Whether we understand what neoliberalism is or not, the reality is that it affects our lives more than most people may realise, and not in positive ways. We might come across the term in an article or see someone post about it online, and we even heard our soon-to-be Prime Minister claim that it had failed New Zealand in September last year although her government is doing nothing to challenge it, yet if we don’t understand it we may not give it much thought. It is important to talk about it because over the last three decades it has played a significant role in many of the social, environmental and political issues we experience today and in order to address these issues, we need to understand how exactly it drives these problems.
There has long been contention about the use of the term, especially by free-market advocates that claim people, mainly critics on the left, use it as an insult without knowing what it really means. While the term does have an interesting history and the meaning has changed over the years, variations of the common usage of the term have become accepted, not only in the academic literature but also by society in general.
David Harvey gives a definition of neoliberalism as “... 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.” Basically, it is an economic theory proposes that business without restraint is good for everyone, and as liberterians love to say “the freer the market, the freer the people”. It is the realisation of capitalism’s most dangerous ideals, or capitalism on crack if you prefer.
To achieve this market freedom, deregulatory policies were introduced during the economic reforms of the 1980’s known in the United States as “Reaganomics”, in the UK as “Thatchernomics” and here in New Zealand as “Rogernomics”. Prior to the advent of neoliberalism, economic growth in most developed nations was significant due to government intervention, social welfare programmes and more progressive tax systems. What are now known as neoliberal policies gave greater power and freedom to employers, and soon after unions across industries were disempowered and dismantled reducing the capacity for workers to maintain their rights.
Tax reforms over the years have seen the corporate tax rate reduced from 48% to 30% and top income tax from 66% to 33%, allowing wealth to be concentrated in the hands of a smaller elite. Austerity is often adopted by neoliberal politicians, where concern about government debt results in policy-makers cutting social spending, favouring the economy over the needs of people. Free trade deals, like the controversial CPTPP our government recently signed, are only partially about trade and largely about securing privileges for corporations.
Proponents of neoliberalism somehow believe that the market will regulate itself, as though the demands of consumers will hold companies accountable for their actions, and they also think the concentrated wealth will trickle down to everyone else. This delusional thinking seeks to portray bloated corporations as a vital part of the economy that serves a public good, despite countless examples of free market policies destroying human lives, e.g. Grenfell Tower, human rights, e.g. Apple and most companies that have factories overseas, and the environment in pursuit of profit.
When the government steps back and allows private companies to deliver essential services without supervision, we are all going to have a bad time. Consider the pharmaceutical industry. While Martin Shkreli was demonised in the United States for hiking the price of Daraprim by over 5000%, he is only the tip of the iceberg that is Big Pharma’s distorted ideologies (Watch the Netflix show Dirty Money’s episode on Valeant). But privatisation in any industry is problematic because governments generally pay subsidies, which in the case of British Rail can get rather expensive. It also means workers are exposed to the whims of unrestrained business and the impacts discussed above are exacerbated.
Neoliberal Values Have Become The Dominant Values
In a stricter sense, neoliberalism refers to the policies and legislation that favour the freedom of markets, but in order for these ideas to take place, the collective values society holds must reflect those ideals. Thus, neoliberalism has successfully become the dominant ideology in developed nations like New Zealand by embedding its values within society itself and suppressing views and theories that propose different ways of doing things.
A phrase often associated with Margaret Thatcher and her support for the market system. It also resembles common responses when challenging dominant ideologies.
People often lament that we have lost our sense of community and our desire to care for each other, and it is pretty clear that individualism trumps collectivism, and we are led to believe that happiness in life comes from looking out for ourselves before everyone else. Look at how we define success. A ‘successful’ person it seems is one that has achieved both fame and wealth, and reality TV stars from shows like Married at First Sight and wealthy businesspeople like Bill Gates or Jeff Bezos are examples of this. Tragically, they are given more media coverage than people working to improve the lives of others and held up as role models for people to aspire to.
Individualistic thinking in this economy can be dangerous because of the impact it has on people’s health. We are led to believe that in developed societies such as ours, every person, regardless of their heritage and situations, are capable of being successful (in terms of social and financial status) if they work hard enough. Coined ‘magical voluntarism’, this way of thinking convinces those better off that they achieved their wealth through their own hard work and nothing else, even though this is usually untrue. On the other hand, those who fail to achieve those goals are convinced they alone are responsible for their failures, inevitably developing confidence and identity issues that can develop into depression and anxiety and other mental health disorders.
Individualism breeds competition, and competition is one of the core principles of free market ideology, justified by claims that economic competition results in innovations that benefit everyone. What really happens when companies compete is that shortcuts are taken that have adverse impacts on everyone but the companies themselves.
Competition turns us against each other, not just to the point where we backstab colleagues for a promotion, even people or entire sections of society we don’t even know. Beneficiaries are the favourite political punching bag of conservatives, who make sweeping generalisations about welfare recipients as lazy dole-bludgers who would rather drink, gamble and take drugs than find a job. The disdain held for the lower class by middle class is one of the key ways in which neoliberal values are upheld.
See, although the majority of the world’s wealth is concentrated in the hands of a very small few, this does not deter the middle class, or even many of the working class, because they genuinely believe one day they will become part of the wealthy class.
Applicable to more places than the US.
They believe this despite evidence to the contrary that shows the wealthy are not in the business of sharing, after all, it is hard to stay rich if you let everyone else get rich, which is why corporation use their economic and political power to monopolise their respective industries.
Corporations are essentially given free reign to do whatever they please. No matter how many times they make mistakes or ruin people’s lives, the punishments are so pathetic they keep going as they are. Going back to the example of the pharmaceutical industry above, it is important to remember that Shkreli was not indicted for gouging consumers, after all, that is fairly standard now, but he was arrested for defrauding investors.
Screwing people over is simply good business, which is why Jeff Bezos is painted as a successful businessman despite so many Amazon employees turning to food stamps to survive. The idea enforced by the media that a good business is one that posts high profits, regardless of the corners cut to get there, and we blindly celebrate it. Like politicians who are blatantly bought out by private interests (e.g. most US politicians) or their more subtly corrupt counterparts (e.g. Winston Peters and the racing industry or Judith Collins and Orividia), we give tacit consent to practices that undermine democracy and our way of living in favour of the private interests of industry.
It is fascinating that greed is not considered an abhorrent thing. We actually celebrate those who accumulate masses of money even though that wealth usually comes at the expense of others, and it is amazing people are surprised when private companies undertake such dodgy actions, after all, by definition their obligation is to profit and their shareholders, not the public good.
How do we move beyond neoliberalism?
The world’s most powerful people and organisations have considerable stake in the status quo, so to challenge these overarching ideologies is to challenge the extraordinary power they hold. That is not to say it is impossible. While the wealthy and businesses hold a lot of power, in a country like ours they must operate somewhat discreetly as opposed to the blatant corruption we see overseas, and more importantly, their will (possibly) can be defeated by the ballot.
Every generation has their own challenges that are different from the challenges of those that came before them. My generation, the millennials, and the Gen Z’s that follow, are set to inherit one hell of a mess. We are deprived of the same opportunities that those who hold the wealth and power now enjoyed, and many of us are struggling to get by or buy a house. Because of this, and more that will be discussed another time, there is a pretty good chance then that when we take the reins of power we are going to do things differently. Just as the Baby Boomers as a whole voted for policies that suited their interests at the expense of others, there is reason to believe that once my generation realizes its power they will vote for more compassionate policy. Indeed, already questions are forming about the future of capitalism and how long we can keep going down this road.
Of course, it is not enough to simply wait for change, nor is the blame or burden to act placed on any one generation. That isn’t to say that there isn’t already well organised resistance to neoliberalism, because there clearly is. Jeremy Corbyn has become hugely popular as leader of the Labour Party in the UK and although he is routinely attacked by conservatives and centrists for his socialist policies, the fact that his policies have so much support from the young and the progressive left give hope that a new model for organising society is on the horizon.
Jeremy Corbyn speaking at a rally – Source: Sophie J. Brown
Similarly, the support Bernie Sanders is still experiencing following his presidential campaign and the ongoing success of the progressive movement he started in electing progressive candidates suggests that democratic socialism may well find a platform to challenge the neoliberal model.
Social Enterprise and Alternative Models
Here in New Zealand we don’t really have this sort of “radical” representation in government, with Ardern’s Labour Party being very much a centrist neoliberal party and the Greens moving towards the centre. But there are other ways to challenge the unrestrained ambitions of capitalism, in part by changing the nature of business. Although it is not without flaws, social enterprise does offer a model of business that uses its profits to provide a social good, rather than simply accumulating wealth for the sake of it.
A good example of this is Eat My Lunch. Yes it is a company that is making money, but a good portion of that profit is used to expand its service and facilities while continuing to provide food for children in need. This isn’t simply tokenistic charity to appear philanthropic to promote one’s business, instead it is a different model of operating a business with producing positive social outcomes at the centre of its purpose.Social enterprise is becoming popular in the regions, particularly in rural areas with high levels of deprivation, and many Maori are exploring social enterprise as a way of overcoming intergenerational poverty, although they must be careful of falling into the trap of equating economic development with Maori development.
Transition towns are an example of local resistance to the global capitalist system. This model proposed enhancing the self-sufficiency of small towns by keeping production and consumption of goods local as much as possible, at times even advocating measures like local currencies. Time will tell whether these initiatives will work in the long run, and their success is determined by the level of support, including financial support, they receive to help them get started. Such models show that thinking big but acting small is the first step in the right direction when governments fail to act in the interests of the people.
Understanding to Overcome
Perhaps the most important thing when confronting neoliberalism in any context is to be aware of its influence. Whether you are addressing poverty, environmental degradation or homelessness, in order to find permanent, sustainable solutions one must first acknowledge that neoliberalism is ultimately responsible for creating the situation, and work to find an alternative that challenges that ideology. Merely tinkering at the edge without challenging the status quo in any way will simply yield the same result.
Change has to be truly transformative, and as discussed above, neoliberalism is enforced by values that are dominant in society. These values have changed how we interact with each other, so reclaiming the value we place on community, protecting our environment and caring for each other must occur in order for public sentiment towards policy to follow. We have been conditioned to compete with each other and think of ourselves, so we need to move towards a society that works with each other and thinks about everyone else.
Currently I am interested in how to improve outcomes for people in rural areas with high deprivation, like my hometown pictured below. While the instinct from the Government is to simply throw money at the area and create jobs, there are countless social implications that prevent this from working, things like substance abuse, disenfranchisement and mental health issues.
Overcoming the feeling of being isolated and demonised by others, as so many people in these areas feel, does not come from having a job or money but by being shown by your community that people care about you and they believe in you. As my whanaunga said to me recently, a healing needs to take place, a personal, sometimes spiritual healing that counteracts neoliberal values. Once we have looked after each other’s mental well-being and given each other purpose and direction, then those jobs and that money can help turn people’s lives around.
It’s about money, but at the same time it isn’t. It is about our values and the kind of world we want to live in, and the first step in creating a better world is by actually caring for each other and putting that into practice.