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Death of neo-liberalism

Updated on July 16, 2011

Francis Fukiyama’s End Of History and The Last Mani talks about the triumph of Liberalism in the world, as to such that Francis Fukiyama said it is “the end point of mankind’s ideological evolution” and the “final form of government” and as such constitute the “end of history”. To some extent he is right; it seems that the world has accepted liberalism and its economic counter-part, neo-liberalism, with open arms but at what cost. In order to spread neo-liberalism throughout the 1970s-1980s, the United States was content to see much of Latin America fall under strict military rule, and often activity encouraged the process with the help of the C.I.A. For example, in September 1973 when General Pinochet overthrew the elected government of Salvador Allende were many thousands of innocent people died. Salvador Allende implemented direct socialism in Chile in effect lifting a large percentage of Chileans out of extreme poverty, through social reforms, nationalizations and public works, his administration reduced unemployment and inequality in the country and prepped-up Chili's heath care and public education, but all of that was thrown away in order to make way of America and Neo-liberalism. Almost thirty years on and we are still witnessing the ups and downs of neo-liberalism and yet we deem it to be the best remedy for the economy. The alternative to neo-liberalism is yet to be realised or encouraged, but we must first understand what is meant by the term neo-liberalism. As the word neo is a prefix which means new, then neo-liberalism can be interpreted as new-liberalism or more correctly the resurgence of classic liberalism of the nineteenth century which advocated reducing the economic roles of government in providing social welfare, in managing economic activity at the aggregate and sectoral level, and in regulating international commerce.


By reducing explicit social regulation of private economic activity and ‘leaving things to the market’, neo-liberalism prevents the implementation of programmes that allow people to exercise political control over their economic affairs. Form this definition we can see that neo-liberalism is very market oriented and does not protect the individual from, as Adam Smith would say, the ‘invisible hand’ of the market. The spread of neo-liberalism has become to be known as the ‘Washington Consensus’ with key advocates such as the IMF and the World Bank; pushing the neo-liberal rhetoric to the rest of the world, especially to Third World countries who have to adopt neo-liberalism in order to attain profit. Thus, the neo-liberals, contend, if the government of a particular country attempts to regulate private activity in order to achieve some desired social goal- greater income equality or environmental preservation, for example- businesses will simply leave the country for higher profits elsewhere in the world. Therefore, in this sense, the homogenized world economy is forced to believe that there is no other alternative to neo-liberalism. For example, in the early 1990s, the debate over NAFTA with Mexico seemed to suggest that if Mexico does not join NAFTA, then it will be frozen out of the globalized economy, it would not have access to international capital markets; its exports would be heavily restricted; and imports would be outrageously costly. The hegemonic power of ideas has spread and transformed most of the globe into an adherent economic system, yet in spite of the huge disparities we are content to see the growth and spread of neo-liberalism.

As powerful as neo-liberalism is, however, it is not a monolithic ideology. This is evident in the strong emergence and support of ALBA in Latin America. ALBA consists of 8 members, Cuba, Venezuela, Nicaragua, Dominica, Bolivia, Ecuador, Saint Vincent and the Grenadines, and Antigua and Barbuda (Honduras used to be a part of ALBA, but after the coup in 2009 it left ALBA). ALBA, championed by Hugo Chavez, represents an alternative vision to neo-liberal economics, one with a socialist agenda in trade relations attempting to re-embed ‘the social’ back into economics. Thus, ALBA can be seen as a replacement of neo-liberalism as remarked by Nicaragua’s President Daniel Ortega during the ALBA Summit in 2008, who saw the crisis as the ‘funeral of Capitalism’, naming ALBA as ‘an alternative model for development’. ALBA is a Trading Bloc in Latin America that infuses, as Hugo Chavez would say, “Our project is neither statist nor neo-liberal; we are exploring the middle ground, where the invisible hand of the market joins up with the visible hand of the state; as much state as necessary, and as much market as possible” with this, Chavez is suggesting a ‘Keynesian economics’ for Latin America were business are heavily regulated by the state thus creating a strong welfare system with the help of subsidies oil prices that are state owned. ALBA still reigns supreme in almost all of the Latin American countries, furthermore, the success of ALBA is seen in its reluctance to co-operate with existing multinational institutions in order to decreased dependency on the West. This alternative to neo-liberalism offers us with co-operation instead of competition, already achieving what neo-liberal economics fails to achieve. In addition, ALBA is further distancing itself from the clutches of the imperialist neo-liberal America. The development of the regional monetary zone in Latin America that uses the ‘Sucre’ as its currency unit is the epitome of ALBA’s diverting dependency on the States dollar. The establishment of the’ Sucre’ can be seen as an attempt to strengthen the regional currency against the now weak dollar and ultimately replace it as a reserve foreign currency. Furthermore, the success of ALBA is seen in its reluctance to co-operate with existing multinational institutions such as the IMF etc, in order to decreased dependency on the West. This is made transparent by recent visits by Medvedev and Hu Jintao to Latin America, suggesting the recognition in the declining influence of the United States and thus the declining influence of neo-liberalism as a whole.


To finish, as neo-liberalism shows us its weakness and fissures under the global economic crisis, alternatives such a ALBA are gaining economic and institutional legitimacy. As Francis Fukiyama’s thesis, The End of History, details the dominance of liberalism in the world and suggesting that there is no alternative, it seems as powerful as neo-liberalism is, it is not a monolithic ideology as displayed by the success ALBA in Latin America. The success of ALBA in Latin America has provided a suitable replacement of neo-liberalism as it offers us with ‘co-operation not competition’; however ALBA’s success may be short-lived. ALBA’s financial dependency on Venezuela’s oil money is exerting pressure on Venezuela to emerge stronger in this economics crisis.

Until this dream of replacing neo-liberalism is a reality how can we support a doctrine that is meant to be "umbilical" linked with freedom and liberty instate so many dictators? Sadly as the perpetual liberalization of the world, so does the perpetual demise of democracy.


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    • Enock Vera profile imageAUTHOR

      Enock Vera 

      6 years ago from Leicester, United Kingdom

      Neo-liberalism is the root of all evil, a system that the humanises people and turns them into a commodity; is that the system we really want?


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