Wednesday, July 11, 2018

Keck and Sikkink. 1998. Activists Beyond Borders.

* Keck, M. E., & Sikkink, K. (1998). Activists Beyond Borders: Advocacy Networks in International Politics. Ithaca & London: Cornell University Press.

Keck and Sikkink focus their work on TANs - transnational advocacy networks, defined as including "those relevant actors working internationally on an issue, who are bound together by shared values, a common discourse, and dense exchanges of information and services" (p. 2). They write:

"Such networks are most prevalent in issue areas characterized by high value content and informational uncertainty. At the core of the relationship is information exchange. What is novel in these networks is the ability of nontraditional international actors to mobilize information strategically to help create new issues and categories and to persuade, pressure, and gain leverage over much more powerful organizations and governments. Activist networks try not only to influence policy outcomes, but to transform the terms and nature of the debate... their goal is to change the behavior of states and of international organizations" (p. 2).

Then they write that TANs frame issues "to make the comprehensible to target audiences, to attract attention and encourage action, and to "fit" with favorable institutional venues" (p. 2-3). Interestingly, they refer to these networks as embodying "elements of agent and structure simultaneously" (p. 5). They are structures insofar as they are "patterns of interactions among organizations and individuals" but as actors the networks have agency (p. 5). Keck and Sikkink choose the term networks "to evoke the structured and structuring dimension in the actions of these complex agents, who not only participate in new areas of politics but also shape them" (p. 4).

Networks are "forms of organizations characterized by voluntary, reciprocal, and horizontal patterns of communication and exchange" (p. 8). The found that "Transnational advocacy networks appear most likely to emerge around those issues where (1) channels between domestic groups and their governments are blocked or hampered or where such channels are ineffective for resolving a conflict, setting into motion the "boomerang" pattern of influence characteristic of these networks... (2) activists or "political entrepreneurs" believe that networking will further their missions and campaigns, and actively promote networks; and (3) conferences and other forms of international contact create arenas for forming and strengthening networks" (p. 12).

The boomerang strategy (p. 12-13) is one in which an NGO in state A that cannot achieve its goals through domestic advocacy alone works with an NGO in state B. The foreign NGO then applies pressure to state B, which directly or through an intergovernmental organization applies pressure to state A. For example, this could occur in the case of human rights, when local activists cannot get their own government to end its repression, so they work with foreign activists. The foreign activists pressure their own government, which in turn puts pressure on the repressive government to improve its human rights record. In fact, Keck and Sikkink say this pattern is often used in human rights advocacy.

When using the boomerang strategy: "For the less powerful third world actors, networks provide access, leverage, and information (and often money) they could not expect to have on their own; for northern groups, they make credible the assertion that they are struggling with, and not only for, their southern partners. Not surprisingly, such relationships can produce considerable tensions" (p. 12-13).

Transnational advocacy networks work by using "the power of their information, ideas, and strategies to alter the information and value contexts within which states make policies" (p. 16). Keck and Sikkink divide their tactics into four categories: "(1) information politics, or the ability to quickly and credibly generate politically usable information and move it to where it will have the most impact; (2) symbolic politics, or the ability to call upon symbols, actions, or stories that make sense of a situation for an audience that is frequently far away; (3) leverage politics, or the ability to call upon powerful actors to affect a situation where weaker members of a network are unlikely to have influence; and (4) accountability politics, or the effort to hold powerful actors to their previously stated policies or principles" (p. 16).

The information in the first category, information politics, must be reliable, well-documented, timely, and dramatic (p. 19). They often rely on testimony "stories told by people whose lives have been affected" and then they often "interpret facts and testimony, usually framing issues simply, in terms of right and wrong" (p. 19). An example given of how activists dramatize the information is that they reframed what was called female circumcision as female genital mutilation, which "resituated the practice as a human rights violation" (p. 20). Activists find it important to link both testimony and technical and statistical information, because the testimony puts a human face on the statistics that motivates people to seek changed policies (p. 21).

Leverage politics find a way to link cooperation with them to money, trade, or prestige. Often they use shame, because "governments value the good opinion of others" (p. 23). In accountability politics, they try to get a government to publicly change their position on an issue and they pressure them to live up to their promises (p. 24).

Keck and Sikkink outline stages of network influence: "(1) issue creation and agenda setting; (2) influence on discursive positions of states and international organizations; (3) influence on institutional procedures; (4) influence on policy change in "target actors" which may be states, international organizations like the World Bank, or private actors like the Nestle Corporation; and (5) influence on state behavior" (p. 25).

They found that TANs are most effective when two characteristics are present: "(1) issues involving bodily harm to vulnerable individuals, especially when there is a short and clear causal chain (or story) assigning responsibility; and (2) issues involving legal equality of opportunity" (p. 27).

This is just a synopsis of the book's introduction. What follows are three case studies of human rights, environmental, and anti violence against women networks.

Kay. 2005. Labor Transnationalism and Global Governance

Kay, Tamara. 2005. Labor Transnationalism and Global Governance: The Impact of NAFTA on Transnational Labor Relationships in North America. American Journal of Sociology Vol. 111 No 3 pp. 715–56

Kay applies political process theory to transnational activism, specifically to a case of labor activism and NAFTA. Political process theory was developed for national social movements. It relies on the concept of political opportunity structures. Kay makes the point that political process theory's ideas about political opportunity structures are specific to national activism. Transnational activism also has political opportunity structures, but they are different from national social movements.

Kay writes:

"Synthesizing key scholars’ conceptualization of the term, McAdam (1996, p. 27) highlights four primary dimensions of political opportunity at the national level: (1) the relative openness or closure of the institutionalized political system, (2) the stability or instability of elite political alignments, (3) the presence or absence of elite allies, and (4) the state’s capacity and propensity for repression" (p. 721-722).

These factors require a state: repression by the state, the political parties within a state, and electoral politics within the state. In the case of transnational activism, Kay says, the political opportunity structure is not determined by a state. Additionally, the four dimensions named above assume one nation state, and in the case of NAFTA there are three.

This seems specific to the types of activism Kay is referring to in which there is an global governance institution that creates the arena for activism. In cases where transnational activism uses a boomerang strategy (Keck and Sikkink) to target one state government using activism from abroad, there are multiple states involved, or at least activists in multiple states who are perhaps targeting just one state, but there may not be a global governance institution involved.

In the case of NAFTA and other political opportunity structures created by global governance institutions, Kay's work applies. NAFTA has no elected representatives or political parties nor does it have a capacity for repression. Kay identifies three dimensions of political opportunity structures at the transnational level:

"Here I offer three primary dimensions of political opportunity structure at the transnational level that explain how power is established at the transnational level: (1) the constitution of transnational actors and interests, (2) the definition and recognition of transnational rights, and (3) adjudication of rights at the transnational level" (p. 722). She adds that "At the transnational level, political opportunity structures are embedded in rules and bureaucratic processes rather than electoral processes" (p. 723).

In the case of NAFTA and its labor agreement NAALC, their creation created transnational actors and interests. Previously, labor activists in each nation saw their interests as purely national. Activists in each nation wanted to keep the jobs in their own country, and saw labor in other nations as competition. Each nation has its own labor laws, institutions, and adjudication processes. Essentially, the arena for activism was purely national. When NAFTA was under negotiation, this changed. Suddenly labor activists in all three nations had a common interest - opposing NAFTA - and they began working together as transnational actors to oppose it. Following its passage and implementation, they continued to have shared interests in protecting and expanding labor rights in all three NAFTA countries. Or, as Kay describes the shifting of interests from national to transnational: "The goal of the campaign was not to keep jobs in the United States; rather, it was to maintain decent labor rights and standards in North America" (p. 730).

Part of the reason for the continued activism after the passage of NAFTA was newly established adjudication process through which activists could file complaints against labor violations in the three NAFTA nations. The complaints must be filed outside one's own country. In order to file complaints, activists in the country in which the labor violation occurred worked with activists in the nation where they were filing the complaint.

Thus, the creation of NAFTA established both a definition of transnational rights - the labor standards that the three NAFTA nations were to uphold, giving rights to labor in all three nations - and an adjudication process at the transnational level when violations occurred.

Kay writes, in summary:

"In this article I show how global governance institutions facilitate a process that constitutes transnational actors and interests. NAFTA forced labor unions in all three countries to recognize the common threat to North American workers if the free trade agreement stimulated a reduc- tion in jobs and wages and in health, safety, and environmental standards. Although it is commonly thought that NAFTA only created a common market, my data suggest that it also created a transnational political opportunity structure through which national unions in North America could identify their common interests as North American unions and advocate for them by developing a transnational political action field.

"The second dimension of transnational political opportunity structures expands upon the first by emphasizing the importance of defining and recognizing transnational actors’ and social movements’ rights in the transnational arena. This dimension is similar to Tilly’s (1984) assertion that national social movements target nation-states because they have the power to grant or deny legitimacy. In the transnational arena, global governance institutions have the same power" (p. 723).

Kay also introduces two other terms, political mobilization effect and institutional effect.

The political mobilization effect occurred when the threat of NAFTA created a common interest (preventing its passage) among labor activists in all three nations. The institutional effect occurred when NAFTA created institutions that "define and recognize transnational rights, and adjudicate violations of these rights at the transnational level" (p. 724).

Kay provides five stages in a process of creating a cooperative transnational relationship and institution building: "(1) contact, (2) interaction and the coalescing of interests, (3) growth of confidence and trust, (4) action (e.g., joint activities and actions to address mutual needs and interests), and (5) identification (e.g., recognizing mutual interests)." (p. 725).

In her case study of three unions that work together, one from each of the three NAFTA nations, she provides examples of how the three unions work together. They initially worked to oppose NAFTA. After its passage, they worked to organize workers in Mexican factories; they set up a fund for striking workers in Mexico; they worked together to organize Mexican workers in the U.S.; and they worked together to file complaints when labor violations occurred in any of the three nations.

Monday, July 2, 2018

Biersteker. 1994. "The Triumph of Liberal Economic Ideas in the Developing World."

* Biersteker, Thomas. 1994. "The Triumph of Liberal Economic Ideas in the Developing World." in Global Change, Regional Response: The New International Context of Development, edited by Barbara Stallings. Cambridge: Cambridge University Press.

Biersteker describes the world before neoliberalism as an era of global Fordism, "a regime of accumulation characterized by mass production, a sharing of value added between capital and labor, and corporate profit stability" (p. 193). This was combined with embedded liberalism - "Keynesian intervention, extensive social legislation, and the construction of the welfare state" (p. 193).

Both Bierstaker and Harvey refer to the 1950s and 1960s as embedded liberalism, and both say that it began to fall part with the stagflation of the 1970s. Harvey points to a backlash from elites who did not like having a smaller share of the pie during the 1950s and 1960s, who used neoliberalism as a tool to increase their own wealth and power. Biersteker does not.

Biersteker says that the 1960s and 1970s were decades of "unprecedented economic nationalism, a growing role for state intervention in the economy, and experimentation with variants of socialism and self-reliance" (p. 174). The development thinking of the 1970s was basically dependency theory: "A basic premise of much development thinking during this period was that the structure of international economic relations was biased against the countries of the developing world. The structure of the international system, rather than characteristics internal to developing countries, was identified as the principle source of underdevelopment. Development was viewed as qualitatively, even profoundly, different in the North and South, to the extent that laws of neoclassical economics were assumed not to apply equally in the developing world" (p. 176).

To get from there to neoliberalism, Biersteker points to a confluence of ideas, interests, and institutions needed to bring a new school of development thinking to the fore. He says the biggest shift was the notion that "the principal obstacle to development was to be found within developing countries themselves" (p. 177). Modernization Theory also blames underdeveloped nations for their own underdevelopment, but Modernization Theory blames their traditional values. Neoliberalism instead blames it on "decades of unwise government intervention in the economy... Violation of the basic (universal) laws of neoclassical economics was considered the source of the main problems" (p. 177).

Under neoliberalism "development was increasingly defined in terms of the growth of productive capacity, and concerns with distribution and the provision of basic needs were shunted to the side - at least for the time being. The first imperative of development was to eliminate the distortions of state intervention and enable the "magic of the market" to run its course." (p. 178). This meant a shift away from ISI (import substitution industrialization) toward promoting exports of any kind (industrial products or otherwise). Here, Biersteker gives an explanation of the policies that essentially make up the Washington Consensus - currency devaluation to promote exports, trade liberalization, cutting subsidies,

Within academia, neoliberalism "gained new force, visibility, and legitimacy" during the late 1970s and early 1980s (p. 183). That alone did not lead developing nations around the world to adopt neoliberalism. What ultimately did it was the global recession of the early 1980s. Biersteker mentions a number of factors, including a collapse in commodity prices, and says "Because this system-wide shock was transmitted to different parts of the developing world through various filtering mechanisms, depending on their mode of integration with the world economy, it affected different countries in different ways at different times" (p. 185). This goes to his point that the adoption of neoliberalism was uneven.

However, the recession of the early 1980s coincided with a sense that "the policies of the past had not worked and something new should be considered" (p. 185). But the ideas needed interests and institutional bases of support. It was the IMF and the World Bank who gave these ideas a "crucial international backing" (p. 186).

Here's how Biersteker sums it up:

"On reflection, three factors were especially important: (1) the shock of the early 1980s recession, (2) the fact that the system-wide shock coincided with a historical opening because of the perceived failure of the policies of the past, and (3) the presence of a reinvigorated set of liberal economic ideas, backed by critically placed domestic interests within the state and reinforced strongly by international institutions" (p. 186-187).

I am mentally interpreting that as more or less the same as David Harvey's summary of it - that the embedded liberalism of the 1950s and 1960s were no longer working by the time the stagflation of the 1970s hit, so something else was needed, and banks were awash with petrodollars that they were loaning willy nilly to developing nations' governments, so when the Volcker shock hit, many countries were unable to pay back their loans, and the IMF hit them with structural adjustment programs requiring them to implement neoliberal economic policies.






Sunday, July 1, 2018

Williamson. 1993. Democracy and the "Washington Consensus."

Williamson, John. 1993. "Development and the "Washington Consensus"." World Development 21(8):1329-36.

Three years after outlining the Washington Consensus, Williamson published again. He begins by walking back his term "Washington Consensus" and suggesting a better name is "universal convergence." Of course, the former stuck and the latter did not.

He notes that he intended to capture what was "conventionally thought to be wise" rather than his own opinion of what was wise, but adds that he agrees with it himself. However, if he were writing up a list of his own opinions, he says it would have been a bigger list because he would have added an equity component. He left out anything redistributive because he felt Washington at the top would have opposed it. I find it interesting that he conflates equity and redistribution of wealth.

Williamson sees the Washington Consensus as good economic sense that ought to cease to be political. He compares the matter to a political party taking the position that the world is flat, or promoting racism. There is no good reason any party should take the position that the earth is flat, because we all know it isn't. There is no reason to have a pro-racism party just for the sake of ideological diversity because racism is wrong. He sees any alternative to the Washington Consensus as equally irrelevant or harmful in politics. He adds that having a stable agreement among political leaders in favor of the Washington Consensus over time is necessary because it will encourage the wealthy to repatriate their money since they have confident that the current, wise economic policies of the day are going to last over time.

I just want to add here that this is infuriating nonsense. Williamson is trying to depoliticize a radical economic agenda that absolutely is and should be seen as political.

He goes on to slightly walk back his idea that the Washington Consensus should be universally accepted by all political parties by noting a few reasons why it must be open for debate. First, because any sort of suppression of debate will create a situation ripe for conspiracy theorists. Second, because there should be some degree of debate in order to assess whether the current conventional wisdom ought to remain so in the future. If there is no debate about the Washington Consensus, then we lose the ability to adapt it to future needs or improve it over time. He concludes: "Thus my position is not that democracy should be in any way circumscribed so as to promote good economic policy, but rather that both economic policy and democracy will benefit if all mainstream politicians endorse the universal convergence and the scope of political debate on economic issues is de facto circumscribed in consequence" (p. 1331).

Williamson sees the old debates over economic policy as irrelevant. Neoliberalism has won out as the "correct" way to run an economy, and anyone who thinks otherwise is wrong. Greed should be harnessed in a competitive market because altruism does not work, and socialism does not work. He sounds like he's been reading Ayn Rand. It's also interesting that he doesn't mention Keynesian economics here as a potential alternative to neoliberalism. Either you're with him, or you're a socialist, and if you're a socialist, you are wrong. The collapse of the Soviet bloc proves that.

Honestly, I don't see the need to keep reading this article. He's not going to say anything new worth reading.

Saturday, June 30, 2018

Williamson. 1990. "What Washington Means by Policy Reform."

Williamson, John. 2002 [1990]. "What Washington Means by Policy Reform." in Latin American Adjustment: How Much Has Happened?

This is the paper in which Williamson coined the term "Washington Consensus." The Washington Consensus are 10 economic policies central to neoliberalism. Although neoliberalism is - and should be - controversial, in the U.S. it became economic orthodoxy with the election of Reagan. When I took economics in business school, I was taught the tenets of neoliberalism simply as "the truth" without being told that the version of economics I was learning was simply one school of economics, and a controversial one at that. The most my professor actually acknowledged that there were alternatives to neoliberalism or that some people disagree with neoliberalism was when she gave us a list of arguments against neoliberalism and neoliberal counterarguments for why they were wrong. One facet of neoliberalism is that it is often depolicitized and presented as simply a technocratic solution to technical economic issues, as it was in my economics class. It took quite a bit of work on my part after graduation to figure out on my own why I strongly disagree with neoliberalism. David Harvey says that neoliberalism is essentially a set of economic policies designed to give a greater share of wealth to the one percent, and the economic justifications for it are more or less bullshit. Basically, he's saying that what is sold to us as "trickle down" economics is actually "trickle up."

Williamson begins referring to the debt crisis in Latin America, and to statements being made at the time about how Latin American nations in economic turmoil needed to "set their houses in order" or "undertake policy reforms." What is meant by that? Williamson's goal is to explain what is meant by that. He has 10 "policy instruments" that he believes both politicians in Washington and technocrats in Washington could all agree to, although in a few cases he has his own suggestions for improving them.

Williamson notes that Washington does not always practice what it preaches to foreigners. This point deserves unpacking. Neoliberal economic policies are painful and often politically unpopular. In Chile they were forced upon the population by a brutal, autocratic regime. In The Shock Doctrine, Naomi Klein speculates that the only way to inflict neoliberalism on a population is through repression, and that the Thatcher and Reagan implementations of neoliberalism were watered down because neither the UK or the US combined them with the brutal tactics that Pinochet used in Chile.

Here are the 10 policy instruments of the Washington Consensus:
  1. Fiscal discipline: Avoid budget deficits. Williamson declares that Keynesians who believe in a positive role for budget deficits are "almost extinct as a species." The differences that now exist, he believes, are over whether fiscal discipline requires a balanced budget or whether limited deficit spending is acceptable.
  2. Reducing Public Expenditures: This goes hand in hand with fiscal discipline. If a nation is aiming to balance its budget or reduce its deficit, it can either increase revenues or decrease spending. Williamson traces the preference for reducing spending to the supply-side economics of the Reagan era. Within the U.S. and particularly on the political right, cutting spending is preferred over raising taxes. Internationally, he believes the debate is more over finding the correct "composition of public expenditures." Often, international technocrats believe that decisions over military spending are the right of sovereign nations and thereby off-limits for international institutions to interfere with. There are three categories where Williamson believes everyone agrees: subsidies, education and health, and public investment. Subsidies should be reduced or ideally eliminated. Education and health expenditures, on the other hand, are seen as necessary. The question is what kind of spending on education and health. In developing nations, primary schools are seen as more necessary than universities, and primary health care (especially prevention) is more necessary than state of the art hospitals in the capital city. In general, the Washington Consensus calls for education and health spending that benefit the disadvantaged. In the case of public infrastructure investment, Williamson says that the belief that the public sector tends to be too large coexists with the view that spending on public infrastructure should be large. Therefore, he says, this adds up to a general belief that public spending should involve redirecting money from subsidies to education and health and public infrastructure. Williamson says his own belief is that there are circumstances in which carefully targeted subsidies can be beneficial, so he would like to see nations keep subsidies when they can find a "convincing explicit justification" for them.
  3. Tax Reform: The other way to cut a budget deficit is through raising taxes. Although politicians in Washington as well as right-wing think tanks are averse to raising taxes, the rest of "technocratic Washington" is OK with them provided they are done in what they believe is the right way. Williamson says the consensus is that the tax base should be broad and marginal tax rates should be moderate.
  4. Interest Rates: Interest rates should be determined by the market, and real interest rates should be positive to discourage capital fight and increase savings. Williamson adds he believes interest rates should be positive but moderate.
  5. Exchange Rates: For developing countries, Williamson believes the consensus is that "the real exchange rate needs to be sufficiently competitive to promote a rate of export growth that will allow the economy to grow at the maximum rate permitted by its supply-side potential, while keeping the current account deficit to a size that can be financed on a sustainable basis." In other words, if a nation is trying to promote export growth, then it wants its goods to be inexpensive compared to other nations. That means a relatively weak currency is better. The question is, how weak is optimal. Much of the rest of what Williamson says here aims to specify exactly that: How weak should your currency be to maximize exports without actually hurting your economy? (One flipside to a weak currency is that when exports are cheaper for foreign buyers, imports are more expensive for your own people.)
  6. Import Liberalization: In short, he's calling for free trade. Let all of the imports in. Get rid of tariffs. He offers two qualifications. First, infant industries "may merit substantial but strictly temporary protection." Second, it's unreasonable to dismantle all protectionist policies overnight. Therefore, a nation adopting free trade policies may do so gradually.
  7. Foreign Direct Investment: Don't limit foreign direct investment.
  8. Privatization: Neoliberals believe that private industry is more efficient than state enterprises (businesses owned and run by the state), and therefore the state should privatize as much as possible.
  9. Deregulation: In short, deregulation is good. Williamson does not mention safety or environmental regulation here. Instead he discusses price controls, restrictions on foreign investment and remittances, import barriers, limits on firing employees, etc. To a neoliberal, all of these represent market distortions.
  10. Property Rights: The state must protect private property rights.

In conclusion, Williamson says, "The economic policies that Washington urges on the rest of the world may be summarized as prudent macroeconomic policies, outward orientation, and free-market capitalism." What I find notable here is how depoliticized and technocratic he presents neoliberal policies as, when in fact they are nothing of the sort.

Monday, June 25, 2018

Cooper and Packard, Revisited

I've already written up a summary of Cooper, Fred and Randall Packard. 1997. “Introduction” in Cooper and Packard, International development and the social sciences: essays on the history and politics of knowledge.

I'm revisiting it as I study to re-take the prelim. I'm not going to summarize the entire article this time. Instead I am focusing on the particular details pertinent to the question I will need to answer on my test.

I found this quote very powerful:

"The state in "less developed countries" and international agencies such as the World Bank each find a role by accepting each other's: the national government allocates development resources and portrays itself as the agent of modernity, while outside agencies legitimately intervene in sovereign states by defining their services as benevolent, technical, and politically neutral. Both are content with development as a process which depoliticizes and disempowers local populations; both portray poverty as "aboriginal," disconnected from the history which gave rise to unequal access to resources; both are content with an expertise-driven structure of development; both are reinforced by failure as much as success" (p. 3).

It's summarizing the ideas of Ferguson (1990) and it appears to be lobbed at neoliberalism in particular.

I also like the point that the concept of development is ambiguous "eliding in a single concept the notions of increased output and improved welfare" (p. 4).

Cooper and Packard then get into history, beginning with how Great Britain and France turned to development as an idea that would carry forward their interests in the Global South once colonialism began to be challenged.

Here is a quote I like that seems to be particularly lobbed at modernization theory and perhaps neoliberalism:

"Within particular domains the development construct has become a framework that rationalizes and naturalizes the power of advanced capitalism in progressivist terms - as the engine bringing those on the bottom "up" toward those who are already there" (p. 12).

This article also has some useful critique of dependency theory:
"While there was wide consensus on the importance of trends in the global economy, simple Marxist explanations based on the logic of global capitalism or the power of dominant classes runs into the problem that development interventions appear precisely where the logic of capitalism fails to produce results that political elites desire" (p. 20).

Much of the article focuses on how various development theories came about and gained acceptance or lost favor. While it's an interesting and useful article, that isn't what I'll need to write about on my exam.

Another interesting bit, this one on neoliberalism, says:

"The strong stress on market discipline sits rather uneasily with the other major trend among the powerful development institutions: their concern with "governance" and the imposition of political conditions - some from of democratization - on the provision of aid. Compelling as many of the critiques of government corruption, clientelism, and incompetence are, it is not clear that imposed austerity helps build political capacity" (p. 22). "The insistence on "good government" reproduces much that was previously said about the "good economy": a bland assertion that the West has defined objective standards for others to meet, a generalized set of categories (elections, multiple parties) that define those standards, irrespective of the actual debates that might be going on in specific contexts over how more people might acquire meaningful voice in their own lives" (p. 23).

I stopped reading at page 24.

Harvey, David. A Brief History of Neoliberalism.

Harvey, David. 2005. A Brief History of Neoliberalism. New York: Oxford University Press. E-book.

I've read only the introduction and first chapter of this book. I think it basically gets the point across as well as I am going to need for my exam.

Harvey's points are simple. In the post-World War II era of the 1950s and 1960s, the U.S. and European nations set up states based on 'embedded liberalism.' The state served to promote the well-being of the people through public services, regulations, and a social safety net. The government was to work toward "full employment, economic growth, and the well-being of its citizens" and it was OK for the state to intervene in the market to achieve this (p. 11).

This worked well until the 1970s, when there was unemployment and inflation, leading to fiscal crises. The Bretton Woods system of fixed exchange rates was no longer working, and the fixed exchange rates were abandoned in 1971.

Meanwhile, the wealthiest segment of society did not like that it had been losing its share of power and wealth during the decades of embedded liberalism (p. 15). Harvey says neoliberalism is essentially a class project to restore power and dominance to wealthy elites (p. 16). Insofar as it is an economic theory, it is contradictory and more or less a thinly veiled attempt to help elites consolidate money and power at the expense of everyone else.

So what is neoliberalism?

"Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can be best advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade" (p. 2).

"We can therefore, interpret neoliberalization either as a utopian project to realize a theoretical design for the reorganization of international capitalism or as a political project to re-establish the conditions for capital accumulation [i.e. the rich getting richer] and to restore the power of economic elites" (p. 19). Harvey sees it as the latter, and says that "the neoliberal argument has... primarily worked as a system of justification and legitimization for whatever is needed to be done to achieve this goal" (p. 19).
,
In short, the state should do what is needed to allow markets to function unimpeded and then get out of the way. In theory, the state can never have all of the information needed to make perfect decisions the way markets can. In practice, says Harvey, neoliberalism leads to a greater share of wealth trickling up to the wealthiest people in society, and to monopolies. Therefore, the idea that getting the state out of the way will lead to perfectly competitive markets is not correct.

Neoliberals base the ideas on human dignity and freedom. They equate freedom with individual freedom to make decisions - unfettered by state interference - and personal responsibility. He cites Margaret Thatcher claiming there is no society, only individual men and women. And because there are only individuals and no collective, neoliberalism calls for the end of "all forms of social solidarity" (p. 23) like trade unions, public enterprises, and the welfare state. He writes, "All forms of social solidarity were to be dissolved in favour of individualism, private property, personal responsibility, and family values" (p. 23).

As to history, the intellectual roots of neoliberalism trace back to a small group of economists, philosophers, and others that first met in 1947. Their ideas went back to neo-classical economics and stood in opposition to the reigning Keynesianism. The first major implementation of neoliberal economics he cites occurred in Chile in 1973 after Pinochet's coup. It achieved some legitimization in the 1970s when prominent neoliberals won Nobel Prizes for economics (Hayek in 1974, Milton Friedman in 1976). Carter took some steps toward neoliberalism, but it was Thatcher, Reagan, and the 1979 Volcker shock that really catapulted it forward.

He explains the Volcker shock as follows. The 1973 OPEC embargo and oil price hike left OPEC nations awash in petrodollars. The US was secretly planning to invade in 1973 but instead it made a deal with Saudi Arabia to get them to send all of their petrodollars to U.S. investment banks (p. 27). With so much money coming in, the investment banks needed to do something with it. They looked to foreign governments, giving out loans to nations all over the global south.

In 1979, Paul Volcker, chair of the Fed, ended Keynesian policies aimed at full employment in favor of policies intended to curb inflation at all costs regardless of the consequences to employment. Doing this raised interest rates practically overnight. Many developing nations were unable to repay their debts. That is the Volcker shock.

Harvey says that under a liberal regime, a bank that made a bad loan would be stuck taking the loss. Under a neoliberal regime, "the borrowers are forced by state and international powers to take on board the cost of debt repayment no matter what the consequences for the livelihood and well-being of the local population" (p. 29).

The first "major test case" following the Volcker shock was when Mexico defaulted on its owns in 1982-4 (p. 29). The IMF made a deal with them to "roll over the debt, but did so in return for neoliberal reforms" (p. 29). This was the first of the "structural adjustment programs" (SAPs), the set of neoliberal conditions imposed on any country accepting a bail out from the IMF. The policies included are codified as "the Washington Consensus" and they generally involve privatization, deregulation, austerity, and free trade. Often public services are cut, and populations suffer when SAPs are imposed.

Harvey adds that the consolidation of power and wealth to elites in the U.S. and Europe did not just come from taking a larger share of the pie within their own countries. SAPs and neoliberalism meant they were also extracting surpluses from the Global South as well.