WHAT IS NEOLIBERALISM? - Brian Kermath, 2005

Neoliberalism can be defined as a political-economic philosophy and set of policies that established development priorities along austere capitalist paths of free trade, market expansion, and privatization, and free of government intervention and regulation. Although its antecedents stem from 18^th and 19^th Century Neoclassical economic arguments favoring market liberalization over protectionist mercantilism, neoliberalism is much more than "free trade." It evolved into an ethos that its followers believe to be superior as a guide to all other forms of human organization and social behavior � superior at setting prices and fair wages, superior at allocating resources, superior at cultivating human potential, and superior at managing the environment.

Emanating largely from United States based institutions (e.g., the International Monetary Fund, the U.S. government, and the World Bank), neoliberalism � or the "Washington Consensus" as it became known � has been the dominant ideology among the world�s power brokers since the 1980s. Accordingly, it set the course on international lending and related foreign policy, rewarding countries that made 'appropriate' structural adjustments to their societies and penalizing those that did not. Although even the most ardent neoliberals in recent years have acknowledged some of the unintended negative consequences of their prescriptions, the doctrine continues with only limited modification and compromise in driving world affairs and globalization.

Running counter to this dogmatic adherence to "market fundamentalism," "fair trade" and other advocates argue that history has demonstrated the market's limited capacity to deal with externalities and the need, therefore, for some form of state regulation (Burton 2001). They call for appropriate fiscal and other policies on debt, discount rates, exchange rates, interest rates, intellectual property, lending terms, monopolies, subsidies, tariffs, taxation, trade, and the environment. They assert too that even if the market were theoretically capable of accounting for externalized costs under ideal conditions, too much time would be needed to reach such a point; in the meantime, with continued neoliberal deregulation and privatization, maladies like corruption, power concentration, destabilization, and accentuated relative poverty would continue to mount. Such a scenario further strengthens the arguments for some form of regulation. Beyond the policy arguments, many authorities also insist that not all human behavior and forms of organization should be measured, judged, or guided solely, if at all, by markets.

Given the free market's undeniable limited capacity to deal with externalities and the negative consequences that result from such neglect, neoliberalism stands as an obstacle to sustainability.

Selected References

Ayres, Jeffrey M. 2004. "Framing Collective Action Against Neoliberalism: The Case of the 'Anti-Globalization' Movement." Journal of World-Systems Research 10(1):11-34.

Ball, Jennifer A. 2004. "The Effects of Neoliberal Structural Adjustment on Women's Relative Employment in Latin America." International Journal of Social Economics 31(10):974-987.

Burton, John. 2001. "Where do We Go from Here?" International Journal of Peace Studies 6(1):4.

Bruno, Kenny. 2002. "The Earth Summit's Deathblow to Sustainable Development." CorpWatch
September 4^th.

Bruno, Kenny and J. Karliner. 2002. The Corporate Takeover Of Sustainable Development. Food First, Oakland, California.