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Neoliberalism

As described by Berkeley economic historian Bradford DeLong, neoliberalism has two main tenets:

"The first is that close economic contact between the industrial core and the developing periphery is the best way to accelerate the transfer of technology which is the sine qua non for making poor economies rich (hence all barriers to international trade should be eliminated as fast as possible). The second is that governments in general lack the capacity to run large industrial and commercial enterprises. Hence, [except] for core missions of income distribution, public-good infrastructure, administration of justice, and a few others, governments should shrink and privatize)."

Neoliberalism is often identified with a number of global organizations, including the World Trade Organization (WTO), the World Bank and the International Monetary Fund (IMF). The concept of neoliberalism arose as economists at the World Bank and IMF found that post-World War II development strategies for poor countries were not having the intended effects. In particular, funding for mega-projects left poor countries with high debts but little growth to show for it.

The neoliberal doctrine is also a subset of the so-called "Washington consensus": a set of specific policy goals designed for Latin American countries to help them recover from the "lost decade" of the 1980s. This period not only saw a rise in dictatorships in the region, but also disastrous financial mismanagement resulting in rapidly rising prices for basic products, which inevitably caused an increase in poverty. In addition to the tenets of neoliberalism, the Washington consensus entailed a country should have a stable exchange rates and a government budget in balance.

While neoliberalism has proved to be more effective than previous development strategies, it has drawn its share of critics due, in part, to some catastrophic failures. In particular, Nobel prize winner and former World Bank chief economist Joseph Stiglitz argues that the IMF is guilty of forcing neoliberal and Washington consensus policy goals on countries at times when it was not appropriate (i.e., the Asian Economic Crisis[?]), with devastating results. Neoliberalism has also been critiqued by the anti-capitalist movement, who argue that market forces inevitably increase inequality in wealth and hence power.

See also: anti-capitalism, privatisation, Keynesian economics

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