In this TED talk, Dr Johannes Meier argues that Neoliberalism has become and orthodoxy, but now it has reached its expiration date…
This material should be of interest as a balanced critique of neoliberalism, which should be especially relevant to students studying the Global Development option for A-level sociology.
The current economic orthodoxy is one neoliberalism, the belief in free markets and unregulated trade, but this orthodoxy is reaching its expiration date.
Keynesianism used to be the dominant orthodoxy, but it started to switch in the late 1940s with Hayek’s neoliberal ideas, and by the 1980s neoliberalism was the norm, such that most people today have grown up with it.
However, today (2019 is the date of the talk) there are more and more signs that this orthodoxy is under threat – as neoliberalism is no longer productive, and Meier asks the question ‘what should business leaders do about this’?
What are the core philosophical beliefs of neoliberalism?
- Homo-economics – individual people are economically rational and they strive to maximise their own utility
- The right to compete is the backbone of liberty
- The success of a nation is the sum of utlitiels, measured in GDP
- The role of govenrment is to make sure that free-markets are protected, but not over regulated
Neoliberalism has been successful over the last 50 years
We have seen huge increases in GDP growth rates, increasing incomes, more employment, billions of people being lifted out of extreme policies and millions of millionnaires created.
Neoliberal ideas have extended beyond markets to labour, education and health policies for example – all of these areas are influenced by market based thinking (especially education, if you’re studying A-level sociology!)
Neoliberal ideas are also entrenched in the world of business and most governments in Western countries.
Three Criticisms of Neoliberalism
Meier draws on the tale of Hans Christian Anderson to suggest there are three flaws to neoliberalism that advocates of it dare not mention, but are obvious to a child!
Neoliberalism is an ‘Emperor with No Clothes’
The Rising Tide isn’t leading to Economic Justice
According to neoliberalism, freeing markets leads to enormous wealth creation and rising wealth overall will lift all boats – so that everyone gets richer, with more and more people being lifted out of poverty.
However, income inequality has also increased such that the top 8% of income earners now earn more than half of all income.
Wealth is worse – 1% own more than half of the world’s weath.
Where consumption is concerned – the richest billion consume 75%, and the poorest billion only consume 1% of our resources.
We thus have wealth and income divides which lead to economic and political tensions. Those who feel left behind no longer trust the narratives of the elites who have established neoliberal policies (and been the main beneficiaries of those policies).
Those who have not benefited from neoliberalism – the ones with no wealth, low incomes, no education or health care, are criticising neoliberalism with increasing vigour.
The tragedy of our commons and our Horizons
We are facing an existential crisis of tipping points where the climate is concerned.
It clearly isn’t true that if the developing nations embrace neoliberalism that they are going to develop as effectively as developing nations – because the planet cannot cope with the levels of resource extraction and consumption that would require to incorporate 8 billion people!
Human relationships are about more than transactional efficiency
Neoliberalism tends to turn relationships into transactions – and the imperative is then to make those relations more efficient.
We see this in the spread of automoation and AI – replacing humans with more efficient machines.
However, human relations are about more than efficiency. And if people think they have found the equation for friendship on Facebook or love on Tinder, thy are missing the essence of humanity.
More and more people are demanding that work be meaningful and that there is space for humanity, rather than it just being all about efficiency.
How do we survive beyond neoliberalism?
Meier proposes three basic rules business leaders should follow if they wish to survive the transition to beyond neoliberalism, which basically involved focusing on the ‘basics of good business’.
Listen to diverse voices
This may sound obvious but business leaders tend to exist in a bubble. This involves thinking beyond traditional metrics such as revenue growth as these don’t provide purpose or deeper meanings.
We need new narratives of belonging beyond homo economics
Reduce the fragility of the system
We have the warning signs – such as climate change. We need to focus on making businesses resilient and genuinly sustainable.
Here he seems to be criticising the fossil fuel industry and suggests a move to renewables is what we need.
Neoliberalism is too focused on the individual.
The system has emphasised individuals getting to a kind of certain wealth or income level, then they are safe to have a nice job and life, leaving too many behind in poverty
Personal individual development is seen as the opposite of community – the idea that we progress our careers at the expense of our families is toxic. Humans thrive better in community and solidarity.
Ee need to take a much broader view of public goods – he suggests we need much more state and business co-operation in providing public goods
Part of the difficulty with moving beyond neoliberalism is that we don’t know what will take over – there will probably be many different alternatives – hence why general principles for surviving change are required.
It will take courage to let go of our existing business models, but it is futile to cling to the old ones.