History Of Neoliberalism

3 A BRIEF HISTORY OF NEOLIBERALISM
Harvey (2005:2-3) writes that neoliberalism is a theory of political economy practices that purposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee for example, the quality and integrity of money. It must also set up those military, defence, policy and legal structures as well as functions required to secure private property rights and to guarantee the proper functioning of markets. Furthermore, if markets do

In order to make standard free-trade theory come out right, it is therefore necessary to show that international competition is always beneficial. This is the real thrust of standard free-trade theory and the real foundation of neoliberalism. Firstly, if trade between any two nations leads to imbalances between exports and imports, it is necessary that these provoke compensating relative price changes. This means that the value of the goods sold abroad by its exporters is less than the value of the goods sold domestically by its importers. For this imbalance to be automatically corrected, it is necessary that exports become cheaper to foreigners who would then presumably buy more and that imports become more expensive to domestic buyers who would then presumably buy less. Secondly, these relative price changes must be effective in reducing the trade deficit. This means that they must raise the money value of exports relative to that of imports. The opposite is perfectly

Finance is the upper fractions of capitalist classes and their financial institutions. Two other features must be added to this broad characterisation firstly, the control of financial institutions supposed to work to the strict benefit of capitalist classes was a prominent component of the new social order. Secondly, the transition under capitalist leadership to this new power configuration would have been impossible if it had not been conducted in alliance with managerial classes notably their upper segments. Capitalist classes always seek maximum income, but after the imposition of neoliberalism in the early 1980s major transformations of social relations were realized in comparison to the previous decades aiming at this maximization. A new discipline was imposed on workers and all segments of management new policies were defined to the same end; free trade placed all workers of the world in a situation of competition capitals were now free to move around the globe seeking maximum profitability. The crisis could have come later to the world as a result of this neoliberal strategy pushed to the extreme, but it came from the United States during the first decade of the 21st century. On the one