Millions of UK homeowners face huge increases to their mortgage repayments as interest rates continue to increase (1)
According to the Office for National Statistics, the average monthly repayment for a mortgage on a semi-detached house in the UK rose 61% to year ending December 2022.
This increase will be even greater now… the news over the last week has focused on how another 2 million people are coming off lower fixed rate mortgage deals between now and 2024, meaning their interest rates are going to increase from around 2% to 6%.
I’m one of these people, my current 2% rate ends in September this year, and I’ll have to switch onto a higher rate, which with my current provider is 6% or 5% on a two year fixed deal. I might of course switch, but that gives me a bench mark, I don’t imagine I’ll get much better than that.
Thankfully my current mortgage is so low that it’s not a big deal for me to manage the increase in repayments In fact if I just extend the mortgage by a few months I can keep my repayments level, which for me means pushing it back from 5 years of repayments to around 5 years and 3 months.
However, obviously I’d rather pay less than more over the next five years or so and it’s difficult to make a judgement as to whether I’m better of fixing now at say 5% for three years, or slightly higher at 5.5% for the full five years, or just going onto the 6% variable rate.
Obviously fixing for a longer period is the strategy IF interest rates are going to go up, while going on the variable rate is best IF interests rates are going to come down.
The problem is I don’t know what’s going to happen to interest rates, but it’s 100% on me to make a decision and 100% on me to bear the consequences of paying more in mortgage interest if I make the wrong the decision.
What’s causing inflation?
The bank of England keeps putting interest rates up because of high inflation, inflation being the rising cost of living.
The government put this down to a squeeze of food and energy because of the legacy of covid and the war in Ukraine putting a squeeze on supply chains, and all of this hasn’t been helped be Brexit making it more difficult to trade with the EU.
Personally I also think there’s a longer term trend of the rise in middle class consumers in countries such as India and China, which will increase demand for all goods and services
neoliberalism is also a problem – as increasing inequality means more wealth sits in tax havens not being used for innovation and more money gets sucked upwards, increasing inequality meaning a higher proportion of our resources go on meat and yachts for rich, which also pushes up prices.
Finally, the UK government has been printing money for years in response to various crises, which reduces the value of the pound. It’s printed almost £1 trillion since 2009 in Quantitative Easing Measures.
In short, there is no obvious immediate end to this inflation crisis because all of the causes are outside of the Government’s control, and many of its responses to global forces over the last decade have made matters worse.
Individualised solutions to Structural Problems (Again)
As to the solutions to the current mortgage crises, all that the current super-rich PrimeMinister Rishi Sunak has is to suggest people should ‘hold their nerve on interest rates‘.
In short, ‘just suck it up’, you’re on your own, deal with it, folks.
Signposting and Sources
This post is really just a general reminder of how damaging neoliberal economic policies are to ordinary people in the long run.
1.3 million workers are making just demands for better pay and conditions, but the neoliberal government is against them
Over one million workers across numerous sectors are going on Strike from December 2022 and into 2023.
Their main demands of the strikers are for better working conditions to make public services better and safer for everyone who uses them, and also for fairer pay to enable them to afford their basic human needs.
Who is going on strike?
There are workers going on strike from several unions in December 2022- January 2023
The Teacher’s union
The nurses union
ambulance workers
The RMT
buses
highway workers
Postal Workers
Boarder Force/ Driving InstructorS
University staff.
Is this a general strike?
No. A general strike is when industrial action is co-ordinated across several unions in solidarity. At the moment, while many individual unions are striking they are no co-ordinating these strikes.
Why are workers going on strike…?
The main reason for striking is that ordinary hard working public sector workers want to receive fair pay for the services they provide, and by ‘fair’ we mean a wage that is at least sufficient to pay for housing, food, utilities, transport and other basic needs rather than nurses having to go into debt and/ or rely on food banks to survive.
Real term pay has decreased by 20% since 2010 because of a decade of below inflation public sector pay rises as part of the Tory’s ongoing austerity policies.
But these strikes aren’t just about wages for the workers, they are also about working conditions and the wages being sufficient to attract enough workers to fill vacancies so that current workers aren’t overstretched. For example there are currently 47 000 unfilled nursing roles in the NHS – the pay isn’t enough to attract people into those roles, but current workers have to do overtime to cover those roles or just ‘work harder’.
The RCN says thousands of “burned out, underpaid nursing staff” have left the profession in the past 12 months.
And the fact that organisations like the NHS are understaffed means working conditions aren’t safe, THAT’s a pretty decent to strike for better conditions – these people actually care about the quality of work they provide and they can’t provide quality if they are stretched beyond capacity due to the wages being so low one in six vacancies are empty!
The longer term context of these strikes is twelve years of austerity politics from the Tories – most public sector workers have suffered a real terms pay cut (when factoring in inflation) of 20% since 2010, meaning they are a lot poorer now than they were twelve years ago. So basically, blame the Tories.
Public sector pay hans’t kept pace with private sector pay, so fairness is also about helping public sector workers catch up
Think about the kind of of people who are striking here too – nurses and teachers – these people go into a vocation, many of them dedicate their lives to it and they genuinely want to make YOUR LIFE and your children’s lives better – just pay them!
Then of course there is the Pandemic – it wasn’t so long ago that especially nurses, but also teachers were in the front-line of keeping the country going during Lockdowns, with nurses exposing themselves to Covid-19, some literally dying or seeing colleagues die as a result and now we can’t even give them a pay-rise in line with inflation.
How many people support the strikes?
It depends on who is striking.
60% of the public would support nurses striking, and a majority supports fire fighters, supermarket workers and doctors, with 50% supporting teachers.
However, people are very much against barristers, civil servants, university staff and train drivers going on strike!
The government says it can’t afford to pay workers because it’s broke but it found enough money recently to pay pensioners 10% more – and that’s ALL pensioners, even the rich ones.
So there may not be enough money but that’s because a combination of sheer incompetence and choosing to fund pensions over workers.
Media bias against strike action
If you can be bothered to wait for the advertising-slowed sluggish right-wing biased fest that is the Daily Mail online to load up you will immediately see the usual anti-social justice vitriol against the strikes.
Besides referring to Mick Lynch as ‘Grinch Lynch’ the other dead giveaway is immediately focussing on how the strikes will inconvenience you – clearly to the Daily Mail it’s more important that wealthy people get their Christmas cards delivered on time rather than the ordinary hardworking mail workers who deliver them receive decent pay and conditions for their service.
Applying Sociology to the strikes
This strike action is a fantastic example of how four decades of neoliberal economic policy have failed ordinary hard working people. If policy had been more about reinvesting back into public services, part of which would have meant pay rises in line with inflation, these socially just strikes would not be necessary.
The government’s reaction in not agreeing to the 1.3 million strikers’ totally reasonable requests also reminds us of the continued relevance of Marxism – with a political elite who recently tanked the economy with their fickle min-budget now refusing to enact a social policy which benefits ordinary hard working people.
Education policy to 2022 has been influenced by neoliberalism: we now have a well established market in education with monitoring done centrally by government authorities while little has been done to address equality of educational opportunity.
The last 40 years has seen a shift in the nature of education in England and Wales. Since the early 1980s we have seen a shift from a state education system to the establishment of a quasi-market in education.
The New Right conservative government which came to power in 1979 was influenced by a mixture of neoliberal and traditional conservative ideologies.
The New Right introduced the 1988 Education Act which first created an education market through the establishment of league tables, formula funding, OFSTED and the National Curriculum.
This created a system in which parents had the choice over which school to send their children to and by making schools compete with each other for pupils.
New Labour (1997 to 2010) continued the marketisation of education by keeping the same basic framework introduced through the 1988 Education Act.
New Labour’s third way approach to government meant they had more of a focus on social justice than the conservatives, in that they were more concerned with improving equality of educational opportunity for students from deprived backgrounds and to this end established academies in deprived urban areas, introduced Sure Start and introduced the Education Maintenance Allowance.
However New Labour still advanced marketisation through their focus on academies and through introducing fees for higher education.
When the Coalition came to power in 2010 they mostly ditched the social justice agenda and renewed their focus on creating an education market through the rapid conversion of LEA schools to academies and the establishment of Free Schools.
Since 2015 the The Tory government has largely carried on the Coalition’s agenda of establishing a quasi-education market, although this process has been stalled somewhat by the Pandemic requiring the government and schools to focus on their ‘safety’ and ‘catch-up’ agendas.
The rest of this post summarises the key changes to education policy since 1979.
The Curriculum
Up until 1988 there was little if no centralised control over the school curriculum, but that changed with the introduction of the National Curriculum as part of the 1988 Education Act.
The National Curriculum stipulated that all schools must teach core content and this made it possible to monitor schools to make sure they were delivering this content, and monitoring evolved through from 1988 to involve increasing amounts of Key Stage Testing.
The amount of prescribed content and volume of testing have been reduced in recent years, and the introduction of Academies and Free Schools means there are now more schools than ever that don’t have to teach the National Curriculum at all, but there still remains a strong focus on a core knowledge base.
School Structure and Governance
This has been a major area of change of the last 40 years in England and Wales.
In the early 1980s the majority of State Schools were under the control of Local Education Authorities who managed such things as school funding, term dates and teacher pay.
However the expansion of academies since the year 2000, and their rapid expansion since 2010, now means that 80% of secondary schools and 40% of primary schools are now independent of LEAs and are self managed either as single schools or Multi-Academy Trusts.
Neoliberals are happy with this arrangement as they see local government bureaucracies as inefficient, but ironically there is now more centralised control over academies and funding comes direct from central government.
Critics of academies argue that we now have a fragmented education system.
A Mass Market in Higher Education
In the 1980s the university sector was relatively small with most young people leaving the education system at 16 and going to work.
Today, we have a fully developed market in Higher Education with universities funded by research output and tuition fees from students with most students taking out loans of tens of thousands of pounds to pay for their fees.
The number of university places has also expanded massively – 50% of 18-30 year olds now attend university.
The U.K. Education market is also global, many students come here to study from abroad, and they tend to to pay a higher level of fees than UK citizens.
Early Years Education
in the 1980s there was very little pre-school childcare or education provided by the state, and this has been a huge area of expansion over the last 40 years.
All three and four year olds are entitled to 570 hours of free early education or childcare a year, equivalent to 15 hours a week (Gov.UK).
Unlike with the expansion of academies in the secondary and primary years of schooling, early child care provision is now the responsibility of Local Education Authorities.
Monitoring and Accountability
Monitoring has become increasingly sophisticated with the development of an education market.
Monitoring is now more centralised as more and more schools have converted to academies, come out of Local Education Authority of control and are now accountable to the Secretary of State for Education.
League tables have become the main means by which schools are held to account on a yearly basis with schools being required to publish annual progression data for students, with Progress 8 being the new benchmark for GCSE progress.
Schools are also monitored on their SEN data, number of exclusions and Ebacc performance.
OFSTED has expanded to include teams of inspectors and outstanding schools are now given light touch inspections whereas schools deemed to be in need of improvement are taken over by more successful academies.
Inequality of educational opportunity
Improving equality of educational opportunity has been a stated aim of every government since 1988, with New Labour doing the most through Sure Start, early academies and the Education Maintenance Allowance.
However, the Social Mobility Commission recently reported that the attainment gap has hardly shifted since 2014, and social class inequalities in educational achievement remain as a persistent feature of the education landscape.
Education Since 1979: 40 years of Neoliberalism…?
Looking back at the last 40 years of education policy it seems hard to argue that for the most part we have seen the influence of neoliberal ideology on education policy gradually transforming our education system into a quasi-market.
This seems to be especially true in the creation of a mass market in higher education but also in the establishment of academies and especially free schools where middle class parents get free reign use their cultural capital to effectively polarise education in local areas.
The strongest evidence for the influence of neoliberal ideology lies in the lack of progress around educational opportunities – after 40 years of education policy education remains a vehicle which allows for the reproduction of class inequality.
Possibly the one area of education policy where neoliberalism is less obvious is in the expansion of early years provision however we can just interpret this as being done so that parents are free to work in low-paid jobs, which is essential to capitalism.
Signposting and relevance to A-level Sociology
The above material is most relevant to students studying the education module as part of the AQA’s A-level sociology specification.
Neoliberalism holds that education systems should be run according to free market principles. Neoliberals believe that education should be privatised both endogenously and exogenously, parents and students given more choice and voice and they also advocate for more top down surveillance and performance management.
Neoliberalism has been the dominant ideology shaping education policy in Britain and many other countries since the early 1980s.
This post outlines four key ideas associated with the neoliberal view of education including:
Competition between schools (‘endogenous’ privatisation)
External (exogenous) privatisation of education
Choice and voice for parents and pupils
Surveillance of teachers and top down performance management.
Neoliberalism has influenced education in Britain since the New Right were in power from 1979 to 1997, during New Labour (1997 to 2010) and since the Coalition and Conservative reign which started in 2010 and continues to this day with the recent coronation of the unelected multimillionaire and darling of the neoliberal global economic elite Rishi Sunak.
While neoliberal ideas have transformed education in Britain over the last 40 years, we are nowhere near having a pure free-market system in education, and many neoliberal ideas have been ‘restrained’ by more social democratic (left wing) thinking.
Endogenous Privatisation
Endogenous privatisation is where public sector organisations are made to work in a more business like way by creating ‘quasi-market systems’.
The main policy which introduced endogenous privatisation in England and Wales was the 1988 Education Reform Act, enacted by the New Right government under Thatcher who was strongly influenced by Neoliberal ideas.
The Reform Act introduced League Tables and gave parents choice over what school to send their children to. Schools then had to compete for pupils as funding was linked to how many pupils they attracted (known as formula funding).
The problem with this type of endogenous privatisation was that it led to cream skimming and polarisation:
The best performing schools in league tables were oversubscribed and skimmed off the higher ability students, the worst schools had to just take the lower ability students that were not chosen by the best schools. This resulted in the better performing schools getting better and the lower performing schools getting worse (polarisation).
Another problem was that in the late 1980s and early 1990s the better schools would exclude any students who were naughty to keep their results high.
Successive education policies up until the present day have had to ‘tweak’ the above competitive education system to try and stop schools from excluding weaker students and to encourage a wider range of schools to take on lower ability students.
Two ways they have done this is to modify League Tables so they now show ‘value added’ – what a school adds to a student’s ability based on where they started, rather than ‘pure grades’, and they’ve linked funding to how long a student stays in school to try and cut down on exclusions.
The Pupil Premium also encouraged schools to take on higher numbers of disadvantaged students who typically have lower academic performance by linking more funding to those students.
Exogenous Privatisation
Exogenous privatisation is privatisation from the outside through new providers: it where private companies take over services which had previously been run by the public sector.
Exogenous privatisation was advanced mainly under the New Labour government (1997 to 2010) and continues to this day.
An example of exogenous privatisation in education is Connexions career services taking over career advice from schools. Careers advice had previously been done in-schools through in-house careers advisors who were on the payroll of the schools and thus the state. Today more and more schools ‘outsource’ their careers services to connexions which is a privately run company which operates for a profit.
Another example is companies such as Pearsons playing a more central role in producing textbooks and running GCSE and A-level exams.
Exogenous Privatisation isn’t purely a free-market activity as it doesn’t involve parents and pupils paying money directly to companies like Connexions and Pearsons. Rather, it is where the government takes tax payers money and gives it to these companies rather than the government employing people directly and paying them to run these services.
The theory is that companies can run aspects of educational services more efficiently than the government.
Increased choice for Parents
Giving parents choice is necessary for there to be an education market. Parents need to be able to choose which schools to send their children too in order for schools to compete for pupils.
The general idea is that increased competition will incentivise schools to raise standards.
Both New Labour and the New Conservatives (from 2010) have also been pushing an increase in both diversity of school provision and personalisation of learning, which both reflect a move towards a late-modern consumer culture within education.
Increasing school diversity
Two main policies have increased school diversity: the introduction of academies in the late 1990s under New Labour and the introduction of Free Schools under the Coalition Government in the 2010s.
Academies increased diversity by getting a much wider range of companies involved with running schools. England and Wales now have dozens of academies and academy chains, and well over 70% of secondary schools are now academies.
Free Schools took diversity and choice to a new level: any group of parents, charity, organisation can apply to run a free school and as long as they come up with a viable model and there is demand they will be approved.
There are currently over 500 Free Schools in the United Kingdom, offering able parents the most choice they’ve ever had in running their own school.
Increased personalisation of learning
Teachers are now expected to tailor their teaching to individual students. You see this most obviously in independent learning plans and learning agreements and periodic reviews of progress with individual students.
Top Down Performance Management
A final aspect of neoliberal education policy is top down management which involves more surveillance of teachers and pupils.
Many academies are huge chains with one ‘super head’ at the top, some on salaries of hundreds of thousands of pounds. The super head is effectively the CEO of the academy chain and he or she monitors the performance of all the schools in that chain.
And the heads of individual schools monitor the performance of their staff within their own schools.
If one school within the chain is underperforming, the management may well be sacked and a new manager/ headmaster shipped in, possibly from another school in the chain.
All of this has meant increased surveillance of schools, teachers, and pupils, so that regular assessments of progress can be made by those at the top and suitable interventions made to tackle underperforming schools and individuals.
Taking over of failing schools
One aspect of increased surveillance is that schools deemed to be failing or even ‘acceptable’ in OFSTED reports are subject to forced acadamisation. This was a big thing under the Coalition government from 2010.
This meant that failing or acceptable LEA schools (funded through local government) were handed over to existing academy chains to be run by them, and to have their budgets managed by the academy chain rather than the local authority.
Signposting and Related Posts
The requirement to learn the neoliberal perspective on education was introduced to the education topic within the AQA A-level sociology specification in 2015.
Neoliberalism is closely related to the New Right, and I think it’s accurate to say that the former informed the later, but Neoliberalism is broader than the New Right, so it is NOT CORRECT to say they are the same thing, as you will find to be the case in the 2016 edition of Haralambos.
However, for the sake of the mid-level sociology student aiming for a C or B grade, you can probably mix the two up and treat them as the same in any essay question on the New Right and/ or Neoliberalism and still get a B grade (you could probably even get an A grade) for the essay as there is considerable overlap between the two!
Martin Lewis has been arguing since at least March 2022 that energy prices in the UK have increased so rapidly in such a short space of time that millions of people will be unable to manage the increasing costs simply by instigating energy-saving measures at the level of the individual household.
His concern is justified, based on a recent government report on the energy market – which shows that energy prices for the average household doubled between summer 2021 and 2022.
Martin Lewis himself has been a long term proponent of helping people to help themselves to save money by shopping around for better energy deals and switching provider, or by doing any or all of the following:
Buy a smart thermostat
Turn the thermostat down by one or two degrees
Insulate the roof
Buy more energy efficient appliances
Wash clothes on a cooler temperature.
The list above is taken from Money Saving Super Market, and all of these suggestions are sensible and it’s difficult to argue against them, but the point Martin Lewis has been making more and more forcibly for several months now is that low income households (of which there are millions) also need government support to either meet the increasing cost of gas and electricity bills.
The simple fact is that even if you do ALL of the above (some of which have an investment cost) you might reduce your energy consumption by 20-30% but that doesn’t offset price rises which have recently doubled and are set to double again in 2023, so a 200% increase in prices!
In Sociological terms all of the above are what Zygmunt Bauman would call ‘individualised solutions to social problems‘, which is the norm in the age of neoliberalism which believes in less government intervention in the market and leaving individuals to fend for themselves.
In this case we have a socio-economic problem – energy prices doubling in a very short space of time and rather than the government stepping in with a range of measures to tackle this they have, for most of 2022, left individuals to fend for themselves.
The Energy Cap – Something of a social solution but still not enough…?
It is probably testimony to how serious the energy crises is that Liz Truss recently announced an energy cap of £2500 (weighted for the average household) – which is a form of a political (public) solution to this social problem.
However, this is quite a weak response – households are expected to soak up ALL of the increase in prices so far, and then this only protects households from some (not all) of the anticipated price rises to come into 2023.
The government could do far more… for example a massive investment into insulating households and tax breaks or even subsidies for households installing solar panels and energy efficient appliances.
Meanwhile at the public level we could be investing in green-energy and training people to research and install such systems, given that there is likely to be increased demand for this sort of thing going forwards.
However the government has opted for allowing companies the right to frack and drill for gas around the United Kingdom and has chosen nuclear as its investment option – the problem with the later especially being that it will be the future generations that foot the bill for securing the legacy of toxic radioactive waste that goes along with nuclear.
Ironically this seams to be a case of the government investing in energy-tech which will create further public problems in the future, when there will even less capacity for a public solution to even more dramatic social problems, at least if the advance of neoliberalism persists!
The recent UK Budget saw a nominally right wing Conservative government pledge more money for public services and introduce pay and universal credit increases for the lowest paid.
Following a huge increase in borrowing during the Pandemic and a recent increase in National Insurance contributions (basically a tax increase) this hardly seems like a government committed to a neoliberal agenda.
Maybe this is because neoliberalism just can’t respond to these current crises – the public sector (the NHS) has been so central in the ‘fight the Pandemic’ narrative that this requires continued high levels of funding – which in turn requires a certain level of taxable income, which requires decent wages.
And ‘deregulation’, another tenet of neoliberalism hardly fits the appetite for policing the pandemic.
And leaving employment up the free-market hasn’t worked in many sectors following Brexit – it turns out that many migrant labourers now see themselves as better off simply staying in their home countries such as Romania rather than coming to Britain to work on a temporary VISA, and so raising the minimum wage is necessary to make work pay.
The government simply has to step in and legislate to prop up wages and take on debt to stimulate the public sector – otherwise millions of the working poor would find themselves earning too little to meet their basic needs.
It would seem that even a government nominally committed to neoliberalism can’t follow through with a neoliberal agenda at this time!?!
The International Monetary Fund and World Bank have been the two global institutions most associated with pushing neoliberal policies onto developing countries since the 1980s, but a recent (2016) article posted to the IMF’s Financial Development newsletter points out that neoliberal policies have caused problems in several countries, suggesting that neoliberalism hasn’t been universally successful.
In this post I summarise the article, which should be a useful criticism of neoliberalism for students studying the Global Development option as part of A-level sociology.
Increasing neoliberalisation
The article starts off by defining neoliberalism as having two main aspects: increasing competition and an increased role of the state and then reminds us that policies designed to achieve these two things have been introduced in many countries since the 1980s:
Criticisms of Neoliberal policies
The report notes three problems:
There is a ‘broad group’ of countries where increased growth doesn’t seem to have brought about any other improvements!
Neoliberal policies increase inequality and the costs of this are prominent
Opening up developing countries to capital flows (liberalising!) seems to have had mixed benefits, depending on how liberalisation has taken place.
Where more investment is tangible, such as money being spent on infrastructure and people skills, there are broader benefits.
However, when it’s just speculative capital coming in (hot ‘debt’ money) this just seems to lead to pump but then a financial crises, and then no more growth.
Austerity policies don’t necessarily work
The report notes that governments with good track records of debt are better off maintaining a welfare state during periods of financial crisis – cutting welfare has adverse affects on spending, which harms a countries economic prospects – it’s better for states in some cases to ‘suck up the debt’.
The combination of huge capital inflows and austerity = more inequality
The report notes that the two together create a vicious loop which creates more inequality which in turn harms longer term growth of a country.
Conclusions
The report doesn’t dismiss liberalisation, but does note that some degree of state regulation could work in many countries – as was the case in Chile – often hailed as a great victory for neoliberalisation, but in fact that State did play something of a regulatory role!
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.
Avoid polarisation
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
In conclusion…
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.
Neoliberalism has been one of the most influential political ideas of the last century, and it has been especially influential in shaping global policies of international development since the 1980s.
Below is a useful four minute video on 10 things you should know about Neoliberalism, as summarised by Ravi K. Roy, co-author of Neoliberalism: A Very Short Introduction.
This material should be especially relevant to A-level sociology students studying the Global Development option as part of A-level Sociology.
Neoliberalism and globalisation are contested terms
There couldn’t be two more conflated and confused ideas in both academia and public discourse.
Generally people see neoliberalism as the set of ideas behind globalisation, which is seen as the process.
An assault on big government
Neoliberalism is often seen as a ‘return to the market’ paradigm, a reaction against big welfare state government.
Where does the term come from?
We can trace the term back to post World War 1, maybe the 1930s, when there was an idea to straddle socialism and market liberalism.
Post World War 2 the term is used to refer to more of a pure market approach.
There are a variety of neoliberalisms!
It’s a very varied term, inspired by lots of intellectual traditions and with many different applications under different leaders.
No one calls themselves a neoliberal!
No one who has ever been identified with neoliberal policies has ever called themselves a neoliberal.
But it’s very clear that in the late 1980s and into the 1990s that politicians in power in the UK, America, Canada and Australia were all ‘neoliberals’
Neoliberalism and Internationalism
Neoliberals tend to look to international institutions such as the United Nations to extend their project.
NB – he doesn’t mention the International Monetary Fund or the World Bank, but personally I would think these have been more central to pushing a neoliberal agenda globally than the United Nations?!?
Neoliberalism and Nationalism
There are some neoliberals who believe in the idea of a single Europe. There are other neoliberals, like Margaret Thatcher who did not believe in the idea of a single Europe.
We are all neoliberals now
Both Thatcher and Reagan wanted to reduce the welfare state, but Bill Clinton reduced the welfare state far more than either of them would ever have imagined!
Neoliberalism as a practical policy package
The authors of the book have framed the practical polices of neoliberalism as a DLP package:
Deregulation
Liberalisation
Privatisation
Neoliberalism and Postmodernism
Neoliberalism has blurred the boundaries between the economy and the state, so that we now live in a more global form of capitalism where financialisation is at the heart of everything.
Postmodernism (or the new postmodern phase of neoliberalism?) is more about the blurring of the boundary between private and public life.
Find out more…
You might like to read the entire book: Neoliberalism: A Very Short Introduction!
Relevance to A-level Sociology
Neoliberalism is a core theory of development within the global development module.
Ghana, in West Africa, has seen positive economic growth for several decades now, on a par with many of its peers (similar countries by virtue of their development stats):
However, it has been more successful that other countries in translating that economic growth into social development, as measured by the decline in stunting and the increase in primary education enrolment:
This is all according to a recent (June 2020) Report by the World Bank: Building Human Capital: Lessons from Country Experiences – Ghana.
The report takes an in-depth look at the government policies of Ghana and concludes that the positive social development has been the result of a multi-pronged policy initiatives all working together in the longer term, including:
Setting up a National Health Insurance Scheme – ensuring everyone has access to basic healthcare. This was funded by primarily by increasing tax on selected goods and services and on formal sector workers.
FCUBE – Free Compulsory Universal Education
School feeding programmes
WASH programmes – to address poor access to water and sanitation – this was largely funded by aid from the International Community.
Adult education programmes – particularly useful in educating adults about health care issues and preventing stunting.
Of particular note here is that the Ghanian government put a special tax (I think it was 2.5%) on oil extraction, specifically to fund health and education.
Also noted is the good governance in Ghana – government is stable so they’ve had continuous investment in health and education for decades now.
Analysis – what does this tell us about theories of development?
Really it tells us that governments are important – if you think about the UK – we have a (relatively) high tax and high-cost free health and education system, which help us develop ‘human capital’ – and that is what Ghana seems to have focused on at the national level.
This case study suggests that MORE government works best for social development, not less – development in Ghana has happened through taxing the oil industry and paying for state social services – taxation, public services and more regulation resulting, in this case, in MORE positive development – a great case study against the neoliberal theory of development.
Analysis – how generalisable is this case study to other countries?
This kind of development may only apply to countries who are free of conflict and have a stable, minimally corrupt government – that way, if resources such as oil are discovered, they can be taxed and the income used for health and education.
There are plenty of low to middle income countries (Ghana’s ‘peer’ countries as outlined in the World Bank report) which could learn from Ghana – so this is maybe a good low-middle income development case study.
However, as Paul Collier and the authors of ‘Failed States’ have demonstrated, many countries stuck at the bottom of the development ladder are not in a position to put in place such policies, so this case study is no help to them.
