What is neoliberalism? and why do we need to understand it for development and climate change

thank you well good afternoon everyone I think we'll get underway I know some would like me to have to leave at 2 o'clock for lectures so I will stop then in fact I'm what I will aim to do is to finish talking about a quarter to so anyone who has to leave early has a chance to ask questions before they leave so that's my aim but I'm known for talking too much and so maybe not guarantee that we'll see how we see how we go ok so this is a topic big complex topic and the first thing is to explain that this talk is not the result of research I do not research neoliberalism what I do is try to understand how neoliberalism impinges on my work so it's not research about neoliberalism it is about understanding why what I tried to do and what we try to do is messed up by neoliberalism so it's the interaction between them so I'm not an economist theoretical economists and I have studied economics but I wouldn't call that my parent discipline geography is my parent discipline and as you know geographers all they're good for is colouring in so we'll see we'll see where we go so one of the problems with understanding this is the confusion about the terminology incredible confusion about the terminology so I just looked up a few American think tanks which are usually regarded as being conservative and on the right because it's quite interesting because they talk about Liberty so this is one the Liberty Fund which is preservation restoration and development of individual liberty through investigation research and educational activity and they enable you to read free books it's quite useful if you want to look at some books on enlightenment philosophy that's just one of many I have I couldn't cover them all but this is the Cato Institute which is probably one of the most famous and infamous of the Institute's if you look at what it says about itself here blow it up can you all see that yeah so it's it's got a very clear statement of what they they think you see that Liberty is the word that is coming out Liberty is then linked to freedom so we then have the Freedom Foundation our mission is to advance individual liberty free enterprise and limited accountable government so you're beginning to get the flavor and these are institutions which are pushing if we use the term neoliberalism they are pushing the neo liberal agenda so you immediately see now here we immediately see a problem because you'll also remember a very famous economist called Amartya Sen who's one of his books is called development as freedom so we're into a kind of an area in which there is disputes even about what appear to be basic words such as freedom and liberty in which there is this very confusing terminology so I want to do some of today to look at that that so left wing right wing in in the United States more likely to be called conservative than right wing but also in the United States what liberal is left-wing and a liberal to people who are on that side of the slide a liberal is it's a term of abuse in the United States so you're you're close to being a communist if you're a liberal amongst the people who support those those think tanks that I showed you at the start but we see that Liberty is one of their words both sides use the word freedom and we we have very little understanding of what they mean freedom from what well on the right it would be freedom from government and interfering government and to do what for sin it would be freedom to fulfill your human potential keypoint about the issues going on here is that on this side there is a general understanding that problems in the world such as poverty inequality racism are systemic they should be looking for explanations which are about how society is structured whereas on the on this side the problems of society of because people are choosing to behave badly and what needs to happen is people need to take responsibility for their individual behavior and it is if you are poor it's because you're lazy so this is one of the powerful explanations that is used especially in the United States about that now this means that you want people to take responsibility individually you want small government on this side where you think the problem is system causation it is about the government fulfilling a role of moderating the effects of markets where markets are perceived as as failing so this kind of sets up the problem we immediately have terminology of difficulty in this and this I think is part of the lot of the confusion around neoliberalism because we use the word neoliberalism and it's regarded as being bad by many people and yet it is using the word liberal in it which on this people would say we are good if we're liberal so the word neoliberalism is using a word which is both criticized and supported in this way so it becomes very very confusing we also have the problem that's and sorry on this side it's against that's gone in the wrong place against Keynesian economics over that side there's also confusing confusion about whether neoliberalism is the same as globalization I will argue and I won't have much time to do it that is not the case globalization has a very long history it goes back to my mind there are different global ization z-- but that dominated by europe it goes back 500 years neoliberalism as you will see how I'll identify as being around 4050 years in terms of its dominance and then others wonder if neoliberalism is the same as capitalism I think it's a version of capitalism and one of the things we have to understand is there are many different types of capitalism and it is a particular version of capitalism where a particular interest groups have captured policy and captured government for their own self-interest so that's where we're going with the argument so part of what I need to do is to explain where this confusion of terminology has arisen I'm going to do that with a little exercise talking about Britain and I'm going to talk about Britain before and after the Industrial Revolution so here is Britain in 1701 with a population estimated around 6 million people at this time in 1701 the vast majority of the people would be living in the countryside the largest city which was London would be possibly around a hundred thousand two hundred thousand people and the map of population density because you have a scale up there of population density the darker means more people per square mile you can see there are very few people with over 500 per square mile very few places with that and basically very simplistically this map is a reflection of soil fertility okay it's feudal times the main predominant economy is farming and it's organized politically and economically under a basically I'm simplifying a feudal system so you get more out of the land where the soil is fertile so you have fertile areas like the Seven Valley here these areas around here which are rich post-glacial soils down here and in certain parts of the country there are no factories there are no railways there are no mines to speak of okay it's a pre-industrial Society and it's run politically economic in its political economy it is what we loosely called feudal okay I'll come come back to that notice just for interest this area of South Wales here which is empty and Central Scotland there which is pretty pretty empty there is people living there because this is a lowland area with farming but look what happens in a minute when we come to look at the post-industrial period now society at this time is organized on the basis of a feudal hierarchical structure very rigid in which the people down here that people actually do the work on the farm II sorry about these kind of funny pictures but it's just a way to get you to the point where you've got this rigid hierarchy with the power of the monarchy at the top supported by Lords who are then supported by knights and then the people actually do the work are down here now this system is one which is very rigid so if you live down here and farm the land you can't go anywhere else you are tied to that land that is where you live and die that's that's your life you can't move so although you're not a slave you are pretty well controlled by being that and if you went somewhere else there's nothing to do you can't get any land anywhere else so you're in this very rigid hierarchical structure so this is if you like the the the feudal system which dominates at that time and the point of this is to show that this doesn't last the Industrial Revolution is part of the protest process by which this is overthrown so by the time we get to sorry 1191 that's it meant to be 1911 1911 1911 you see that the map has changed considerably the first thing is that you've got a much larger population and this is from a census so we that's reasonably accurate 33 million people it's gone up quite a lot in the space of 200 years you've got lots of areas of very dense population over 500 per square mile and you can see that this area which was empty you couldn't even farm there is now one of the most densely pop lady parts of Britain and that's because it's coal mining and steel making an industry which has grown up as part of the Industrial Revolution you can see that London which was also an industrial city is very dense there is some remnants of the benefits of farming in in there but you would see you've got a very very different map and this map is basically determined by the effects of the Industrial Revolution coal mining and the arrival of industry and you can see that central Scotland which was empty is now very densely populated by people in coal in iron making shipbuilding and so on so this is what we mean by the Industrial Revolution so we now have factories mines railways roads and so on which were completely absent here and so when we talk about the Industrial Revolution that is what we mean it's also a Democrat demographic shift of considerable importance now why am I saying this because the class structure that you had on feudalism is now completely different the feudal system has gone you have a new set of classes you have in in stereotypical Marxist analysis you have the bourgeoisie you have the proletariat and a small middle class at this time and the economy is dominated by manufacturing and exports and mining and very very different times now this how did this transition happen if we look at the last five hundred years we see that in Europe in Britain in particularly Europe we have the collapse of feudalism and its replacement by capitalism so one system supplants the other you need different people to run capitalism than you do in feudalism so the old lords by and large go out of the picture although in Britain they don't go completely out of the picture they do more in France where some of them lose their heads in Britain that didn't happen so much so we have a much more fluid class structure in this transition to the extent that we still have the extraordinary situation of a second house of parliament which is called the House of Lords which also has 32 bishops sitting in which represents the fact that we would never separated politics and the church so we have this this transition now there is a another part to this which is I'm not going to have time to talk about today which is overseas and what became the colonies now I don't have time to talk about that but there is a huge debate in economic history about whether this transition could have happened without the exploitation of the colonists especially through slavery I don't have time to get into that there is you can get into that if you want I tend to think that you could have had this it might have been slower without that but certainly this was part of the globalization process which took capitalism certainly to other parts of the world now I've done a much more complex version of this diagram and I've chosen 500 years because this is basically the beginnings of European globalization globalization which is dominated by the European powers that became the colonial powers the empires of Europe I've chosen that 500 year period and here we see in more empirical detail the way in which the feudal classes diminish and they break down until we have a few feudal remnants like we still have the House of Lords we have the monarchy which means that we still have things in Britain which are of feudal type okay but by and large these have been supplanted by the emergence of capitalism and the rise of the the manufacturing and mining systems which are I'm not going to have time to talk about if we bring in the overseas there we then see that the global exploration the East India Company plunder and slavery and so on plantation crops raw materials then Britain has to manufacture it has to export its manufactures and so on so we have this transition the key point I want you to get is that this society is very different from this in terms of its politics and economics the capitalist system is emerged as a from mode of production so in this I'm going to use the concept of mode production which is used by Marxists Marxism I think it's a very useful powerful way you don't have to be a Marxist to use it it's a it's a it's a way of understanding how all societies work and I won't have time to go into great detail but we can perhaps have a discussion about it afterwards to illustrate what I mean by a mode of production I'm going to talk about oh sorry I've forgotten I've got to talk about the Enlightenment in the middle of this process we have the thing which is called the Enlightenment now I've put it in quote marks because there is a degree of chauvinism that goes on in understanding of the Enlightenment because it seems to many people seem to assume that it was a purely European white thing because we have an earlier Enlightenment in the Middle East with Arab culture and civilization which derives a lot of its learning from other cultures that predated it and the reason we know so much about the science and the medicine and the philosophy of those periods is because it was transmitted to us partly through Arab civilization through Spain and also through the through the Greeks but I I'm being ironic about using this notion of the Enlightenment it isn't exclusively a white European thing but what comes with it is some things which if you like the thinking of the Enlightenment is what you need to run capitalism ok the Enlightenment thinking does not fit with feudalism the Enlightenment thinking is about a separation of church and state it's about an understanding that the church should not interfere in matters of government but we'd had a thousand years in which the church was used by the powerful to help them to administer and run and terrify the population into thinking that they were under God's eye that they were they had to worry about what God was thinking about them because they would be punished if they didn't do it so the church and religion was extremely useful to feudal society to reinforce what became for some monix the divine right some monix claimed that they had God's right to rule and this was a ideologically a very powerful powerful thing the other thing that happened with the Enlightenment which was of course in in philosophy theology but also in science and the emergence of science as a way to explain natural phenomena which previously were explained as being as a result of God or God's action so science begins to explain the geology of the world the the reason why you find certain things in places it understands the chemistry and it becomes possible to make things using chemical reactions which could not be used before so it becomes possible to actually make artificial substances or modifying natural substances to be useful for construction so iron and then steel making batteries the possibility of electricity all come out of the science that is parallel to this and all of those things are necessary for capitalism but were completely unnecessary for feudalism so we have the way of thinking emerging different and then we have the social science because we have to explain why has this change happened and what is capitalism so we have the emergence of social science beginning with people like Adam Smith but I before Adam Smith because we've heard of him where we are trying to understand capitalism and why some countries are different from from other countries so to understand this idea of modes of production I'm using a very simple model here of games that we play you've all probably played this ok so I'm I'm going to suggest that motor production have two basic components to them one is hardware and the other other is software ok all societies are composed of things you can touch like iron factories roads railways people it's made of things that you can are physical things and it's made up of rules and relationships which organize how those things operate ok and the crucial difference between different modes of production is that there different things in each murder production you don't have factories or or mines in feudalism but you also have different systems of organizing it literally almost literally like software so your hardware is your computer that the the screen the keyboard and the mouse and so on they will not work without software now each society has different software which makes it different hardware's work and operate together now those rules are normally captured by the powerful so the powerful design the rules for their own benefit okay and that is why what neoliberalism is a particular form of capitalism in which those who have been able to become empowered at the top of our hierarchy are able to design the rules that benefit how capitalism works for them so they've redesigned the software of capitalism for their own particular benefit so it's a particular form of the mode of production which is serving their needs so in this hardware's very simple you've got the board you've got the dice that you throw you've got the counters that you move around and there's very simple rules the software is very simple if you land on a snake you go down if you land on a ladder you go up and the one to reach the end is is the winner very very simple hardware and software if we compare it with another game Monopoly how many of you have played Monopoly probably everyone yeah isn't it wonderful crisp you know lots of people play at Christmas with their family and you you're playing this game with all your family and your aunt aunt is there you haven't seen her for a year and you realize she plays this game and she wipes the floor with you and you realized this nice old lady is actually a real cow you know and anyway so the hardware is the board the cat these counters this is an updated one you've got a laptop here and their mobile phone and the money the hotels the houses and so on so the hardware is much more complicated there's more of it and the software that manages this have you ever tried to explain to a ten-year-old the rules of Monopoly it's not easy so the software is much much more difficult as well now I'm not going to have time to talk about it today but what happens when a society that runs this system meets a society that runs that system so this is basically the process of colonization is that people that want society to be like this arrive in and dominate a society that looks like this and whose rules win okay so we have the idea of the mode of production the mode of production is a way of producing is just jargon for the way the system by which production happens and every society has a mode of production we have things which are in the Marxist jargon are called the forces of production it's the things you can touch it's the hardware things and people factories roads bla bla bla and then there are the linkages the software the social relations in the jargon they're called the social relations of production they're the rules that enable the game to be played of the way in which the hardware is used and there's basically two types of rules here very important that we understand these rules two types of software the first is who is allowed to own things and who is forbidden from owning things and this is usually based on class also gender and sometimes ethnicity so for certainly for gender in many parts of the world women are forbidden from owning land so that one of the rules that you would have in many societies around a particular rule of ownership in capitalist society ordinary workers are not allowed to own factories okay so I'm going to have to speed up and go the other crucial rule is assuming this society produces a surplus and magically it always produces a surplus for a certain group of people okay what is the rule that says who should get that and how much they should get what is their share of that so that is also a taxation rule in terms of how the sir Plus society generates how it is allocating we will be coming coming back to that in a minute I'm going to do this in a much more complex way on this diagram don't worry about too much about the the big diagram I'm going to focus on two parts of it so this is the economy the primary the mining the agriculture the industry service sector and so on and that gives rise to your GDP your GDP is then divided three ways between the net profits to corporations taxes which are collected and the net wages that go to to the workers simple so far if you are getting your wage then you can spend it is there any guarantee that your wage enables you to have a sufficient life in terms of adequate food healthcare education and so on it depends it depends how society is organized what the level of the wages is your wage the minimum wage is it the living wage is it commanded by supply and demand so you can demand a hundred thousand pounds for your job as opposed to twenty thousand pounds for your job so all of those those things are going on there the hope is that your wages and your spending enable you to have a decent life what we call human development adequate food nutrition education and so on but that depends entirely on everyone having a job a decent job and giving you enough money to spend to have a decent life okay so this is not we will be coming back to that the other path to human development is where that does not satisfy people's needs where this does not work everyone else is dependent on government policy and expenditure so now obviously not all government expenditure goes on human development but some of it goes on welfare spending is loosely defined I'll come back to it which then enables you to have human development to satisfy your needs so if your wages do not enable you to be I have good level of development then you're dependent on it redistribution basically it's it's an issue of redistribution now I'm not going to talk about all of this what except this very simple feedback loop which is the benefit of human development is that it produces educated healthy trained people who are then able to start up new enterprises or be employable so it's a feedback loop which is what generates economic growth supposedly adding of course adding to that research and development and investment from from from profits we also have up here a couple of additions to put in foreign aid NGOs and now we have to put in philanthropists but what we want to do is to label this as pathway B and label the other one is pathway a and talk a bit about what the significance is of there being these two pathways because I think they are quite significant now the argument here for pathway B which has if you like big government and Taxation that pays for welfare is that it is profitable and good for society so this idea is that if you have this system here where people's wages cannot pay for their education or their health care and the vast majority of people in the world cannot pay for their education or health care they try to but they're reliant on it being from where you you know the story so the point about this is that it is profitable for capitalism to operate in this loop and this is what is was is loosely called welfare capitalism or social democracy so democratic capitalism in which the argument is that the capitalists are satisfied with this because it gives them a good income capitalism is profitable there is no problem when the system was operating like this before neoliberalism there was no problem of profitability interestingly the heads of corporations in the 1950s and 60s there the ratio of the highest paid in a corporation to the average salary in a corporation was around 20 to 1 okay it is now two hundred thirty to one okay with no necessary increase in profitability in fact some of the people who get the most are running loss-making companies like uber and we work and and so on so you know that there is no relationship between being paid enormous amounts of money and it being profitable so but that is one of the the lies that emerges with with neoliberalism in this pathway here if people do not get enough wages they cannot live well what happens to them well this is very visible in developing countries because those people are expendable they die young they die hungry their mothers died in childbirth etc but we now see it on the streets of Brighton when this does not work we see hundreds of people living on the streets in Brighton so we've got this this is where we're going with neil neoliberalism and I'll explain that a bit more just to another way of representing pathway B is that you've got the GDP coming from the bottom there is a government share of that which is derived mainly from taxes and that is then divided into what you could call the social allocation ratio and this has been inspired by the 1996 Human Development Report there's very I found a very very good report 1996 Human Development Report some of this I've stolen from that well worth looking at and my big diagram is actually a modification of one of the diagrams that used in there so how big should this be and then how big should that be as a share of it neoliberalism wants to shrink that and shrink that and put everyone as many people as possible onto a-okay and not have such a large pathway be so new people become responsible for themselves remember the first statement neoliberalism conservatism is about individual responsibility if you're poor it's your fault it's not societal so this is just an added one is that some of these can where countries are deficient in this that's where donor assistance comes in to some extent so for example the Uganda I don't know if it's still true today but the Ugandan health budget about half of it was being paid by David so it's added in to government revenue we haven't got time to go into those arguments except that a few years ago a Martius end wrote a newspaper article which said why does India not have universal health care so why is the Indian government not collecting taxis to improve the health care of its citizens and it's because they are not collecting enough tax through corporations or individuals to income increase the size of this I would say because they don't give a damn many of them do not give a damn about their people so so that's we will have to move on now you can get these slides if you if you put down your email I'll send you the slides I'm not going to have time to talk about this this is a bit more of an explanation of pathways a and B now what happens under pathway B is that it you have the allocation of production as well in all societies you have a software you have a software rule that determines who owns what so who owns how much land who has the right to own a factory who has the right to own a railway company those are software rules that exist in those societies so each Society has a set of rules that allocate resources which are used for livelihoods between different people the software rules also determine the distribution of income through wage levels and taxation it also determines the level of what in Britain we called the social wage which is education health care social housing we call it council housing in Britain and the universal benefits such as an unemployment benefits and so on which everyone has a right to these are universal benefits if you live in Britain you have a right to them and then social protection which we have a lot of doing work on this in ideas which is targeted benefits for particular groups which I'm not going to have time to talk about very much but I think you all know what I mean by that then we have the issue now with climate change is where do funds come from from the the rich countries that have caused global warming to help poor countries overcome the problems of global warming which is called adaptation now this adaptation funding is practically zero at the moment and I'm not going to have time to talk about that until nearer to the end so these are all determined by the software rules of society and they're determined therefore by the systems of power that operate in society and so for example in much of the world you still have feudalism so all forms of unequal land tenure which many people call semi fuel ISM so India Bangladesh Pakistan Nepal to a significant extent in in parts of Indonesia in the Philippines and so on you have people living in pyramid structures in which the the country in the village is run by somebody at the top and down at the bottom you have very very little few options okay now this was a political problem for the West in the 20th century because apart from the two world wars the biggest social unrest and the most people were killed in revolutions which are about unequal land tenure they were revolutions about bad landlords only most of the land so you had the Mexican Revolution the Russian Revolution the Chinese Revolution Vietnam Cuba the one in Nepal which didn't go very well these are all revolutions about unequal land in feudal systems in which the poor at the bottom in the end said enough and rebelled against these systems of power now as well as that you had two pathways about of that in the 20th century the other pathway was the West Western countries deliberately forcing land reform on some countries so South Korea and Taiwan were forced to get rid of their landlords and in industrialized and become modern urban societies by it especially the United States insisting that they buy out the landlords to end feudalism enter the real world and why it was the West interested in doing that because they did not want more dominoes to fall over they did not want Taiwan and South Korea to go like China and Vietnam okay North Korea had already gone so South Korea was kind of in the frontline and interestingly it's much less known about the Americans did the same in Japan because Japan was at what you could call a feudal country and MacArthur who was the head of the armed forces in the Pacific during the war he then became the governor of Japan and instituted land reform and as you can see the language here is very much like the American Revolution and the Bill of Rights it's about getting rid of a system which is oppressive and exploitative it's insisting on the idea of dignity and rights and freedom so it's quite interesting the kind of crossover of the terminology there was this kind of awareness in the State Department they needed good social scientists who actually understood the rural economy possibly a bit better than happens today but basically so power systems determined so in much of the world the allocation of the assets land in particular is due to these systems of power now what I want to emphasize is that in this model of pathway a and B the goal of changing the rules under neoliberalism is basically to shrink this pathway sorry it's gone maybe it comes up in a later slide I was doing this until late in the night and I might have got some of them in the wrong order but basically just to say that the goal of neoliberalism is to shrink taxes to shrink the government and to shrink the amount of welfare spending so that's the role of neoliberalism and to push as many people as possible onto path a which is the one where you take individual responsibility for your life I'm saying okay now this neoliberalism what it has has it involved well one of its favorite things is the public-private partnership which I won't have time to go into but highly dubious and lots of criticisms of it but basically neoliberalism involves the privatization of utilities so in Britain and many countries the water supplier the collection of garbage the electricity supply gas supply all of these have been privatized under Thatcher and her subsequent governments into profit-making organizations so they are now designed to deliver profit for their shareholders rather than to provide public service now when I did my first economics these were all defined as public goods these were public goods and these utilities were supposed to be available on the basis of right to people at reasonable prices and so on we all I'm not gonna have time but this also involves the stealth privatization of the National Health Service this I'm not gonna have time to talk about all these but the privatization of government functions has been quite important as well so for example government key government functions like the forensic service in Britain has been privatized and these private laboratories that do in you know the DNA investigations and all of those they are not doing it very well their profit oriented they want to minimize their costs some of them are gone bankrupt and some of them have been proved to be completely incompetent and many criminal cases have collapsed because they've not provided adequate evidence for criminal cases in other words bad people have got off because the government privatized the forensic system and you have same problems with the probation system social care and so on which I'm not going to have time to talk about it we have outsourcing now outsourcing is a primary ideology of neoliberalism and this involves in particular cleaning services and catering services in an organization will be put out to tender to a private organization so in the university here all the cleaners and all the catering staff are from a private company which is contracted to the university to provide its services and their conditions therefore suffer they used to be employees of the university the reason they've done it is the university can save money and the employees are treated like dirt and they are starting to well they've been starting quite a while now to strike there have been some serious strikes by them unit unionizing over this it also involves deregulation or cutting red tape which is a favourite thing I have a friend who's doing work with the World Bank who says regulations save lives and he's working on building codes where deregulation by the World Bank and others he's trying to cut building codes which make people safe he's trying to demonstrate the building codes are absolutely vital to saving people's lives and Milton Friedman had a wonderful he's one of the pioneers of proponents of neoliberalism he was interviewed quite a few years ago now he said building regulations are an unfortunate constraint on the profitability of the construction industry interesting Lin it until your house falls down in earthquake it also involves cutting taxes for rich and corporations and I'll just show this then give those who have to how many people have to leave for two o'clock ok so I'll give you a chance for no I'll give you a chance for questions and comments now and come back to the video afterwards so anyone want to ask anything or say anything who's got to leave only those who've got to leave anyone nope okay if you want the slides and the link to the talk then send me an email and I'll send it out no comments questions okay so this some of you I hope saw in January yeah okay okay I think the interesting comment there is they don't necessarily want to do it but they've seen it is an election election thing and that's my point is about whether neoliberalism has provided leaders who actually care about their people so that's the point I'm trying to make is that many leaders will get away with the minimum possible because they don't really care but they may be forced to in into it so Boris Johnson yesterday was forced to say that these things people are saying about the National Health Service are not true we are genuinely trying to improve it because he is worrying about getting getting votes and they banned fracking because they're they have a number of key marginal seats in rural places where fracking is threatened so yes I accept your point but I think my point still stands it's about the motivation the difference between welfare capitalism that I spoke about before neoliberalism and this is the major difference in changing the rules and perceptions is that we had certainly in Britain died and and certainly in some other European countries we had a capitalist class who thought that capitalism should run for the benefit of all okay that that was the social contract going back to social contract theory the theory art of the Second World War was that you you had to run capitalism for the benefit of all you had to have a healthy well educated population and we're quite happy with that if you're a capitalist you're quite happy with that because you've got a good population to work for you and say so this is the difference that people are now expendable you know you you get what you want you need less and less workers etc but thank you for that anyone need to leave now is a good time unless you've got a comment yeah have you got to leave okay if I could interpret you what I think you're really asking is why did it shift from welfare capitalism or socialism democratic campus to neoliberalism but but I think the problem with that is that the neoliberalism takes hold and is victorious not completely victorious significant inroads are made long before 1989 I mean the privatization of the British utilities comes along before that the privatization program predates 89 I think you're right that there is an impact of 89 around the argument of the end of history that I idea that there is no alternative but but what that doesn't demonstrate is there was an alternative welfare capitalism was trashed because it was thought to be too expensive so there you had the argument that if we want to run in capitalism that way our profitability is challenged it is challenged by trade unions which erode our profitability and the Smashing of the trade unions was a key part of the Thatcher agenda in order to redress the balance between wages and profits and but the the issue of what happened I don't think there's any particular individual drivers I think Reagan and Thatcher become individuals who are captured they are captured by those who want to influence how governments behave and and I think the role of the individual is quite interesting around the kind of the zeitgeist I mean I think what we see now in Britain and and the United States is that people who promote capitalism don't necessarily want Boris Johnson or Trump in power but they were kind of clowns that had to come forward to enable those parties to stay stay in in the running for a significant period but this is a huge discussion which we won't have time for for now which we'll have to come back to so if I could if you're able to stay till the end could I take your comment at the end would that be alright yes good thank you okay so I just wanted to show you this because it became kind of iconic about the debates and the discussions this was at the Davos meeting some of you probably saw it this is my first time at Davos and and I find it quite a wildering experience to be honest I mean 1,500 private yes flown in here to here Sir David Attenborough speak about you know how about wrecking the planet and I mean I hear people talk in the language of participation and justice and equality and transparency but then I mean almost no one raises the real issue of tax avoidance right and of the rich just not paying their fair share I mean it feels like I met a firefighters cleitus conference and no one's allowed to speak about water right there was there was only one panel actually we've had to hear the second one let's go there one panel hidden away in the media center that was actually about tax avoidance I was about I was one of the 15 participants so something needs to change here 10 years ago the World Economic Forum asked the question what must industry do to prevent a broad social backlash very simple just stop talking about philanthropy I start talking about Texas Texas Texas we need to I mean just two days ago there was a billionaire in here let's name Michael Dell and he asked a question like name me one country where a top marginal tax rate of 70% has actually worked mm-hm and you know I'm historian United States that's where it has actually worked in the 1950s during Republican President Eisenhower you know the war veteran the top marginal tax rate in the US was 91% for people like Michael Val you know top estate tax for people like Michael Elvis more to say I mean this is not rocket science I mean we can talk for a very long time about all these stupid philanthropy schemes we can invite Bono once more come on it's we gotta be talking about Texas yeah that's it taxes taxes taxes all the rest is in my opinion we have a tax system that leaks so much that allows a hundred and seventy billion dollars of money every year to be taken to tax havens and to be denied the developing countries that need that manimals so we have to look at the business model and we have to look at the role of governments to tax and plow up money into people's lives I have to say honestly this is a very one-sided the u.s. basically has the lowest unemployment rate ever the lowest black unemployment rate ever Louis youth unemployment ever we've actually reduced poverty around the world no one's talking about that at all so I like for the panel talk about beyond taxes which every one of you have talked about the only thing you've talked about this whole panel on inequality what can we really do to solve and it helps solve inequality over time beyond taxes the gentleman who talked about who said we've just stopped taxes and the jobs are there on this law and unemployment rates are low let me tell you something we talked about jobs but the quality of those jobs and we also work with poultry workers in the richest country in the world the United States hochi workers these are women who are cutting the chickens and parking them and we buy them in the supermarket dolorous one woman we work with there told us that she and her co-workers have to wear diapers to work because they are not allowed to eat breaks this isn't the richest country in the world that's not a dignified job those are the jobs are being told about that globalization is bringing jobs the quality of the jobs matter it matters these are real jobs of dignity in many countries workers no longer have a voice they are not allowed to unionize they are not allowed to negotiate for web for salaries so we're talking about jobs but jobs that bring did we're talking about healthcare the World Bank has told us that 3.4 billion people who on five point five dollars a day are all divert are just medical bills away from sinking into poverty they don't have health care they are just a crop failure away from sinking back into poverty they have no crop insurance so don't tell me about low levels of unemployment you are counting the wrong things you're not counting dignity of people you're counting exploited people I wouldn't so interesti there was a figure in the paper for Britain last week there's 8 million people in Britain who are in work and are so poor that they have to get help from food banks they're working they're in these jobs that winnie is talking about ok so cutting it's about cutting taxes privatization of schools I'm running out of time but in Britain and the United States in particular there are huge ideological moves to privatize schools I mean we're talking about primary and secondary schools this is part of the agenda to hand them over to relative relatively small corporations and then we have the corporatization of the universities half of the staff in British universities are casual workers half nearly half in the United States it's half ok the university is now corporations which are trying to maximize their income by allowing as many people to come as possible so the qualifications come to British universities now have almost completely eradicated for undergraduates you don't need good grades in your a levels to go to university each University is competing to try and get as many students as possible which is why we see here a building boom on this campus with the need to provide more space because each university is competing with every other university in corporate competition to do that and outsourcing its miss its cleaning and catering in order to minimize its costs there's another issue here which I hope to give another talk on which is how this is affected universities in terms of its research in the research we carry out my argument here is that because we are all universities and ideas reliant on funding from different kinds of donors a lot of it from government the way in which we take the money is already framed around ways of thinking which are not necessarily addressing the causes of the problems ok the framing of how we discuss poverty marginality and and hunger is already framed around ways of thinking which are convenient to the government and are not truly independent research opportunities and I think this is a another way in which neoliberalism has influenced science in a very detrimental way oh I didn't say on deregulation it's now coming out that you'll heard about the crashes of the Boeing 737 max the two crashes it's now coming out that that was tryin if eclis those crashes were a part of the reduction of regulation by the FAA of the aerospace industry in the United States so D deregulating the industry has led to systems in the manufacture of that aircraft which made it unsafe we could look talk about Grenville tower we could talk about many many things here which I'm gonna run out of time so what's moved from from this oh here's some more examples of tax evasion avoidance this was in February this year this guy moved to Monaco so he could be outside the British jurisdiction in order to say four billion you think what is his income if he's trying to save four billion in taxes what's his actual income and why does anyone need that much money what would you do with that much money I mean this is the ludicrous situation that we've got into and then USB which is a major it's a Swiss bank and no Swiss based bank was done for fraud because they were helping people to avoid paying taxes in France so another thing that neoliberalism has done is to make it easier to be criminal and to avoid tax and a number of the big banks HSBC Barclays have been fined a huge sums of money hundreds of millions of dollars for laundering money for for criminals including drug cartels and for manipulating foreign exchange systems to enable them to make more more profit and so on I mean there's endless stories about about that so a guide to the terminology neo is Greek for new liberalism what do we mean by that I'll explain a bit of that it's it's liberalism is used by many to me contradictory things but the key thing is that how you think about it is very often class-based so neoliberalism basically the simple story is it's the new version of 19th century liberalism which we called less a fair soul a say fair capitalism was let it happen without interference from the government laissez faire was the motto of the free trade ideas of 19th century capitalism so you you run the economy without interference from government and it argued that market forces could determine more or less anything that happened in the economy and that was the way it should be run and there's an interesting little footnote on that which is the irish famine of 1845 249 in which the initial response of there at that time Ireland was part of Britain Ireland was actually a colony but actually Britain claimed that it owned and ran Ireland and the Irish Famine happened it killed one to one and a half million people and the British government refused to intervene in terms of food aid because it said the market will solve this problem and this is all on record from the Minister of Finance who was called Lord Trevelyan at the time I haven't got time to go it's a fascinating story that the idea was that the role of the state would be very restricted and it's based on classical economics around the idea of what's called economic man which of course should be mankind and the idea of Homo economicus and this idea is based on the the understanding that each person will want to maximize their income and each corporation will want to maximize their profits and that is the driver of society and if people are allowed to do that then the there will be the maximum benefit from all because that will rationally allocate resources in society and you will have the maximum utility of people and that's also underlying this idea individual freedom in what I talked about in the United States and I've talked about this already so I'm not going to repeat it but basically from this time what does liberalism mean in terms of its meaning in in language is that it free from restraint in speech or action in other words it's a democratic principle and here we have the first clue as to why it's related to the shift in the mode of production from feudalism to capitalism because all people who did not want feudalism whether they were want to be capitalists or want to be free people who then became workers all of those people wanted freedom from restraint of speech or action in other words there was unity amongst people against the restrictions of the feudal hierarchy and what this means is that over the last 200 years what has happened is that both of those sides of the different kinds of people who wanted freedom and liberty went themselves in different directions because each side could use that argument for freedom and liberty to promote their own class interest so those who dominated the capitalism capitalist system like the freedom foundation so on they can argue that we need freedom and liberty to run the economy for the benefit of all but each individual takes their responsibility and the workers could say we need freedom from the oppression by the state in order that we are allowed to form hue trade unions and women are allowed to vote where we should have decent housing we should have decent education so out of the opposition to feudalism all all sides both sides of whichever you want to call it all had an interest in promoting freedom and liberty and that's where the terminology confusion comes from from 200 years ago in all sides wanting to draw on this as a legacy which they could use to to make for their rights so I'm skipping through these you if you want the slides you can you can get them and you can read them so I'm going to skip so basically to put a timeline on it to make it simple this period is lace a fair dominates up to the towards the end of the 19th century market forces can resolve any problem even the IRS famine but there is a tension here because one of the things that emerges is quite understandably the capitalism begins with many many thousands of small family-owned businesses and what happens what emerges in the nineteenth century is the tendency towards monopolization so by the end of the 19th century in the United States you have the beginnings of legal restrictions on monopolization the anti so-called antitrust laws which are designed to try to take it back to a free-market situation where there is fair and free competition on a more level playing field and you've probably heard that European Union still has has its own antitrust laws which tries to minimize it doesn't really work monopolization then we have the emergence of the need to manage capitalism the idea that you need a state which actually interfered interferes and intervenes to manage the the market imperfections and the social problems that emerge from it and then from the 40s onwards we have the emergence of the welfare state which is consolidated in most Western countries Keynesian economics becomes intellectual so demand management is the key to Keynesian economics that means if there is not enough jobs the government will spend money to create jobs so this is the idea of minimizing harm done to people whereas the neoliberal view is that you maximize profits and that is reinvested to create jobs now here we have the big lie of neoliberalism because does neoliberalism want to have more jobs no it is investing in in in artificial intelligence and in robots and in all manner of ways in which you can reduce the number of jobs so the argument that economic growth is what you need to provide jobs is proven by the lie that everything is going on to reduce the number of jobs so you will not have the guarantee of having a job - and people become expendable so from 1980 roughly speaking when Thatcher and Reagan are coming to power you have the victory of neoliberalism which confirms the domination of the Chicago School Milton Friedman Hayek and so on the state is regarded as harmfully to economic growth is not a supporter of economic growth interestingly though if you want capitalism in South Korea and Taiwan and Singapore and a number of other countries how do you do it you foster it through state intervention so all of those so called and the World Bank had the nerve to claim that those newly industrialized countries of the 60s and 70s were because of market forces and that's a complete lie they were the result of state intervention and states combining with corporations as in the South Korean tribals and in Japan with the links between corporations and financial systems and the Ministry of Finance they were state interventions which created capitalism in those countries under state sponsorship and interesting that this is is sometimes called market fundamentalism in other words markets should rule everything but interestingly very few people argue that you should have a free market in labor because you have to restrict immigration because otherwise you can't get the parties into power that you need to run the system that you want so you can't have a party in Britain or United States that will run the capitalism that you need if you allow a free market in labor because then people will not vote for you because they're anti-immigrant or some people are anti-immigrant and so on so you have interesting interesting little footnotes there interestingly on that one a tiny little footnote is that in the eighties there was a part of the Conservative Party in Britain which was called the Young Conservatives they were very young radical loud shouty market fundamentalists and they actually had a debate one of their annual conferences as to why the labor market was not free like the others they were advocating for free markets and everything else and they actually had a debate about if we're true on this ideologically then we should have a free market in labor quite quite interesting I'm gonna skip through these there are other slides here I want to stop so you have a chance to ask questions but the this other slide here is to highlight the difference between economic growth and human development a lot of that is very very well known one key thing I do want to finish on and that is how did neoliberalism get spread around the world and one of the main tools was through the World Bank in the IMF through structural adjustment programs so it's this absolutely crucial that the privatization the reduction of the size of the state no need to collect taxes things will be solved by market forces this was sold around the world in the 80s and 90s as an ideology some call it a religion that this was actually spread to developing countries which means that you have the this absorption and actually favoring this ideology in those countries now the the upshot is that in many of those countries you have the arrival then of demagogues and kleptocrats who are favored by the rules the software the software that comes with the penetration of neoliberalism is a kind of software that benefits demagogues kleptocrats and dictators so in Africa and Asia parts of Latin America you have the arrival of people who are in power do not give up power because they are pushing an ideology which is welcomed by the West so I I think I will have to stop there in order that there is some time for you to have questions so thank you very much [Applause] I'm having to chair it myself so we've got a roving mic as well so there and then there and then you wanted to speak earlier so yeah though they're there first I think so I try to to be very like direct and probably like this question I shouldn't be asking here but I would anyways I got the sense of an underlying assumption or two assumptions first if there is no neoliberalism then there the loudspeaker system is not very good I can't really hear you properly so if if we're running away any other words or they besides neoliberalism there is a belief that leaders would be working for the good of the people this belief that what sorry lead is like an assumption that leaders would be working for the good of the people yes so like the type of leaders that new liberalism put in place are actually not working for the good of the people but throughout history that like this has rarely been the case I can argue no matter what other type of water production has been in place and the other thing is there's a lot of trust like the alternative that we have has a lot of imply trust in governments and I come from Egypt and like I can show you that this is not like this is not the alternative route we can take so as much as I agree hundred percent on all of these implications especially while Egypt is going through the structural adjustments programs right now but on the other hand like if you leave it to the governments to provide these services we might be much worse off so what art is about providing which services sorry I missed that Oh welfare welfare services yes we've already seen that and increased taxation taxi taxis have tripled during the past years and spending on education and health have decreased so like yeah I mean I can't comment on Egypt because I know almost nothing about the country so it's difficult for me to make any any useful comment in relation to that your first point is about the kind of leaders my point about that is the contrast between what we had in the 50s and 60s in Europe and what we had from the 80s onwards so it's the contrast between the kinds of leave leaders that are thrown up the idea of welfare capitalism was that you needed leaders who in this country were called in the Conservatives were called one-party Tories what sorry One Nation torus there they believed that the nation should be unified and welfare capitalism was something they signed up for in fact when I was a kid the Labour Party in the Conservative Party competed with television adverts when there was going to be an election they would each pledged that they were going to build a hundred thousand houses for social housing or 150 and they compete with each other for how many houses they would build that of course with the Tories after Thatcher went to zero any in fact - because she allowed them to sell houses - to people so the housing stock for poor people diminished significantly so my contrast is not about other periods of history I think I demonstrated in the 19th century we had some pretty awful leaders so the contrast is between cap welfare capitalism and I'm trying to demonstrate that is entirely possible and there is no reason why it should not exist of course it won't be exactly the same as it was in the 50s and 60s what I'm saying is there was there was profitable capitalism that even capitalists might enjoy okay and and and what we've had since so this system throws I think this system throws a number of particular kinds of people into positions of power one is Psychopaths and and the other is criminals who have no morals and and also nerds like Zuckerberg who do not understand have no empathy they do not understand how to help to relate to people so so that is because the accident of neoliberalism is that it's coincided with the so-called tech industry and the possibility of Silicon Valley to develop new ways of making profit which gives rise to the Steve Jobs and the Zuckerberg who are particular kinds of psychology which suits them to those jobs and they they rise to the top in that I can't comment about Egypt but then then it was here thanks very much thank you very much for a very interesting and entertaining you said right to me that that is different between neoliberalism and globalization but there is a link to me and I think it's what I would call a perversity incres because the notion that is put forward by the multinationals and their governments between the US has been that globalization has made national borders irrelevant and that the world is now a unified economic space that religion should be run without any interference from national governments and States and according to the rules of neglible ISM and I think they're using international instruments particularly trade agreements and investment agreements to put forward their and get home and there are some some cases which are iconic you see and one has to do with climate change you haven't mentioned the climate change in your promise - yes but but what this is went directly relevant disappear - and I think they've managed to do is to establish the principle that foreign investors have a right to sue governments whenever their national policies rules regulations etc that impinge on their profits and there is at the moment a case in this sort of kangaroo court to see which other we will Bank exceed court a company a Swedish company in Germany which is suing the the German government because the German government after the Chernobyl disaster decided to do away with a nuclear power and by the Year 2022 these companies are invested and they're suing now for five billion dollars in compensation because they say this is an expropriation the fact that you know I don't want nuclear power means that our an investment is now worth nothing and it's very likely gonna get money from values yeah so my point is that we have to be aware of the fact that this instruments this agreements which are in principle appear to be quite benign trade and investment agreements are really effective vehicles for the liberalism to become globalized yeah I think that's very very good and important and in a sense it's also a way in which they're changing the software rules for their own benefit so I think that's very helpful thank you well I feel well tour de force thank you it took me right back to when I started development economics in the late 1960s and these stories about the market developing Taiwan and South Korea were just emerging they were treated as a branch of economics where government was good it was bad and so on but I felt right at the ends that the Box neoliberalism was empty now tell you why I think that in the late 60s around May lots of us in North America doing PhDs we're doing very very highly mathematical theses with a whole stack of data and when we finished we wanted to go away and work out a social story a political story to go with the economic analysis in development economics is an excellent example in Arthur Lewis with his model of terms of trade he had a story about the village a story about the subsistence wage and a story about how profits were shipped out of those countries and it was good economics that went together now if you go way way to the end of your talk to climate change how else can you talk about climate change go to good neoclassical economics which talks about the goods that we eat and the bats that are v02 and so on and I just think that there is a huge huge amount of structural and neoclassical economics which can be used in parallel with your lovely descriptive history which I enjoy it so much thank you David thank you there and then thank you so much for a very insightful discussion and I'm just trying to contextualize this in for my country Pakistan in other countries like India developing countries where the public sector is now increasingly moving towards outsourcing the healthcare services in the system particularly the primary health care service which has actually so for example in Pakistan you look at Punjab and Sindh you see that the provincial government has spent increasingly on outsourcing the health care services which has actually led to some improved outcomes particularly and like women and people are actually using those services so I'm just wondering how that what implications it has for neoliberalism in that context where you see that you see some positive in outcomes I mean of course I don't know your country or or that process either I think everything is context specific and we can all imagine countries where the health care services is very poor and changing and where I mean I've been to many local government offices in Uganda in Bangladesh in India where it's barely functioning because the people are underpaid they are not motivated to do a good job and we know this happens in schools and I know less about clinics but I imagine that happens in clinics so if they can find a way by which people can become motivated to do a good job which in in in healthcare should involve caring for people you know being motivated about caring then I wouldn't be against it but the lessons from Britain is in the opposite direction so if you're in the care system in Britain the care system for the elderly and the infirm has been almost entirely privatized and in those care homes people are cared for by people on minimum wage many of whom are migrants who don't speak English or speak minimum English so you're looked after by people who can't really do a job based on caring so these jobs in the past nursing and care workers jobs were based on the idea you go and do that job because you actually cared for the people where you would do it whereas now people do those jobs because it pays a wage and they barely survive on that wage but that's what they can get and and so it has to be context specific so I wouldn't wouldn't say condemn what's happening in Pakistan and it may be a partial solution so what should happen there but the big question there and as Marta Sen asked for India is why isn't it better and more you know why India is three and a half times richer than it was in 1990 are all people in India three-and-a-half times richer of course they're not so why as the collection of taxes not been enough on on rich people and corporations to enable there to be a much better health care system colleague over there said it has got better but then obviously thought it could be much much better so it's about those those issues as well okay thanks Terry um might be quite a big question to try and consider with only a few minutes left but I'm curious to hear your thoughts on the kind of future gazing basis I suppose in in the context of climate change and as the climate crisis presents more and more of a stranglehold on everything that's going on in the world how you see the free market narrative panning out as a result of that okay that is a big question I think it's very mixed so some parts that the market approach have benefited through the the very significant expansion of renewable energy wind farms like the one off the coast here solar in some countries have taken off enormous Lee and that's driven by capitalism I don't have a problem with that in the sense that it is providing part of the the solution to emissions other respects it is it is hemmed in by politics so the Tory government refuses to allow onshore wind because it might spoil the view oblivious to the fact that there won't be a view if there's nobody to look at it so so it's very mixed on the other side of climate change which is adaptation there is no market solution to that at all there is no private market interested organization that can make profit out of adaptation or very little there is the possibility Syngenta Monsanto could make money out of selling different kinds of seeds which are heat tolerant okay so they're there and they're working on that so there are there are little gaps in it but the vast majority of what is needed for adaptation is not solvable by market forces that's going to require if money is the solution and that's a big debate if money is the solution then that money is has to be based on the polluter pays which means huge transfers from those who caused the climate change to those who are suffering climate change it's a very short answer hi Terry thanks so much for that unfortunately I missed the first half an hour but maybe we can catch up another time so I had two questions a very broad one which maybe I'll save for another time but um a more specific question about the notion and argument about technology and things like AI displacing workers I hear that argument a lot and I also hear a counter argument a lot which is that in the past there have been numerous examples of technological disruption in labor markets and you know that we rebound in some way you know other industries pop up there's other opportunities for supporting the kinds of technologies that emerge etcetera and I don't I don't necessarily buy into those arguments but I just wonder what you how you would respond to to that argument which i think is quite pervasive okay well to the extent that if we if we look at the economy as it operates to the extent that it creates jobs it would be pretty difficult for me to say I don't want there to be more jobs but I think like when he said in the video they should be good jobs well-paid respectable of respectful of the workers who are doing them so I don't I don't have a problem I mean it's pointless to argue that there is a problem of poverty and unemployment and then to oppose the creation of new jobs so you know it's it's um that's that's not the argument the argument is about the software that manages how that happens now some people argue that mechanization and the formation of robotised mech and I you know mechanized worker replacement just enables other jobs to be created in other sectors or in other places I'd like to see that work out and to be proven and that would be fine my point is that those who promote economic growth and neoliberalism always argue that you need growth in order to supply the the wealth which can be shared in order to provide welfare well I think what we've demonstrated is that they do not want to share it they want to restrict the amount of welfare that is shared and also that they don't really give a damn about creating jobs they're only driven to create jobs if it makes more profit their job understandably is not to create jobs to give people jobs so I think we have to be cynical or realistic about the fact that those claims which are about how capitalism through GDP and economic growth solves the problem of poverty we should analyze that very carefully and say is that really what is going on is that their goal and it's not their goal if if what their goal does serves humanity then all well and good but my argument is that that that served Humanity in the 50s and 60s in Europe but it does not serve them now so it's about these different rules and they're manipulating the rules to get what they want against what we need well I'm delighted to have so many of you come and to get your questions if you want to talk other times I'm very happy to meet up for discussions and if you want the slides do to send me an email and I will share them with you thank you very much for coming I did this

Channel: Institute of Development Studies

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Length: 88min 9sec (5289 seconds)

Published: Mon Nov 11 2019