A Brief History of Neoliberalism | David Harvey

Summary of: A Brief History of Neoliberalism
By: David Harvey

Introduction

Delve into the intricate world of Neoliberalism with David Harvey’s enlightening book, A Brief History of Neoliberalism. Tracing the roots of this economic and political doctrine from its inception after World War II, Harvey explores how Neoliberalism has evolved and spread across different countries and continents. The book encapsulates the key events, philosophies, and transformations that marked the rise of Neoliberalism in nations like the U.S., U.K., China, and India, and its impact on income distribution, state policies, globalization, and more. Unravel the complex connections of Neoliberalism to privatization, freedom, and the changing dynamics of power in society through this engaging summary.

The Rise of Neoliberalism

When U.S. and coalition forces invaded Iraq, they not only sought to overthrow a dictator but also to privatize Iraq’s entire business structure. This move opened up Iraq to foreign control, creating a neoliberal state that emphasized private property, multinationals, and financial investment. Neoliberalism emerged as a powerful philosophy after World War II, with countries creating new international institutions to prevent economic depression. However, neoliberal policies led to economic growth for advanced nations but left behind much of the Third World. The top 1% of earners in countries like the U.S., U.K., Russia, Chile, and Mexico saw their income share increase dramatically due to privatization and tax policies.

Neoliberalism’s International Expansion

Neoliberalism’s expansion in the international sphere began during Mexico’s default crisis in 1982-1984. Major U.S. investment banks offered easy credit for developing countries’ heavy borrowing denominated in dollars. When Mexico defaulted due to higher interest rates, President Reagan’s administration resolved the crisis by restructuring Mexico’s debt with the IMF and the U.S. Treasury, contingent on domestic neoliberal reforms. The reforms privatized state assets, benefiting a small group but not the labor market. The IMF and World Bank applied the same neoliberal format to other emerging market countries, creating a new super wealthy class that shared an ideology advanced by the World Economic Forum or Mont Pelerin Society. In the U.S., financial activity encouraged the “monetization” of any asset, favoring CEOs of new corporations with no core business but to maximize cash flows among industries.

The False Promise of Neoliberalism

Neoliberalism’s narrative is a double-edged sword. It touts individual freedoms and initiatives, yet promotes corporate interests over social welfare. In essence, it is a policy that yields limits on democracy in the name of freedom. Karl Polanyi’s 1944 prediction that neoliberalism would only benefit the wealthy has become a self-fulfilling prophesy, as governments have given absolute priority to financial institutions over the people. What follows is a brief overview of neoliberalism’s rise, its effects on unions, the populace, and the environment.

From the outset, neoliberalism has been a support system for the privileged class. Politicians have sold this particularly harmful policy to their electorate under the guise of “common sense”. The first major test of neoliberalism in the U.S. occurred when NYC found itself in fiscal trouble in the 1970s. As more affluent suburbs developed around the city, leaving the poorer areas with vacant homes and unstable employment prospects, NYC began to unravel. Subsequently, the city faced technical bankruptcy when larger financial institutions refused to renew its debt. This was resolved by rescuing bondholders at the expense of unions, who were forced to accept wage cuts, as well as health and social services cutbacks.

The Reagan presidency saw the nationwide implementation of neoliberal policies, especially to undermine trade union activism. When Reagan fired the air traffic controller’s union in 1981, he made it clear that the Federal government no longer allowed unions. Much of the Midwest and East were deindustrialized and replaced with non-unionized manufacturing in the South, Asia, and Latin America, thanks mainly to neoliberalism. The approach featured three forces to secure class power: increased direct foreign investment, deregulation and active financing in the markets; breakdowns in trade barriers and exchange controls for more open capital flows; and pressure exerted by U.S. Treasury, IMF, and Wall Street on developing countries to adopt neoliberal reforms.

Unsurprisingly, neoliberalism supports corporations over democratic institutions. While the government claimed to be expanding social and environmental justice, it utilized the word “freedom” to steamroll political consent. More troubling, good and bad freedoms often conflict. Since neoliberalism is founded on free enterprise and little regulation, governance cannot be strengthened in response to “good freedoms”. If such “good freedoms” impede the neoliberal policy, the rulers can suppress them with state powers.

The neoliberal regime has led to an uneven geographical development of state institutions, functions, and systems, making it an unstable and paradoxical political form. Established democracies, such as the U.S. and the U.K., have advocated neoliberal policies in universities, corporations, and think tanks over the years, even developing campaigns, books, and TV series to promote the neoliberal agenda to the public and fellow corporations. Indeed, political economist Karl Polanyi’s prediction that neoliberalism would only advantage the wealthy has come to bear, given that governments have given absolute priority to financial institutions over people.

As neoliberalism unfolds, it is essential to examine the policy’s double-edged story that espouses individual freedoms and initiative, whereas it propels corporate interests at the expense of social welfare. The condition of labor after the Great Depression ought to educate us about the false promise of new liberal economic policies. In essence, neoliberalism is a policy that puts limits on democracy in the name of freedom.

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