Global Policy Forum

Critical public choices and extended political struggles will determine whether, in what ways, and how far a new course of globalization will shape in the coming years, according to Jan Aart Scholte, Professor in Politics and International Studies, and currently Co-Director of the ESRC/Warwick Centre for the Study of Globalisation and Regionalisation. In a recently published article by the United Nations Research Institute for Social Development (UNRISD) - ‘The Sources of Neoliberal Globalization' – Prof. Scholte reflects on the future of neoliberalism, while examining what sustains it. Following are extracts from that article.

Neoliberalism plus

Concerns about adverse consequences of neoliberalism, together with pressure from protest movements, have in recent years provoked considerable discussion about changes of policy toward globalization. Already a number of reforms have attenuated the ultra-liberal marketism that prevailed in the 1980s and the first half of the 1990s. As of late 2002, it remained far from clear how deep these revisions would go. However, the relative modesty of policy alterations to that date suggested that neoliberalism would retain general primacy in our (mis)management of globalization. No full-scale shift of approach is in immediate prospect.

Most changes of the last five years regarding the regulation of globalization have fallen in the mould of what has been called the post–Washington consensus or, as Rodrik (2001:15) has more aptly described it, the "augmented Washington consensus". In this vein, globalization-by-marketization has been pursued with greater attention to institutional contexts and social consequences. Even an arch-neoliberal like Milton Friedman has conceded that his earlier call to "privatize, privatize, privatize" needs a supplementary injunction to couch the market in solid institutional arrangements (Friedman 1991). Privatization, liberalization and deregulation remain the order of the day, but these core neoliberal policies are now undertaken in tandem with more measures that address corruption, transparency, financial codes and standards, unsustainable debt burdens, the timing and sequencing of capital control removal, social safety nets, poverty reduction, corporate citizenship and so on. Recent trends have also seen some technocrats reduce their earlier inclinations to take a one-size-fits-all approach to the application of neoliberal policies and to give greater attention to the diversity of cultural, economic and political contexts.

However, "Washington Plus" has still had neoliberalism at its core. Thus, anti-corruption drives, information disclosure schemes, and other so-called good governance measures have had the primary aim to improve market efficiency. The Poverty Reduction Strategy Papers spearheaded by the Bretton Woods institutions since 1999 have continued to centre on marketization through privatization, liberalization and deregulation. Concerns about "moral hazard" in the marketplace have severely constrained creditors from extending more substantial debt relief to poor countries than a handful of bilateral cancellations and the grudging heavily indebted poor countries (HIPC) initiative on loan repayments to the IMF and the World Bank. Capital account liberalization remains a key macroeconomic policy objective, even if it is approached with greater caution. Corporate citizenship is an exercise in market self-regulation and often has the aim—implicitly if not explicitly of pre-empting greater public sector interventions to secure social and environmental standards in business behaviour. The second generation neoliberal framework has more or less ignored issues of social inequality, ecological integrity, cultural protection and democracy. In all of these respects there has been limited "post" in the post–Washington consensus.

True, certain ideas recently promoted in some policy circles have implied a more substantial reorientation away from neoliberalism in the direction of redistributive global social democracy. Discussion of global public goods funded through global taxes has fallen into this vein, as has talk of creating an Economic and Social Security Council at the UN. A vision of global social democracy has also underpinned notions of "decent work" developed at the ILO, conceptions of a "rights-based approach to development" pursued at the United Nations Development Programme (UNDP) and elsewhere, and ideas of a new "global social contract". However, to date this reformist discourse has not translated beyond words into significant concrete rules and regulatory mechanisms to govern the global economy. Indeed, neoliberal regimes have shown considerable adeptness in co-opting reformist themes and draining them of their force for significant change. This fate has already largely befallen notions such as sustainable development, social capital, ownership and participation.

Dissatisfaction with the harms and omissions of neoliberalism has also of late generated greater interest in transformist approaches to globalization. For example, radical socialists have seen the contradictions of neoliberalism as an opportunity to transcend capitalism. "Dark green" environmentalists have promoted ecocentric alternatives to neoliberal economism. Religious revivalists have offered spiritual renewal as an antidote to the cultural voids that privatization, liberalization and deregulation are not designed to fill. Yet transformist ideas of these kinds have extended little beyond fringe movements that remain very far removed from the core regimes that govern the global economy.

Other reactions against neoliberalism have taken protectionist-mercantilist forms. These rejectionists have dismissed globalization of any kind - neoliberal or otherwise - and seek to construct some form of regional, national or local autarky as the way to secure the good society. Calls for de-globalization have come from highly diverse and often otherwise opposed circles, including the farmers of Ví­a Campesina, the Communist Party in Russia, neofascist movements in Western Europe, and middle-class professionals in the San Francisco-based International Forum on Globalization.

Some observers have wondered whether this accumulation of reactions against neoliberalism signals the start of a Polanyian "double movement" in relation to contemporary globalization. Sixty years ago Karl Polanyi observed that ultra-liberalism in the nineteenth century world economy produced social dislocations that generated demands for reform and an eventual reregulation of capitalism (Polanyi 1944). Followers of Polanyi would expect the failings of neoliberalism—as the marketist phase of capitalist development in the past quarter-century—to provoke a turn toward a more socially sustainable regulation of globalization.

It is plainly too early to call this outcome. Unadulterated, naive neoliberalism has fallen from grace in most quarters, but "neoliberalism with knobs on" has thus far held sway over reformist, transformist and mercantilist alternatives. To date we have witnessed only tinkering at the margins rather than a Polanyian great transformation. For the time being, then, policy makers and citizens-at-large still need to understand the forces that have kept neoliberalism in place.

Dynamics of Neoliberalism

The forces that have generated and sustained neoliberal policy frameworks over the past quarter-century are located in four interrelated areas: governance, production, knowledge, and social networks. Regarding governance, the key shift advancing neoliberalism has been a move, with globalization, from statist to decentred regulation. Concerning production, the main trend has been the rise of supraterritorial capitalism—more specifically, neoliberal policies have responded to, and reinforced, certain expanded fields of surplus accumulation such as finance and information, and certain new forms of capitalist organization such as transborder firms and offshore arrangements. With respect to knowledge, neoliberalism has thrived in an environment dominated by rationalist constructions of knowledge, particularly in the form of modern economic science. In terms of social networks, neoliberalism has been furthered through the consolidation of a global managerial class, namely, transborder elite bonds that have interlinked powerful official, corporate and intellectual circles.

These four principal forces behind neoliberalism in practice have generated the doctrine together and through their combination. Thus, the explanation does not lie in one factor that operates before the others as an independent variable. Instead, all four aspects—and more particularly their interconnections—have been crucial to the production and entrenchment of neoliberal policies. Other developments like the end of the Cold War have provided further impetus to the rise of neoliberalism in the late twentieth century, but their role has been secondary to the core four-faceted dynamic.

Social networks: A gobal managerial class l

A fourth key general development that has underpinned the rise and continuing strength of neoliberalism has been the growth of transborder connections between, and solidarity among, regulators, business managers and knowledge producers who promote neoliberalism. To speak of a global managerial class is not to say that perfect harmony has reigned among its many elements. Nor, to repeat an earlier disclaimer, is it to suggest that this class has embarked on deliberate global conspiracies to create the harms of neoliberalism. However, these transworld social networks in and between official, corporate and academic circles have helped to consolidate a powerful general elite consensus behind neoliberal policies.

In governance circles, for example, dense connections have come to link economic policy makers across state and suprastate agencies. Prior to 1950, trans-state networks were mainly limited to the diplomatic corps. Now transgovernmental links between finance and trade officials are often equally, if not more, dense than those of foreign ministries (compare Slaughter 2000). Through regular encounters in multilateral forums, as well as frequent communications in between these meetings, many economic policy makers have come to have closer relations with their counterparts in other states than with colleagues in other ministries of their own state. Likewise, staff of different multilateral economic institutions have developed close ties with each other and with national policy makers for finance, trade and industry, while often having relatively few links with officials in social, cultural and environmental agencies. These transworld economic governance networks have provided key channels not only to spread neoliberalism across the planet in the first place, but subsequently also to provide continual reinforcement of the doctrine.

Significant social networks have also interlinked business elements of the transworld managerial class, with their keen capitalist interests in promoting neoliberal approaches to globalization. Partly these corporate connections have developed through everyday entrepreneurial dealings. In addition, a number of transborder associations of financiers, industrialists, traders and large farmers have brought business leaders together to discuss more general policy issues. Some of these forums date from earlier in the twentieth century, such as the International Chamber of Commerce, the International Organization of Employers and the International Federation of Agricultural Producers. Others like the World Economic Forum (WEF), the Institute of International Finance and the Bretton Woods Committee were created in specific response to questions of globalization. The WEF in Davos has figured especially prominently as a channel for transworld business networking, and one that has very actively and explicitly championed the neoliberal cause.

Meanwhile, transborder networks of knowledge producers have interlinked the many universities, research institutes and think tanks that disseminate neoliberal ideas. Relevant academics and policy researchers have had continual contacts—both face-to-face in countless conferences and remotely through electronic communications. Some of these connections have been institutionalized, for example, in the American Economic Association (AEA), the African Economic Research Consortium and the Economic Research Forum for the Arab Countries, Iran and Turkey. All of this academic networking has produced a transworld "epistemic community" (Haas 1992) that has helped to give mainstream economic science in general and neoliberal thinking more particularly much of the power described in the preceding section.

In turn, these networks of official, corporate and intellectual circles have been deeply interlinked in an overarching global managerial class. The three sectors regularly intersect, for instance, at WEF events, WTO meetings, AEA conventions and conferences of national bankers associations. The different elite elements also have constant casual encounters in hotel lobbies, airport lounges, cocktail parties and social clubs. Indeed, the people concerned have generally attended the same elite universities and often also send their children to the same schools. Both deliberately and subtly, these continual interactions have provided a strong social basis for neoliberal discourse.

Through these various networks the global managerial class has lived in relative isolation from other parts of society. Cocooned in airplanes, high-rise offices and exclusive seminars, these officials, corporate executives and researchers have been able to exchange mutual congratulations that all proceeds well in the neoliberal world, while largely avoiding confrontations with the counter-evidence. The recent headline anti-globalization protests have therefore come as a genuine surprise in much of these ruling circles. Unaccustomed to working outside their own box, these elites have struggled to understand the challenge to neoliberalism, let alone to respond effectively to it. Some sections of the global managerial class have attempted to engage with the criticisms along post-Washington lines. However, the complacent elements have indulged temptations to dismiss the opposition to neoliberalism as a temporary blip caused by "a few cranks" and to spin the cocoon still tighter.

Such ostrich responses will be sustainable so long as the global managerial class lacks a powerful counterpoint. Indeed, to date critics of neoliberalism have lacked the resources and in many cases, also the political imagination to form effective transborder opposition blocs. Labour movements have so far failed to use regional and transworld networks to mount more than feeble challenges to global capital. Other social movements—of anarchists, environmentalists, feminists, indigenous peoples, peace activists, religious revivalists, etc.—have likewise had nothing approaching the resources and cohesion of the global managerial class. Indeed, many non-governmental organizations have sooner been co-opted into the global elite. Initiatives of recent years like the World Social Forum—as a counter-point to the WEF—and the Hemispheric Social Alliance—as a counter-point to the Free Trade of the Americas Agreement—confirm that some fertile ground exists for transborder formations to challenge the global managers, but as yet these projects remain very fragile.

So a core fourfold dynamic has strongly promoted neoliberalism in contemporary globalization. Other developments have further reinforced these principal forces. As mentioned earlier, the end of the Cold War removed a significant counterpoint to neoliberalism and reduced the pressures on market capitalism to address social justice issues. In addition, a general climate of consumer culture has discouraged many people who could have grievances with neoliberalism from turning to political action against it. All in all, then, the sociohistorical dynamics behind neoliberal globalization over the past quarter-century have been very powerful indeed.

Conclusion

This paper has offered a historical-sociological understanding of neoliberal globalization. Its core argument is recapitulated below.

1. Globalization is a transformation of social space that occurs with the spread of transplanetary—and in contemporary times often also supraterritorial—connections between people.

2. Globalization and neoliberalism are not the same thing: the latter is a policy approach toward the former.

3. Neoliberalism prescribes that globalization is an economic process that should be managed with marketization through privatization, liberalization and deregulation.

4. Neoliberalism has in various cases promoted gains in efficiency and material welfare, but it has also tended to neglect other important issues and to produce or exacerbate a number of cultural, ecological, economic, political and social harms.

5. Neoliberal policies have been generated by a powerful combination of forces related to decentred governance, supraterritorial capitalism, modern economic science and global elite networks.

It remains in these concluding remarks to look to the future. Strong though the forces behind neoliberalism have been in contemporary history, there is of course nothing inevitable or permanent in the primacy of this policy framework. The world was once without neoliberalism, and at some point the doctrine will again recede. Nothing in history is forever fixed. The question is not whether neoliberalism will yield as the reigning approach to increasing globality, but when, how and to what.

With regard to the "when" question, current prospects seem relatively modest for a full-scale shift of policy tenets away from neoliberalism in the short term. As discussed in the preceding section, a ubiquitous, multilayered and diffuse world governance structure is at present mainly and powerfully aligned to neoliberal formulas. Similarly, predominant forces in contemporary capitalism strongly favour a laissez-faire course of globalization. Liberal economic science currently faces little challenge in ruling circles, which are quite firmly interconnected in a transworld managerial class. In the present environment, therefore, it has proved extremely difficult to press through even the most morally compelling cases for deviation from neoliberal principles. For instance, consider how hard it has been to obtain a relaxation of global intellectual property rights on anti-retro-viral drugs to combat HIV/AIDS among destitute people in Africa.

To be sure, neoliberalism has its vulnerable points in the current situation. For one thing, there is the previously reviewed evidence that qualifies and sometimes also outright refutes the promises that global free markets would yield a good society of material prosperity, ecological care, cultural integrity, social cohesion, justice and democracy. Awareness and experience of these limitations and flaws could well encourage more criticism of economistic and marketist worldviews. In addition, some - albeit usually weak - sites in governance of the global economy, such as certain governments and UN agencies, are relatively amenable to consider alternatives to neoliberalism. Even some financial and trade regulators harbour increasing doubts about the laissez-faire approaches that they have heretofore embraced. Meanwhile, downturns of recent years in certain areas of global capitalism such as finance, information technology and mobile telephony could perhaps dampen some enthusiasm for free markets, particularly among smaller investors, and particularly if substantial losses on investments persist over a number of years. Furthermore, unilateralist and mercantilist tendencies in the United States—heightened under the George W. Bush administration—might well increase rejections of neoliberalism as hegemonic ideology. Even the global managerial class has experienced some tensions, for example, over several US protectionist trade measures. However, these various weak spots in the ruling policy orthodoxy must not be overestimated.

Indeed, not only does neoliberalism remain substantially entrenched, but also at the same time most alternative visions of globalization—whether rejectionist, reformist or transformist in character—are today still underdeveloped. For example, rejectionist mercantilism seeks the unrealizable with its aim to erase globality and return to a territorialist world. Telecommunications, transborder ecological challenges, electronic finance, transworld human rights movements and the like are not going to disappear in any foreseeable future, so regionalist, statist and localist options that deny supraterritoriality are non-starters. Good arguments might exist for greater subsidiarity in the governance of global relations, but the notion that globality itself can be eliminated is unsustainable.

Reformist global social democracy offers some appealing ideas like global public goods and redistributive global taxes. However, this alternative thus far lacks sufficiently large and powerful constituencies to make major headway. Moreover, the project has not yet adequately addressed cultural diversity and the intercivilizational character of global relations, so that global social democracy can be something by all and for all, rather than yet another Western and imperialist imposition, however well-intentioned.

Meanwhile, transformist impulses for a revolutionary globalization have to date rarely gone beyond general aspirations to a specific vision of a postcapitalist or postmodern future, let alone a well-developed strategy to achieve such a new society. Moreover, not all projects of radical re-globalization have been particularly attractive, as in the case of religious fundamentalisms and transborder neofascist networks. In any case, movements for a revolutionary globalization have thus far attracted only small and often ephemeral followings. To be sure, some transformist ideas can provide valuable stimulus to strivings for progressive social change. However, the time would not seem ripe to exploit the new geography to achieve a wholesale reconstruction of society.

What, in these circumstances, should people who seek to move beyond neoliberal globalization do? The following seven general recommendations might be offered.

1. Nurture an understanding of neoliberalism as choice

The environment for change would be enhanced inasmuch as citizens and governing authorities appreciate that policy decisions matter. People could shape globalization so that it develops in different directions. Politicians and officials have more room for manoeuvre in this regard than they often acknowledge or realize.

2. Advocate ethical cases for different globalizations

It is important to press home at every possible juncture the normative rationales for abandoning neoliberalism. Policies on transworld relations should have the priority goals of enhancing cultural vitality, democracy, ecological integrity, material welfare, social cohesion and social justice. These objectives should take precedence over those of economic efficiency and the GDP growth per se. Rises in production and productivity should serve the higher aims and do not become ends in their own right. The transcendence of neoliberalism requires a major shift in prevailing values among policy-making communities and the general public.

3. Continue to document and publicize the limitations and failings of neoliberal policies toward globalization

As seen earlier, both logic and ample empirical evidence suggest that neoliberalism not only neglects various important aspects of human development, but also often does not deliver its own promises. In addition, critics can continually put the spotlight on the contradictions between neoliberal rhetoric and many actual practices of those in power. As policy makers and citizens-at-large become more aware of the various flaws of neoliberalism, they will be more ready to explore alternatives.

4. Devote greater energies to developing alternatives to neoliberal globalization

It is crucial to combine negative protest with positive proposal, deconstruction with reconstruction. People will be more ready to reject neoliberalism when they see clear and attractive replacements. Efforts to rethink policies can be pursued through a number of channels, including: