Neoliberalism and the 2008 Global Economic Crisis

Introduction: The Crisis and Neoliberalism's Alleged Demise

After the end of the Cold War, the triumph of capitalism was taken as a given. Not only was communism dead, so was traditional welfare-state social liberalism, historians and politicians alike proclaimed. However, in the wake of the international recession, such certainties were subjected to increasing scrutiny. The economic crisis that took hold of the world in the fall of 2008 was often described as the "end of neo-liberalism" (Kampfe 2009). But although faith in current capitalist norms, unfettered globalization, and deregulation were all curtailed, proclaiming the death of the philosophy known as neoliberalism seems premature.

Criticisms of neoliberalism are not new. Even during the time neoliberal policies were most in vogue, neoliberalism was not without its critics: "the rich grow richer and the poor grow poorer" was a common lament as social theorists proclaimed it merely a reformulation of "trickle-down" economics, or Adam Smith-style capitalism based upon the idea that eventually prosperity at the highest levels would trickle down to the lowest stratum of society (Martinez & Garcia 2000). But now, even the middle-class members of the developing world draw back in horror at the burgeoning bonuses of CEOs and Wall Street managers who have ruined their companies, as well as the necessary bailouts of major industries deemed too big to fail. The mass disgust at the excess and consumption that fueled neoliberal expansion — among both the very wealthy and the upper middle class — has grown. The credit crisis and the helplessness of major financial institutions make the ideas of tax cuts for the highest tiers of society, deregulation of financial risk-taking, and the belief that the free market will "sort itself out" seem deeply suspect.

Core Principles and the Rise of Neoliberal Policy

In contrast, the 1990s was often called a decade-long triumph of neoliberal dogma. The core principles of neoliberalism involved liberating "free enterprise or private enterprise from any bonds imposed by the government (the state)" even if this meant economic pain for many workers (Martinez & Garcia 2000). This pain was supposed to be short-term, as in the case of the "shock therapy" imposed upon the governments of Eastern Europe and the former republics of the Soviet Union. Privatizing industries and functions formerly performed by the state (including utilities and defense contracting), eliminating price controls, encouraging free trade rather than protecting state industries, and making social services more difficult to obtain were all part of the neoliberal program.

Although many of these principles appear conservative, they were called neoliberal because of the enthusiasm with which they were embraced by many "liberal" politicians, including Bill Clinton — the architect of both NAFTA and welfare reform in the United States — and the "New Labour" government of the United Kingdom. Neoliberalism was "a strategy to change the relative strengths within the state — in favor of finance capital, property owners and transnational corporations" (Kampfe 2009).

Liberalism has been equated with political freedom; neoliberalism was equated with economic freedom. Of course, it could be questioned how "free" most of the world's peoples really were under neoliberal governance. Much of the developing world worked for companies based in the developed world, or to create goods and services for the developed world. Economic polarization between rich and poor grew, and political power shifted along with it — in a lopsided manner, just as lopsided as the burgeoning growth of the wealthiest and poorest people at the opposite ends of the world's economic continuum.

Works Cited

Carreon, Juan. "World-economy: Not the end of neo-liberalism yet." Inter-Press Service News Agency. April 3, 2009.

Martinez, Elizabeth, and Arnoldo Garcia. "What is Neo-Liberalism? A brief definition." Global Exchange. February 26, 2000.

Kampfe, Gruppe Soziale. "The end of Neo-liberalism and the crisis of capitalism." Social Struggles. May 19, 2009. Los Angeles Independent Media Center.

Treanor, Paul. Neo-liberalism: origins, theory, definition. 2009.

Wolff, Rick. "Neoliberal Globalization is not the problem." Radical Notes. 2009.