Neoliberalism has become the prevailing economic ideology for corporate elites and their political allies in both the global South and the North. The term has long been a buzzword within academic circles to explain the growing consolidation of corporate power and the weakening of democratic institutions. However, ‘neoliberalism’ is often poorly understood by the general public in both theory and practice. In fact, there is often a general confusion surrounding its true meaning. So what is neoliberalism, really?
Where did neoliberalism come from?
Neoliberalism is a revitalization of the classic 19th century liberal economy, or what we may term laissez faire capitalism. (Laissez faire translates to “without interference”.) In this era, the business classes dominated society, and were able to operate with little or no government regulation and control of the marketplace. Following Watergate and the Vietnam War, the public’s sweeping distrust of government coupled with the growing power of conservative corporate elites, led to the reintroduction of a new type of laissez faire capitalism: neoliberalism.
What is neoliberalism?
This late-stage form of capitalism places heavy emphasis on market deregulation, the privatization of public services, “free” trade over fair trade, and fiscal conservatism, all of which allocate financial, economic, and political power to larger corporations. Similarly, neoliberalism promotes market supremacy: the notion that markets, or forums for the buying and selling of commodities, should be the dominant mechanism by which the needs of individuals and the larger society are met. The ‘market’ that neoliberals promote is characterized by supremacy of corporate decision-makers over elected government officials and ordinary working people. Neoliberalism holds that free markets are ideal, aligning with Adam Smith’s proposed “invisible hand” theory; that individuals acting in their own self-interest will bring about greater societal good.
What makes neoliberalism so destructive?
What Smith failed to account for, however, is how dangerous the externalization of costs truly is, for the environment and people alike. So while it might be in the self-interest of any single corporation to maximize profits by dumping as much toxic waste as possible onto our land and into our waterways, this comes at the expense of our long-term health and well-being. Under neoliberalism, government intervention or regulation of such a situation must take a back seat to the free market, because the market is considered the most efficient system for addressing such impacts in a profitable way. The notion of market liberalization and free trade are a facade for the true M.O. behind neoliberalist ideals: success for the wealthy few at the cost of the many.
There is no possible way for neoliberalism to function without rampant and unjust exploitation; it is inevitable and intentional by those who continually prop up this system. And the U.S. has been one of the chief architects of such corporate-led destruction. Corporations, largely concentrated in the Global North, intentionally take advantage of vulnerable populations — namely the Global South, communities of color, and others who lack the political power to combat corporate infiltration into their communities. The private sector is attracted to countries and communities lacking environmental regulations, as they can engage production at a lower cost by foregoing any strict health and safety laws. These corporations readily appropriate the natural wealth in these areas, utilize unfair labor practices in the process, and sell these commodities on the global market without second thought for the places or people they have exploited.
Neoliberalism has allowed the Global North to relish in stolen profits from the Global South (and other vulnerable communities) without real consequence. Without government intervention, corporations are able to escape any financial consequences by externalizing ecological burdens onto the public where the costs of extraction are dumped. In other words, they privatize the profits, but socialize the costs of production. The public suffers from undiscarded hazardous waste, acid rain, noise pollution, oil spills, and nuclear energy accidents, among other health consequences, all of which could be avoided if companies implemented proactive regulations and standards that fully accounted for all the consequences - those externalities - of their production.
Yet, because neoliberalism prioritizes profits over everything, companies continually refuse to implement preventative measures until it is too late. There is no incentive to “do better” under a neoliberal system, as the fallout of these unsustainable practices are felt by the public, and not the corporations who commit these injustices, nor their political allies who allowed the injustices to legally happen. Neoliberalism facilitates this unjust allocation of ecological consequences, and must be replaced with an economic ideology that prioritizes public health, precautionary lawmaking, and long-term sustainability in order to bring justice to historically oppressed communities. Efforts to de-privatize goods and services, to re-regulate markets, and promote global protective regulations and fair trade practices are all necessary to end the inhumane practices of the private sector and facilitate a more just global economy that serves the needs of humanity and protects the ecological integrity of the planet.
