Third World economies to permit foreign control.
The oil-rich Third World nations flexed their muscles in 1973, jacking up oil prices and serving the rich nations notice of their power over raw materials. This created a vast new pool of money for Arab states, however much of this money was simply invested back into Western banks rather than going to Third World development. During the 70s, the US-controlled World Bank under the Keynesian technocrat Robert MacNamara, whose previous job was managing the war on Vietnam, embarked on massive lending to the poor nations from this pool of "petrodollars".
MacNamara promoted capital- intensive development of Third World nations as a means of containing Communist revolution, while creating a steady cash flow in loan repayments and stimulating markets for US technology. Together with a Keynesian domestic policy, this position was called "Containment Liberalism"
Little concern was given to how this loan money was spent, however. Large, badly-planned and environmentally disastrous projects were common. Corrupt officials, financial speculators and various favorite dictators such as in Brasil, often simply pocketed loan money and invested it back into Western banks for a second time.
A major thrust of World Bank loans was the "Green Revolution" which promoted the rapid industrialization of third world agriculture, creating dependency on First world machinery, agrochemicals and corporate distribution infrastructure. It was called "green revolution" explicitly as an antidote to the "Red Revolution" which focussed on land redistribution to peasants as the key to development. The green revolution led to a vast increase in rural inequality with the collapse of peasants' market share in favor of large well-capitalised land holders. Rural -urban migration became epidemic in the Green Revolution countries. 
Neoliberalism

In spite of a history which showed clearly that unregulated capitalism would self-destruct as in 1929, the apostles of "laissez faire" rallied yet again. Starting from the mid 1940s, by the 1970s their ideas became fashionable again, even resulting in Nobel prizes for neo-liberal theoreticians Friederich Hayek and Milton Friedman.
But this was no accident. Industrial production and ocean transport processes had developed to the extent that whole plants and their products could be shifted around the world with a greater ease than ever before. Rural-urban migration resulting from the green revolution created a labor pool ripe for the picking. First world business scrambled to abandon the New Deal truce in the class war at home, and head to the new frontier in the Third World.
Not surprisingly, the old doctrines of "laissez faire" enjoyed a renewed vogue. Neoliberals saw a golden opportunity for immense profits while shedding the only part of government that they always hated- namely the part that protected workers and the environment from their depredations. Neoliberal think tanks primarily in the US like the American Enterprise Institute, Heritage Foundation, and the Cato Institute were generously funded by business magnates like Coors, Scaife and Mellon, Olin and the Bradleys to spread the old gospel.
They called for removal of state regulations, taxes, import restrictions and tariffs as well as the elimination of social welfare. State services were to be privatised or forced into a business model, as if their role was now turning a profit rather than serving the public. Problems like pollution and deforestation were to be addressed not by fines and laws but by creating artificial markets in tradeable rights to pollute or exploit. The market was promoted as the best model of social organisation.
Libertarians, clinging to the curious belief that the state was the worst threat to their property rights, became so delirious as to call for the doing away of the state, perhaps forgetting the warning of Adam Smith who prefigured Marx when he declared in his Lectures in Jurisprudence:-
"Laws and government may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and preserve to themselves the the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence"
When Ronald Reagan (US) displaced the Containment Liberals from power in 1980, he embarked on a massive campaign of neoliberal rollback:- gutting social welfare and eliminating regulation. More than anything rollback meant reassertion of US hegemony over the insurgent Third World. This campaign was presented as a campaign to rollback Soviet influence and "restore freedom", for capitalism that is.
Neoliberal ideology was applied selectively however. While Reaganites demanded that the Third World open up to US investment, to reduce the role of the state and promote free markets, they embarked on a remarkable campaign of protectionism in favor of US business, an enormous expansion of the permanent war economy and escalating aggression against uppity Third World nations notably Nicaragua, Libya and Grenada.
This trajectory has remained largely on course under Bush and then Clinton.
Recolonization by debt 
After the lending boom of the MacNamara years, the poor nations were left with enormous debts. After the deregulation of finance capital in the mid 1970's interests rates soared increasing national debts to many times the original amount. In 1982 Mexico defaulted on loans. Nations that tried to stop debt payments like Peru, were punished by capital flight. Nations that had more sense like Japan, Taiwan and Korea maintained strict controls over capital flows, until at last the US forced them to "liberalise" in this decade. The best that debtors could hope for was rescheduling. The Reaganites had discovered their ideal weapon for rollback of the third world insurgency.
The World Bank and International Monetary Fund stepped in to impose austerity plans, and structural adjustment of debtor economies along neoliberal lines as a condition of debt reductions or of further loans. The new regime was masterminded by US Secretary of Treasury James Baker in 1985.
Structural adjustment had the following important requirements:-
1. privatization of publicly-owned industries especially oil, power, telephone, ports and railways;
2. slashing of public services with massive layoffs, ending social welfare, closure of hospitals, libraries, schools etc.
3. removal of wage and price protections and laws for workers rights;
4. removal of barriers to foreign investment and ownership, and abolition of tariffs on imports;
5. allowing currency to float or devaluing currency to stimulate exports.
There was an additional maneuvre in the Baker plan, the nationalisation of debt. Henceforth the debtor government would assume responsibility not only for public sector but also private sector debt. The gross debt would then be largely consolidated under IMF (that is, US) control. Lastly, all this IMF intervention into the affairs of small poor countries was conducted under the rubric of "laissez faire".
National political sovereignty was basically surrendered in bondage to the WB/IMF, a process that Chakravarthi Raghavan (Third World Network) has termed recolonization. The consequences have been pillage of forests and minerals, fisheries and soils by transnationals, a sharp rise in poverty and disease, collapse of real wages, union-busting and general police repression, and in the worst cases war, neofascism and genocide.
The global empire of the USA
The triumph of neoliberalism by now synonymous with US imperialism came in 1989 with the breakup of the Soviet Union. Russia was rapidly recolonised by capitalists from the rich nations, and adjustment imposed with a predictable explosion of gangsterism, poverty and unemployment in which Russia is still immersed.
The former CIA director George Bush as president, celebrated by invading Panama in late 1989. In 1990-1991 he engineered a war with oil-rich Iraq, which continues to this day with over a million Iraqis killed as a result. The 1973 rebellion by the oil-rich Third World was finally put down. Most importantly the UN was back under US control, if only shakily.
In 1990, the US blocked loans to Yugoslavia unless they accepted structural adjustment, which they were dragging their feet on. The US and Germany then offered support to secession by Croatian fascist Franco Tudjman, which led to the genocidal civil wars of 1991-1995, and ultimately to the direct US bombardment of Yugoslavia this year. The Rwandan collapse into genocide was also directly preceded by imposition of a severe structural adjustment program.
In 1998 unregulated global finance markets went through wild fluctuations and created severe recessions in Asia and Russia. Some Third World governments even neoliberal star pupils like Mexico, began to demand that the IMF, impose controls on capital movements.
Now even the IMF is developing cracks in the ideological facade. In a recent report a terse understated admission was made:-
"Taken together, developments in the global economy in 90s and the hypotheses to which they give rise are not particularly reassuring. They point to a global economic and financial system with great potential for allocating resources more efficiently within and among countries, but also with a potential for excesses to develop in asset markets and the private sector, and therefore for recurrent macroeconomic instability."
The end of the 20th century is an historic low-point in the struggle for justice and equality. Politics look now much as they did at the end of last century, with some differences:-
(1) the US is now far and away the dominant imperial power, possessing 50% of the world weapons stockpile and dominating a new political entity known as "the West", The US refuses to observe the restraints of the UN system and refuses to sign crucial treaties that might lead to a peaceful international order; 
(2) the grip of capitalism on the world's throat is on a truly global scale and
(3) the environmental damage caused by industrialisation and First World consumption has reached levels that spell a long period of disaster most significantly from global warming and nuclear waste.
Faced with the bizarre spectacle of the Communist Party championing neoliberalism in China and elsewhere, new forms of popular struggle, such as those of the Zapatistas in Mexico, are trying to avoid vesting any social interests in the state, which is always in danger of reverting control to its original owners and creators, and replacing the state with autonomous institutions of governance under direct public control, in much the way anarchism was heading a century ago.
While right wing libertarians want to do away with the state because of its capacity for redistribution from the rich to the poor, anarchists and other libertarian socialists want to do away with the state for exactly the opposite reason, because of its tendency to redistribute wealth from the poor to the rich, and generally to serve business interests.
I would like to say that I would welcome any libertarian initiative to do away with the state, and then let the chips fall where they may.
However I share the left-humanist abhorrence of violence, which affects mainly the poor. The non-Stalinist left has always pinned it hopes on non-violent revolutionary change for the simple reason that we are the many, and the few must cede control eventually. I believe that our hope lies in the slow building of parallel governance at an international level based on radical democratic principles, communal ownership and control of production and institutionalised protections of our cherished freedoms from hunger, repression, exploitation, misery, isolation and disease, from landlords, bosses, cops, presidents, senators and judges, politburos and commisars, censors, Ayatollahs, popes, priests, moral crusaders and CEOs, from elites and leaders of all stripes. In the words of the Zapatistas, I continue to dream of "a world in which many worlds fit."
Martin Taylor, Oct 1999