Criticisms of Neoliberalism

The three country case studies below all suggest that although neoliberal policies might promote economic development in the long run, in the case of Chile at least, there are some significant negative consequences of this pathway to development.

  • Chile in the 1970s
  • Boliva in the the 1990s
  • India – Contemporary

NB – If you’re here for a blog post about Neoliberalism in India – please click here (I moved it!)

Chile 

The following clip from ‘The Shock Doctrine’ outlines the ‘neoliberal experiment in Chile from 1973 onwards, the very first neoliberal experiment in development.

Following the overthrow Salvador Allende, the democratically elected but Socialist President, the American backed Dicator Augusto Pinochet implemented neoliberal economic reforms.

These were written for him by by a group of American economists known as ‘The Chicago school’, headed by Milton Freedman.

Examples of neoliberal policies reforms included the cutting of taxes on imports to 10% (previously Chile had the second most protected economy in the world) and the privatisation of state owned companies.

In the short term – the policies increased unemployment and inflation and inequality and human misery which led to massive social unrest which Pinochet oppressed violently killing tens of thousands of people.

However, 40 years later… Chile is one of Latin America’s leading economies.

Neoliberals might argue tens of thousands of lives is a price worth paying for rapid wealth creation

Neoliberalism in Bolivia 

This video clip from ‘The Corporation’ summarizes the case study of water privatization in Bolivia in the 1990s.

  • In the early 1990s, one local administrative area within Bolivia was forced to privatise the previously state owned water supply as part of a ‘Structural Adjustment Programme’
  • A Multinational took over running the water supply for a profit
  • The poorest people couldn’t afford to pay for water.
  • This led to massive protests which the government violently suppressed.
  • In this case the government eventually renationalised the water supply due to popular demand.
  • Did neoliberalism help development?
  • If you define progress as the right to clean water then no.
  • If you define it as increasing profit for European Transnationals then yes.

Neoliberalism in India 

Arundhati Roy notes that  ‘Trickle down hasn’t worked in India, but gush up certainly has’

 

She notes the following three ways in which the Elite in India Benefit from Neoliberal Policies

  • Corrupt government officials sign a ‘Memorandum of Understanding’ (MoU) with a Corporation which privatises a chunk of publicly owned land, giving that corporation the right to use that land to establish a business – this either takes the form of mining the raw materials from under the land, or establishing a range of other projects such as Agribusinesses, Special Economic Zones, Dams, and even Formula One racing circuits.
  • Taxes are typically kept very low in these deals – often sow low in that local people see little of the financial benefit of the new business. This is especially true were mining is concerned. In 2005, for example, the state governments of Chhattisgarh, Orissa, and Jharkhand signed hundreds of memorandums of understanding with private corporations, turning over trillions of dollars of bauxite, iron ore and other minerals for a pittance – royalties (effectively taxes) ranged from 0.5% to 7%, with the companies allowed to keep up to 99% of the revenue gained from these resources. (Allowing people like Ambanni to build their 27 story houses, rather than the money being used for food for the majority of the Indian population.)
  • In a third strand of Neoliberal policy, companies are subjected to very little regulation. It seems that they are allowed to develop their projects without protecting the environment or paying any compensation to people who are negatively affected by these projects.

 

Exploring the Experience of Poverty in the UK

This post provides some qualitative sources of data which explore what it’s like to be poor in Britain today, follows on from a previous post on ‘defining and measuring material deprivation in the UK’ .

One of the things you need to look at for the AS Education module is the extent to which material deprivation is responsible for educational underachievement. While statistics give you an overview of the extent of poverty, and a little bit of information of the kind of things poor people can’t afford, they don’t give you much a feeling of what it’s like to actually live in poverty.

To get a feeling for day to day challenges of living in poverty you need more qualitative sources, and ‘thankfully’ we are blessed with a number of recent documentaries which look at the experience of living with material deprivation in the UK.

Watch the documentary sources below and then answer the questions/ contribute to the discussions below. The videos have all been selected because they focus on material deprivation and education in some way.

Source One – Poor Kids (BBC – 2011) – Mainly focusing on younger children

Poverty – Britain’s Hungry Children (Channel 4 Report, 2013) – Cites research drawn from 2500 food diaries kept by children in the UK – Some of whom live on less than half of the recommended calories. Also highlights the importance of lunch clubs to feed hungry children.

Finally watch this video – This shows you a case study of one girl from a poor background who actually made it into the best school in the area, against the odds. It’s a bit slow, but later on it gives an insight into the struggle her mum faces to raise enough cash to meet the ‘hidden costs’ of education (she has to resort to a ‘pay day loan’).

Questions/ tasks for discussion:

Q1: Draw an ‘ageline’ (like a timeline, I may have just invented the word) showing how material deprivation affects 3 year olds to 18 year olds in different ways.

Q2: From a broadly Marxist Perspective, the effects of material deprivation on children are structural, or objective if you like. Being brought up in poverty and having a poorer diet, and living in lower quality housing effectively cause poor children to do less well in education. This means that, all other (non material) things being equal (same school, same intelligence, same motivation etc) a poor kid will always do worse than a rich kid. Do you agree? Be prepared to explain your answer.

Related Posts

The effects of material deprivation on education

The Effects of Material Deprivation on Education

Material deprivation can be defined as the inability to afford basic resources and services such as sufficient food and heating. Material deprivation generally has a negative effect on educational achievement.

Material Deprivation and Educational Achievement

Gibson and Asthana (1999) pointed out that there is a correlation between low household income and poor educational performance. There are a number of ways in which poverty can negatively affect the educational performance of children. For example –

  1. Higher levels of sickness in poorer homes may mean more absence from school and falling behind with lessons
  2. Less able to afford ‘hidden costs’ of free state education: books and toys are not bought, and computers are not available in the home
  3. Tuition fees and loans would be a greater source of anxiety to those from poorer backgrounds.
  4. Poorer parents are less likely to have access to pre-school or nursery facilities.
  5. Young people from poorer families are more likely to have part-time jobs, such as paper rounds, baby sitting or shop work, creating a conflict between the competing demands of study and paid work.

Supporting evidence for the importance of material deprivation

  • Stephen Ball (2005) points out how the introduction of marketisation means that those who have more money have a greater choice of state schools because of selection by mortgage
  • Conner et al (2001) and Forsyth and Furlong (2003) both found that the introduction of tuition fees in HE puts working class children off going to university because of fear of debt
  • Leon Fenstein (2003) found that low income is related to low cognitive reasoning skills amongst children as young as two years old
  • The existence of private schools means the wealthy can afford a better education. Children from private schools are over-represented in the best universities

Evaluations of the role of material deprivation

  • To say that poverty causes poor educational performance is too deterministic as some students from poor backgrounds do well. Because of this, one must be cautious and rather than say there is a causal relationship between these two variables as the question suggests, it would be more accurate to say that poverty disadvantages working class students and makes it more difficult for them to succeed.
  • There are other differences between classes that may lead to working class underachievement. For example, those from working class backgrounds are not just materially deprived, they are also culturally deprived.
  • The Cultural Capital of the middle classes also advantages them in education.
  • In practise it is difficult to separate out material deprivation from these other factors.

Related Posts

The Effects of Cultural Deprivation on Education

The Extent of Material Deprivation in the UK

Evaluating the extent of material deprivation in the UK