Although not named ‘Neoliberalism’ the extractive policies during the colonial times quite well mirrored virtually the same underlying phenomenon– which under the garb of following ‘market fundamentalism’ basically allows elitist influence on public policy to extract resources from the ‘many’ to transfer to the ‘few’.
While during the colonial times, under the cover of so called ‘sound economics’ whereby what was being hailed as efficiency attained through employing ‘comparative advantage’ theory – that a country produces only that it knows best how to produce, which in other words, meant continued production of mainly raw cotton in the colonial lands, while the colonial masters took that cotton and produced much higher valued products in the shape of textiles.
So, countries like China, India, and Egypt, which were once at the cusp of starting an industrial revolution, could not when under the rule of colonial masters, and the so-called sound economics they practiced, were left to produce agricultural products, and not allowed to move towards more finished products. Hence, countries which in terms of national income were among the top most, like in China, and the Mughal Empire in India, were reduced to low-income countries by the time their masters left a few centuries later.
The same philosophy of market fundamentalism, and least regulation that swept many parts of the world, and which was carried on their shoulders by Bretton Woods institutions, under the influence of major shareholders of these institutions like the USA, the UK, for instance, which by the early 1980s had mostly moved away from ‘New Deal’ type policies providing a greater role for the public sector, and with the significant footprint of governments in regulating markets, for instance, through price control policies, and with a much greater welfare agenda, and appropriately reined-in property rights application to international trade, and role of multi-national companies.
Instead, what was being given way to, was to the adoption of Neoliberalism with arms wide open by many countries in the West, including Latin America, through ‘Chicago Boys’ styled economists, and in more and more developing countries under International Monetary Fund (IMF) programmes, which they were getting into, mainly as balance of payments support taken by these countries mainly because of weak commitment to economic reform agenda instead, and because of the movement towards flexible exchange rate regime– after the collapse of the Bretton Woods system– overall globally, putting a number of developing countries under greater debt distress.
Hence, given the quite similar basis of Neoliberalism, as the sound economics being practiced under colonial rule, the term is a misnomer, since the policies being practiced are neither new, nor liberal, as indicated in lines above. As a consequence of such policies income-, and wealth inequality has surged drastically not only within countries– as extractive institutional design adopted through the collusion of politico-economic elites extracted resources from the many in the population, to a tiny elite segment through diminishing government regulation, practice of both market fundamentalism, and deep austerity policies– but also creating a big gap between the developed global North, and the developing global South due to similar neoliberal policies practiced in international trade, mainly through little regulated capital flows internationally, which operates as ‘hot money’ and creates quite serious balance of payments issues in developing countries with little regulation of capital flows under the neoliberal assault, practiced both under the influence of many of their policymakers styled in the same way as ‘Chicago Boys’, and through the programme conditionalities of IMF programmes, in which a number of developing countries find themselves in from time to time.
It is exceedingly important the world gets rid of neoliberalism, and within it over-board practice of austerity, and instead move towards social democratic type regimes, which are based on inclusive economic, and political institutional design, believe in greater regulation of markets, and value cooperation over competition; and work meaningfully towards a welfare-oriented state.
Moreover, in addition to restricting developing countries unjustifiably to certain extents of market, the over-board practice of intellectual property rights (IPIs)– as done during the pandemic to restrict the manufacture, and sale of Covid vaccines by developed world overall through World Trade Organization (WTO)– that puts too many patent restrictions mainly for satisfying the profit motives of the main fund providers to the WTO, and the multinational companies that operate from these countries.
Hence, it is exceedingly important the world gets rid of neoliberalism, and within it over-board practice of austerity, and instead move towards social democratic type regimes, which are based on inclusive economic, and political institutional design, believe in greater regulation of markets, and value cooperation over competition; and work meaningfully towards a welfare-oriented state.
This is all the more important, as the world tries to move away from a short-sighted, largely profit-minded, fossil-fuel based economic regime, to a green economy. A July 22, Project Syndicate (PS) published article ‘The dead hand of Neoliberalism is blocking green growth’ pointed out in this regard ‘Thus, while neoliberal policy prescriptions fall out of favor in developed economies, they are being repackaged in green boxes for less affluent ones. …Moreover, richer countries are pushing developing countries to “leapfrog” to renewables at an unrealistic pace. They fail to recognize developing countries’ need for limited fossil-fuel use in the short term, or that unfair trade rules are limiting poorer countries’ access to affordable green technology and cheap capital. Such double standards are indicative of the same power imbalances observed in recent years when wealthier countries hoarded vaccines, slashed aid budgets, and failed to deliver on past climate-finance promises.’
In the same vein, economics Nobel laureate Joseph E. Stiglitz in his comments in a June 4, PS published ‘Big Question’ article ‘What comes after Neoliberalism?’ in which a number of noted economists commented, pointed out ‘The neoliberal agenda was always partly a charade, a fig leaf for power politics. There was financial deregulation, but also massive government bailouts. There was “free trade,” but also massive subsidies to big agriculture and the fossil-fuel industry. Globally, this led to the creation of rules that preserved colonial trade patterns, with developing countries producing commodities and the advanced economies dominating high-value-added industries. … That it was a charade has now been made apparent by the US, which is providing huge subsidies to certain industries– essentially disregarding World Trade Organization rules– after decades of scolding developing countries that even considered doing the same. … The end of neoliberalism, the recognition that some of the institutions created under its aegis are failing, and the new geopolitical realities provide us with a critical opportunity to rethink globalization and the rules that have underpinned it. We must seize it.’ It is therefore, very important, that assault of neoliberal policies is undone at the earliest possible.
