Understanding Neoliberalism
The neoliberal model has defined the last 30 years of global development and concentration of wealth, and is increasingly the model of our own education here at Cal. Here's why you should care.
The historical roots of modern-day neoliberalism can be traced through 300 years of economic theory. The classical understanding of laissez-faire (or “let them be”) economics, spearheaded by the likes of Adam Smith, Voltaire and Thomas Paine, believes that the “invisible hand” of the market (not the state) should be trusted to govern the economy. In other words, private business should be allowed to do what is in their best economic interest, without fear of public or state-backed regulation. This is what is meant when people refer to economic “liberalism”. What we deal with today is merely a repackaging of this idea (along with dozens of other macroeconomic theories) in a “new” form: a so-called neo-liberalism.
The neoliberalism that we encounter today has its roots in the “Washington Consensus” of the 1980s. This is where we find our checklist of neoliberal objectives. Through the macroeconomic jargon, the commitments to free trade, comparative advantage, privatization, deregulation and export-based development arise. But how does neoliberalism play out in the real world?
Free trade is the idea that trade barriers inhibit true global development and should be lifted in order to stimulate economic growth worldwide. A prominent example is the 1994 North American Free Trade Agreement (NAFTA). By destroying trade barriers between Mexico, the US and Canada the neoliberal powers have created a free trade zone in which goods and services flow “freely” amongst the three participating countries. Neoliberals point to macroeconomic measures, such as overall GDP growth or increased exports, to declare their free trade zone a “success”.
But on the ground in 2008, fourteen years after NAFTA went into effect, the devastating shortcomings of the neoliberal model are apparent. “Comparative advantage” translates to brutal Mexican exploitation and the mass exodus of American and Canadian jobs (not only to Mexico, but to China, Indonesia, etc.). With no environmental or labor regulations, private multi-national corporations (MNCs) and countries around the world find themselves in a “race to the bottom”; as MNCs relocate to countries with the cheapest labor and laxest environmental standards. Mexican women, working in the toxic maquilladora sector, are pitted against their South East Asian counterparts in a competition to be the most exploitable. Unions, seen as threat to the neoliberal agenda, are busted to keep labor conditions at subhuman levels. Export-reliant food systems have imploded as hunger and poverty increases everywhere except in the upper echelons of the global elite. Everyday 200 American small farmers are put out of business as they cannot compete with the giant agro-business exporters favored by NAFTA. Corn maize, a symbol of Mexican patrimony, is in danger of being completely replaced by an Iowa-grown, heavily-subsidized variety.
NAFTA is just one example of the neoliberal encroachment on national sovereignty. As hundreds of bilateral and multilateral free trade agreements continue to be signed without popular consent, the neoliberal powers do as they please. The battle for basic human rights and dignity is being fought against these corporate giants as grassroots organizations build to provide alternatives to neoliberalism. Neoliberalism is dead; its goals are inherently unjust and unsustainable. The ideology’s aim from the beginning has been private, corporate concentration of wealth. They have succeeded. It is time for genuine human success.
What does this have to do with us as Cal students? Neoliberalism is increasingly the model of our own education here at Cal, as we witness an eroding understanding of what it means to be a public university and to serve the “public good”. Decreasing public funding of education has seen Cal rely more ands more on corporate sponsorship to keep the university "competitive", resulting in increasing privatization and a complacency towards perpetuating destructive, top-down policies. The Regents and many faculty, who have personal and ideological investments in the neoliberal model, have been able to slowly marginalize those who advocate alternatives to neoliberalism. Fortunately this process is far from complete, leaving the Cal student with a clear choice: to learn how to become a "successful" part of the neoliberal model, or to carefully choose professors and classes that explore the alternatives to this model; and actively resist the corporatization of our campus and its curriculum.