How the neo-liberals ideas has influenced the world order - Essay Example

A DISCUSS ON HOW THE NEO-LIBERALS IDEAS HAS INFLUENCED THE WORLD ORDER. (2005) INTRODUCTION Since the advent of the end of the Cold War, it is experienced that the ideas of the neo-liberalists has widely taken place. Hence, the contemporary states economy have imbibed the culture of free trade, free economy entry and exist of labour and the opening of their state economy to the international market for active competition. This scenario of the international order, with the aid of modern improvement in the world technological base, has resulted in the expansion and the consolidation of globalization. The stand of socialism has given way to capitalist society, where the rule of price is a cogent force that determines the market situation. Hence, governments through the policy of privatization and commercialization , deregulation of their states economies have given up several state corporations to the private individuals and private bodies; thus, bringing to the fore front the phasing out of the socialist and communist doctrines. The enshrinement of the neo lib al doctrines in the world order would not have gain its immense success if international organizations such as UN, World Bank, IMF, WTO , have not backed up and imbibe the culture and ideas of free trade and the globalization of the world economy. This write- up tends to discuss the ways in which Neo- liberalism has influenced the world order. IDEAS OF THE NEO- LIBRALS The neo-liberals based their ideas on the neo- classical economists' doctrines, which is an extension of the classical economists' ideology. The neoclassical economists contend that slow or negative growth results from poor resource allocation from non market prices and excessive Third World state intervention. Hence, the argument that promote competitive free market, privatization of public enterprises, supporting export and free international trade, liberalizing trade and exchange rates, allowing exchange rates to attain a market- clearing rate, removing barriers to foreign investment, rewarding domestic savings, reducing government spending and monetary expansion, and removing regulations and price distortions in financial, re source and commodity markets, would spur increased efficiency and economy growth was upheld. (Dibie, 2000:18) according to Albo (1996), "Neo-liberals have fostered the movement to freer trade and deregulation of labour markets, arguing that overcoming the constraint of limited markets is the means to increase growth, remedy trade imbalances, and lower unemployment. The state needs to be forced to comply with the 'laws' of the market". It is seen that the socialist and communist's ideas of government control of the means of production is greatly opposed in all its' ramifications by the neo liberalists, Hence a capitalist structure that support free trade and free movement of labour is supported. The neo-liberals ideas are summed up in what is widely known as 'globalization'. "Globalization can be briefly defined as the intensification of economic, political, social, and cultural relations across borders" (Holm & Sorensen, 1995:4). A key characteristic of the globalization is that the actors involved are not only states but non- state actors, particularly multinational or trans- national corporations. It is now the case that more than half of the top economies in the world are corporations not states, and international investment is increasingly private" (OHCHR, 2005). Many international trade theorists, such as Gottfried Haberler, Jacob Viner, Alex Cairncross and Peter Baur, have expanded and reinforced the classical and neoclassical views. These scholars share the neoclassical belief that trade can promote the growths that are favourable to the other sectors. (Dibie, 2000:15). To Haberler (1968), the emphasized international trade has several indirect and dynamic benefits, apart from static gains to the trading countries. One of the benefits is the introduction of new technologies in less developed countries. THE WORLD ORDER CREATED BY NEO LIBRALS IDEAS Since the end of the Cold War, where there is bipolar order between the Western pole and Eastern pole, how can the contemporary world order be defined International order is defined by Hedley Bull, as "a pattern of activity that sustains the elementary or primary goals of the society of states, or international society" (quoted in Holm & Sorensen, 1995:3). Different views have been upheld concerning the current world order after the collapse of the bipolar order. Some argues that multipolarity has been reinstated in the international system. To Charles Krauthammer, we live in a unipolar world dominated by the last remaining superpower, the United States (ibid). Another innovative view according to Holm And Sorensen (1999:3), is "the international system has become bifurcated into a 'zone of peace' encompassing the developed industrialized North and a ' zone of conflict' in the rest of the system. The globalization world order is witnessed to be underlined with inequality; whereby some countries are benefiting and reaping the gains from the proceeds of free trade and free mobility of labour, while others are bearing the pains. "the problem with globalization is that it is not just a natural progression.it stands to benefit some and make losers of others; the unequal power relationships within and between nation states and between other groups in society mean that the judgment about whether globalization is good or bad depends on the nature of those power relationships" (Public Service International, 2005). The broad spectrum the ideas of neo-liberals have occupied in the world order is today very significant and widely spread. In the crisis of 1974, social democratic government like Sweden's and technologically ascendant countries such as Germany seemed to be moving in very different directions from other capitalist countries. Today, these divergent economic paths seem to be only alternate routes covering in neo-liberalism. The world economy in the 1990's, is generally agreed to accommodate only one model of development: export-oriented production based on flexible labour markets, lower real and social wages, less environmental regulation and freer trade. (Albo, 1990). According to Holm & Sorensen (1995:2), globalization and the end of the cold war are the two main expressions of change in the international system. Two social structures are visible from the uneven nature of globalization: 1. Core- type, industrialized countries with consolidated liberals democracies and external institutionalization; and 2. Periphery- type, semi- or non industrialized, authoritarian or semi-democratic areas with a relatively low degree of internal and external institutionalization. While the core -type, industrialized areas with consolidated liberal democracies is associated with Western Europe and the United States, the periphery- semi-periphery is linked to the African, Latin America, and South Asia. Another category resulting from the changes in the former Eastern bloc have created a 'gray zone' (semi-periphery area) in which countries clearly resemble the periphery-type societies. This includes countries like Azerbaijan, Turkmenia, Uzbekistan and others. While most advance countries like Hungary, the Czech and Slovak Republics, Poland, and also Russia, struggle for membership in the core. It is observed that the Eastern Europe countries have suddenly imbibed the doctrine of the neo-liberals movement. "Eastern Europe's market for policy ideas, suddenly opened in 1989, was swiftly captured by an Anglo-American product with a liberal brand name". (Gowan, 1995:3). Some Scholars in Eastern Europe have also encouraged the adoption of the neo-liberals ideas. Prominent among them is Sachs's ideas which have received the very highest accolades from the Anglo-Saxon academic world and widely recognized and a household name in Eastern Europe. Sach is strongly committed to a vision of a globalize, unified capitalist world which he believes would benefit the whole of humanity and he evidently saw an opportunity fro bringing that vision closer by becoming involved in formulating a European region. (ibid) International organizations like UN, WTO and the Briton Institutions (World Bank, IMF), have all adopted the ideas of the neo-liberalists and in many instances have recommended policies for developing countries to be structured along this pattern of ideas. Policies of structural adjustments, free trade, deregulation, privatization, and removal of subsidies and all other ideas of the neo-liberals have also being conditionality put forward before any developing country seeking for assistance in form of loan for economy resuscitation. These policies in developing countries has not only failed to revive the dying economies of these states, but made them greatly dependent on the western developed countries. As Lairson & Skidmore (1993), argue, "as a mechanism, international trade has by its very operation, led underdeveloped countries to stagnation or impoverishment, and developed countries into automotive cumulative growth". Scholars have come up with the 'Dependency theory' to show how modernization in less developed countries as simply the adoption of economic and political systems developed in Western Europe and the North America. While scholars like Ander Frank Gunder sees underdevelopment as the effect of the penetration of modern capitalism into the archaic economic structures of the Third World. He feels that the eventual development of the underdeveloped countries will be stimulated by indiscriminately transferring capital institutions and values from developed countries (quoted in Dibie, 2000:17). Despite the negative aspect associated with international free trade and the ideas of the neo-liberals, there exists positive side to their ideas. The free movements of labour and goods in the international arena and the less government intervention in the economy have led to the transfer of skill and technological advancement. Also, it brought about reduction in price of labour and cost of goods production resulting from comparative advantages. The private sector of most developing countries has grown from their embryonic state to a positive force in contributing meaningfully to resuscitating their countries' economy. The Neoclassical economic ideology of structural adjustment adopted by World Bank and IMF has the objective to establish market-friendly set of incentives that can encourage accumulation of capital and more efficient allocation of resources (World Bank, 1985). WORLD FOOD ORDER STRUCTURED BY NEO-LIBERALISTS IDEAS The WTO in 1990's via the Uruguay Round (1986-1994), advocated for the adoption of policy of green revolution, as a way of relieving the problem of surplus of food in certain part of the world and the dearth of food for other parts. According to McMicheal (2004), the green revolution consolidated the global movement under the guise of addressing the question of national food security. Green revolution technologies further internationalized agro- food relations, supporting newly-introduced genetically modified crops with chemical and mechanical inputs, and elaborating agribusiness dependencies. With the global expansion of live-stocking, green revolution technologies extended into feed cropping, promoting lie stock commodity chains linking specialized agricultural sub-sectors across national boundaries. Food security in the world over is central to shape national initiatives such as the green revolution, and the content of multilateral institutional relations. "The development era has metamorphosed into the era of corporate globalization; food security has been redefined and institutionalized in the WTO as an internationally managed market relation (ibid). The Uruguay Round (1986-1994), begins the shift in the site of food security from the nation-state to the world market. Hitherto, food security principle is rooted in this system despite the onset of corporate globalization. Under the Uruguay Round, in anticipation of the WTO Agreement on Agriculture (1995), states no longer have the right to food self-sufficiency as a national strategy. The WTO's minimum import rule requires all member states to allow imports of food up to at least 5 percent of the volume of domestic consumption. The WTO, as a way of securing world food and problem of shortages in some part of the globe, carries out a diversion of food surpluses in countries like North America and Western Europe to where shortages are mostly severe. Also through the synchronization of Northern farm policy in the anticipated WTO Agreement on Agriculture. According to Pistorius & Van Wijk, 1999:110), despite the rhetoric of free trade, the underlying Northern agenda was an informal mercantilism of constructing a comparative advantage through de-regulating a highly unequal world market. To McMicheal (2003), liberalization is the means to this end, via de-coupling, that is, supporting Northern corporate farming with public monies in services of agribusiness, or via de-regulation of Southern protection- opening economies to food importing and /or agribusiness offshore investment. The effect of Agro-export dumping of food in countries less develops, by the surpluses of advance countries like the US, has its own consequences. The positive side of it is that it brings about reduction in prices, but local farmers are made worst off and bear the brunt of price shortages to their local produce and this means low income to them. According to Friedmann (1993), Agro-export dumping undermined the post war food regime's system of stable prices and managed disposal of food surpluses. In 1980, the US corn dumping forced Zimbabwe's grain marketing board to cut domestic producers prices almost in half and to reduce its purchase quota from these producers (Watkins, 1991:43). The resulting , or potential for low-cost agricultural production in the global south in turn allows global sourcing by agribusiness to exert further downward pressure on Northern farmers. The result has been a mass exodus from farming in North and South accomplished by depressed prices and the competitive advantage of intensive agriculture integrated into agribusiness and favoured by a system of asymmetrical farm supports.(Mcmicheal, 2004). Neo-liberal policies introduced in 1991 threaten India's tens of millions of small farms, the livelihood source of 75 percent of the population. According to Paringaux (2000:4), in 2000, the Indian Ministry of Agriculture observed "the growth in agriculture has slackened during the 1990s. Agriculture has become a relatively unrewarding profession due to an unfavourable price regime and low value addition, causing abandoning of farming and migration from rural areas". The double face standard of International Organizations in its policies neo-liberalists' recommendation has also worsen the inequality state in the international arena. According to Frias (2002), "the root of the problem is the economic model that has been imposed on the world, the model of exploitation that has been imposed and that will go on being imposed, the model of ferocious capitalism, now further poisoned with the theory of unrestrained neo-liberalismwhat the neo-liberals want to do is to throw out the concept of ethics and governmentimpose their rules on us, especially on poorer countriesstrict laws for the poorest countries- no subsidies to farmers, the most developed countries subsidize their production to the tune of one thousand million dollars a day". The mechanism in promoting WTO food security programme is based on the neo-liberal model institutionalized and coupled with structural adjustment policies. Via Campesina, opposes the WTO's neo-liberal project of constructing a world agriculture based in comparative advantage, because it is not about strategies of regional differentiation so much as about corporate global sourcing strategies, premised on the existence of a reserve army of cheap labour (cited in McMicheal, 2004). CONCLUSION The ideas of the neo-liberals have helped to structure the world order as a global village where there is integrated and intensified relationship of economy, political, social, cultural coexistence of states in the global arena. Though this has created inequality where some countries in the Western advance countries are the reapers of the gains emanating from globalization while Third world countries still lavish in their state of penury and underdevelopment. Thus, the world order created by the neo-liberals ideas is to make these third world countries readily dependent on the wimps and caprices of western developed countries. 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