Neoliberalism simplifies trade between nations. It involves uncontrolled exchange and movement of goods, services, resources and activities with the aim of acquiring profit leverage with efficiency through cheap resources (Shah, 2007). Neoliberalism espouses the removal of the free trade barriers. These barriers include tariffs, regulations, laws and legislation, and investment restrictions. Neoliberalism is the intensification and expansion of the market through the increase in quantity, frequency, recurrence and formalization of transactions (Treanor). The goal of Neoliberalism is to enhance market competition in every transaction process.
These transactions tend to be more competitive if they occur repeatedly for short periods of time. This way the dynamism of the cycle of cost and profit remains active. The basic principles of Neoliberalism include the freedom of trade in goods and services, limitless circulation of capital and, investment capacity and opportunities. The concept of Neoliberalism involves several vital points mainly in reference to the economy. The five points include the rule of the market, reducing public expenditure for social services, privatization, deregulation, and the concept of individual responsibility against public good (Martinez & Garcia, 2000).
The rule of the market means limitless freedom of the flow and exchange of goods, services and capital. It sustains that the market regulates and balances itself through the dynamics of market demand. The government has a hands-free policy when it comes to the dealings of the private enterprises like the freedom to determine prices of commodities. International trade and investment are likewise encouraged. The next point is the reduction of public expenditure for social services. Social Services comprise health, education and infrastructure development among others.
Privatization is a main aspect of Neoliberalism in that it espouses the transfer of the previously state-owned enterprises or businesses like banks, schools and hospitals to private investors. There are two opposing views on privatization. On one hand, it increases efficiency of the enterprise under the ownership of a specialized private group. On the other hand, privatization results to a concentration of wealth and power to a few groups. Deregulation is another aspect of Neoliberalism. It refers to a reduction in the regulating power of the government. Instead, the market is allowed to regulate itself with the aim of maximizing profits.
The last point is the concept of individual responsibility versus public good. Each individual is responsible for his or her conditions in life. The decrease in government support to the community for education, health care and social security should be compensated by the individuals themselves. What are the justifications of Neoliberalism? Is it an underlying theory for most of the economic successes of a nation? Neoliberalism promotes the idea of a free market without government interventions in order for resources to be more efficiently distributed to groups in society who can better handle businesses.
It likewise supports the idea that privatization of enterprises takes away the inefficiency or incompetency of the public sector in running businesses. Neoliberalism believes that the best way to achieve progress is through continued economic growth and the inevitable road to success is economic globalization. Economic globalization pertains to trade and financial movement as the factors which increase the integration of world economies (IMF Staff, 2000). It is also referred to as the transfer and exchange of knowledge and labor beyond the national boundaries and into the international field.
The term Globalization is most often interchangeably used with Neoliberalism because of the similar principles that both concept advocates. Both support free trade as the ultimate means to achieve economic growth. Globalization leans more towards the weakening of national borders and the increase in the assimilation of global policies and trends in the national level. The aspects of Globalization include trade, movement of capital, movement of people and information dissemination and exchange through technology.
Information exchange has been significantly globalized due to the proliferation of the internet. The global financial market run on a very fast pace due to the internet where transaction can be done with just one click. Movement of capital involves foreign investment and movement of people refers to employment opportunities outside the home country. These employment opportunities give way to an increasing trend of migration from developing countries to countries with more advanced economies.
On the other hand, Neoliberalism is more focused on the nationwide aspect of trade with major effects from the international trade community. Other policies supported by Neoliberalism include the maintenance of competitive exchange rates where market-determined exchange rates are followed instead of government-fixed exchange rates (Neoliberalism). Another policy is fiscal rectitude where expenditures are reduced and taxes are increased to sustain a budget surplus. II. The Neoliberal Revolution in Great Britain
Prior to the Neoliberal Revolution, the dominant principle in both Western and most parts of the Third World economies is the Keynesian concept (Ambrose). John Meynard Keynes was an advocate of the idea that government interventions are needed to lead markets in endeavors which would benefit the most number of people. This idea was put to a halt when Neoliberalism began to take shape. In 1975, Margaret Thatcher became opposition Conservative Party head and was elected as Prime Minister in 1979 (Scott, 1997).
She was determined to alleviate the condition of the British people from recession to economic greatness. The Neoliberal Revolution started in 1980 with Margaret Thatcher as the main proponent. The proposal of the revolution included decrease in corporate taxes, corporate regulation reduction, public services privatization and abolition of international trade barriers (Moore, 1998). At this time, privatization was a major practice and the primary force of Neoliberalism, as power, assets, rights and responsibilities along with a great deal of autonomy were afforded to private enterprises.
Thatcher’s principle of Neoliberalism was supported by her TINA or There Is No Alternative campaign (George, 1999). The significance of Thatcher’s neoliberal policy lies in the idea of competition as an essential part of growth. Nations, regions, companies and individuals compete with each other. This competition makes the market more effective as it maintains only those who survive or those who won against the others. Thus, only the best resources, may it be natural, human, physical or financial, are included in the final market competition.
It is the belief of Thatcher that people by nature are unequal so there are no worries about issues of social inequality as a hindrance to economic success. Those who are the strongest, more intelligent and well-educated can contribute best to the welfare of the country and its people. On the other side of the fence, the weak and the poorly educated are only responsible for themselves and have themselves to blame for their status. The Neoliberal Revolution introduced changes in policies which brought about the negative effects to the public sector.
The budget for the health sector was reduced which meant less free health services for the people and the privatization of health services was started resulting to the charging of fees and introduction of insurance policies (Navarro, 2006). A very important factor in the Neoliberal Revolution is not only the promotion by the U. K. and U. S. governments, but the support it got from international organizations like the International Monetary Fund (IMF), the World Trade Organization (WTO), the World Bank and the World Health Organization (WHO).
III. Effects of Neoliberalism on British Citizenship The main goal of citizenship is equality among the people. There are three forms of citizenship: civil, political and social citizenship. Civil Citizenship comprises employment, private property and contract protection, and market access. Political Citizenship involve the right to vote and hold public office, while Social Citizenship means the right to the provision of education, health benefits and other social services (Sparke).
The rights of the citizens are mainly dependent on the policies of the government. Neoliberalism had a great impact on the government policies in that citizenship was largely affected to its detriment. It is important to note the social policy of Neoliberalism before we move further into a discourse of its negative effects on citizenship. In Neoliberalism, social policy means the provision of equal opportunities available in the market and equal legal treatment to all citizens (Rosch). This is also the measure of social justice.
The social policy does not include concern for the social welfare of the people. Its premise lies in individual responsibility where each person is responsible for achieving his or her own social and ethical ideals. This responsibility is not to be shouldered by the government in any way. This social policy is deemed as leaning favorably to those with financial power and is discriminating and pushing those at the lower level of the economic ladder further down. Neoliberalism threw its strongest punch on the social form of citizenship.
Social services were privatized and budget cutbacks were enforced as part of the fiscal rectitude policy where expenditures are reduced to maintain a budget surplus. Education, health services, housing, transportation and other social services were stripped off their importance as part of the government’s responsibility to its citizens. Instead, the people are encouraged to strive on their own to meet these needs. The social services organizations were handed over to private institutions which now are to be dealt with if the people need the kinds of services they offer.
Since these private enterprises are now competing in an open market, the cost of availing their services becomes expensive and incomparable to the previous benefit that the citizens were receiving from the government. The negative impact is most felt by the underprivileged and advantage is savored by the wealthy and powerful. Civil Citizenship was likewise adversely affected by Neoliberalism in terms of the contract and employment terms. The most notable effect is the reduction, if not elimination of the trade unions which are primarily based in public enterprises.
Privatization meant abolishing of the existing systems as the policy making is transferred to the owners of the private companies. Protection of the employee was abandoned with the increasing short term contracts along with short duration of jobs. Employees now are offered shorter tenures which force them to undergo the tedious task of re-applying to companies. With private companies’ anti-union policies, the employees now have nowhere to go. They either sink or swim. Employment opportunities are now available to more competent and well educated individuals.
The name of the game became employability or the capacity of the individual to sell his or her services based on the acquired knowledge and skills. This now brings us back to the issue of the advantage of the more financially able citizens. Individuals with access to good education from schools which are now private enterprises and which are now able to charge high fees, has the advantage. The flow of trade money between enterprises, regions and even between nations on a wider scale as espoused by neoliberalism, has a tremendous effect on the electoral system or the political aspect of citizenship.
The exercise of electoral right is now deemed futile as doubts are cast upon the veracity of the election results because of the money generated inside the politics arena. Politics, as a powerful venue of pushing legislative programs or business leverage, is considered to be a channel used by some groups or enterprises in advancing their own personal agenda. Neoliberalism has in great part affected the entire nation including the people and how they function in society. Its effects are criticized left and right by different groups as to its advantages and disadvantages.
Critics and proponents both have their valid points. It has to be stressed though that for a concept or idea to be considered truly successful is to analyze if a great majority of the people has benefited from the underlying principles of the concept. The ultimate question now is: Has Neoliberalism created a healthy balance between the rich and the poor or has it been an instrument to push the rich to the topmost part of the economic ladder and to push the poor further down the pit? Bibliography Ambrose, S. (n. d. ). The Roots of Corporate Globalization in IMF/World Bank “Structural
Adjustment” Policies. Public Eye. Org. [online] Available from: http://www. publiceye. org/magazine/v18n2/ambrose_imf. html [Accessed 25 June 2007] George, S. (1999, March 24). A Short History of Neo-liberalism. Global Exchange. [online] Available from: http://www. globalexchange. org/campaigns/econ101/neoliberalism. html [Accessed 25 June 2007] IMF Staff. (2000, April 12). Globalization: Threat or Opportunity? International Monetary Fund. [online] Available from: http://www. imf. org/external/np/exr/ib/2000/041200. htm#II [Accessed 25 June 2007] Martinez, E. , & Garcia, A. (2000, feb 26).
What is “Neo-Liberalism”? A Brief Definition. Global Exchange. [online] Available from: http://www. globalexchange. org/campaigns/econ101/neoliberalDefined. html [Accessed 25 June 2007] Moore, R. (1998, May). Absolute PowerThe Making of a new World Order. Third World Traveler. [online] Available from: http://www. thirdworldtraveler. com/New_Global_Economy/Absolute_Power. html [Accessed 25 June 2007] Navarro, V. (2006, Oct 23). What is happening at the World Health Organization? The coming election of the WHO Director-General. People’s Health Movement. [online] Available from: http://www.
phmovement. org/en/node/279 [Accessed 25 June 2007] Neoliberalism. (n. d. ). Wikipedia. [online] Available from: http://en. wikipedia. org/wiki/Neoliberalism [Accessed 25 June 2007] Rosch, M. (n. d. ). What does neoliberalism mean? Internetseminar. [online] Available from: http://tiss. zdv. uni-tuebingen. de/webroot/sp/barrios/themeA2a. html [Accessed 25 June 2007] Scott, D. (1997). The Path from Old Labour to Tory Neoliberalism to New Labour. People’s News Agency. [online] Available from: http://www. prout. org/pna/uk-capitalism. html [Accessed 25 June 2007] Shah, A. (2007, March 5).
A Primer on Neoliberalism. Global Issues. [online] Available from: http://www. globalissues. org/TradeRelated/FreeTrade/Neoliberalism. asp [Accessed 25 June 2007] Sparke, M. (n. d. ). Center for Communication and Civic Engagement. University of Washington. [online] Available from: http://depts. washington. edu/ccce/assets/documents/pdf/Passportsintocreditcards. pdf [Accessed 25 June 2007] Treanor, P. (n. d. ). Neoliberalism: origins, theory, definition. InterNLnet. [online] Available from: http://web. inter. nl. net/users/Paul. Treanor/neoliberalism. html [Accessed 25 June 2007]
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