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What Impact Has Neoliberalism Had on World Politics?

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What impact has neoliberalism had on world politics?

Neoliberalism is an economic philosophy that rose in prominence from the eighties following the elections of Margaret Thatcher and Ronald Reagan. Jones, Parker and Bos (2005: 100) summarise the essence of this view as “markets good, governments bad”. Neoliberalism argues that free trade is beneficial to all nations, that governments create inefficiency and waste, and that the distribution of goods should therefore be left to individuals and firms competing in the market to maximise their utility (WHO 2010). To ensure an efficient allocation of resources, neoliberalists argue for widespread liberalisation i.e. the reduction of rules and restrictions, and the privatisation of public enterprises.
However, the reality of Neoliberalism has been very different to the theory. Regulation provides the framework within which markets work and enables the moderation of the externalities they produce, thus deregulation was in fact limited and was quickly followed by regulation (Levi-Faur 2005: 13). Because of this, Polanyi (in Peck, 2010: 330) writes: “the road to a free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism”.
In this essay, I look at the impacts of Neoliberalism on World Politics, focusing on two in particular. Firstly I explain that the policies of liberalisation and privatisation, albeit supported by regulation, have led to increasing inequality and after this, I argue that Neoliberalism is partially to blame for the environmental issues we face today.

It is widely known that inequality is rising in the modern world. The 2015 Global Wealth Report (Stierli et al. 2015) compiled by Credit Suisse explains that the wealthiest 1% “own half of all household assets in the world” while the bottom 71% own only 3% and this trend is accelerating year on year. Inequality is nothing new, it has been present throughout history. In fact, the rising equality in the aftermath of the Second World War was a historical anomaly as we now return not only to nineteenth-century levels of income (in)equality but also to “patrimonial capitalism” where economic power is held by family “dynasties” (Krugman, 2014) .
The reversal of the trend towards more equal societies can be put down to the global shift in policy initiated by the neoliberal reforms of the late seventies which created a global capitalist economy where greater openness and competitiveness is encouraged (Cammack, 2014). This setup favours big players in markets at the expense of the smaller players, be this at a micro-level between individuals or a macro-level between states. The result is rising inequality which is often justified by the notion of “trickle-down economics” although its impact in reality is relatively small (Chang 2003: 38).
A heavily unequal distribution of wealth is so entrenched in our world that it has become the norm. Before the 2001 general election, Labour party leader Tony Blair said “If you end up going after those people who are the most wealthy in society, what you actually end up doing is in fact not even helping those at the bottom end” (quoted in Wade 2011: 55). The focus of policy nowadays is not greater equality but poverty reduction (Cammack, 2014: 420), yet Wade (2011: 72) explains that greater inequality reduces the efficiency of such policy.
Furthermore, inequality within a country increases the financial fragility of its economy. Meanwhile, the creation of more open markets and the deregulation of the financial industry has led to financial crises culminating in the 2008 Great Recession from which we are yet to recover (Lanchester 2010). These crises have caused unemployment and bankruptcy, making many poorer while banks were bailed out by governments in order to save the economy from a total meltdown. The initial reaction to this was more regulation of markets, yet little by little such legislation is being watered-down as we are seeing with the Dodd-Frank Act (Weisman and Lipton, 2015). The financial and pharmaceutical sectors, which count most of the world’s wealthiest people, spend vast amounts on lobbying to create a more favourable and profitable business environment (Hardoon 2015). It is of no surprise then that attempts to regulate are often unsuccessful or disappointing. Economic power translates into political influence very easily.
This is also the case on an international level where, as Barker and Feiner (2010: 249) write: “Economic imbalance - U.S. debt-financed consumption binges - mirror political imbalance - U.S. imperial power”. By creating institutions such as the World Bank and the IMF which promote neoliberal policies on a world scale, the influence of its creators, that is to say the US and to an extent the UK, is increased.
Neoliberalism may also be seen as having an impact on gender inequality. Through labour market deregulation, there has been a boom in low-wage, flexible, semi-skilled service sector jobs which have predominantly been filled by women. This work is generally seen as having a lesser value, further entrenching norms of male superiority (Barker and Feiner 2010). Furthermore, as well as partly because of this, policies of austerity and privatisation have a greater impact on women who are often the lowest paid and the first to be fired. However, they are simultaneously “the most likely to bear the burdens of family maintenance, and the most affected by the involuntary migration, domestic violence, homelessness, and mental illness that are intensified by poverty” (Becerra and Young 2015). Even on an ideological standpoint, Neoliberalism may be dangerous to the feminist project. With its focus on the individual, it dismisses the social, economic and cultural forces that produce gender inequality, converting a structural problem into an individual one (Rottenberg, 2014: 3).

Having written about inequality, I now turn to the issue of the environment. In the last couple of decades, we have realised that there is a global ecological problem caused by human action. Air, soil and land pollution, destruction of natural habitats and loss of biodiversity can all be traced to our activity, yet global warming due to greenhouse gas emissions is arguably the greatest and most harmful impact humans have had on the environment. This was set off with the Industrial Revolution and has only accelerated as fossil fuels are used for power, transport, construction etc… all of which are integral parts of the modern world (Dalby, 2014: 43). A direct link between capitalism and environmental destruction is thus easy to trace: “If one makes more profit by cutting down trees than by planting them, then there is no reason not to cut them” (Von Werlhof, 2007). Neoliberalism can in a sense be seen as capitalism on steroids as it promotes its fundamental values to the maximum. Because of this, I argue that environmental destruction is another impact this free-market capitalism has had.
Although ecological damage was very much present before its rise to prominence, Neoliberalism is to bear part of the blame for the gravity of the situation we have now reached. It has cemented the discourse of ever-more growth into the world psyche and, by framing society as an amalgamation of competing individuals, it has created ever-increasing wants (Skidelsky 2012). In combination, these lead to ever more consumption, meaning more production and therefore more pollution and use of natural resources. Carbon dioxide emissions are now over 150 times greater than they were in 1850, higher than any point in history (Friedrich and Damassa, 2014). Furthermore, more open economies create the incentive to produce more in order to compete internationally. Brazil for example, a rapidly developing country, is a leader in meat production. The cattle sector of this country alone is responsible for 14% of the world’s annual deforestation (Greenpeace 2009). In a paper for the World Bank, Sergio Margulis (2004: xi) writes that Brazilian deforestation significantly increased in the 1990’s due to private firms seeking profits. These private gains contrast with what is socially and environmentally desirable as they do little to counter inequalities and forests are crucial in stabilising the world’s climate by storing large amounts of carbon. This is just one example of how Neoliberalism can be blamed for the environmental crisis we now face. Moreover, the promotion of a small state and the influence corporations have through lobbying may have stemmed the implementation of legislation preventing environmentally damaging practices although this cannot be known for sure.
Environmental issues have an impact on world politics and will have a much greater one if nothing is done to prevent further aggravation. A World Bank (2012) report has predicted that in a 4˚C warmer world:
“The projected impacts on water availability, ecosystems, agriculture, and human health could lead to large-scale displacements of populations and have adverse consequences for human security and economic and trade systems”
The recognition of the importance of these issues have led to the creation of environmental protection agendas around the world. This can be seen as starting with the 1972 UN Conference on the Human Environment in Stockholm which has been followed by many other international meetings and agreements as well as action on national, regional and local levels. Even if the disaster scenario is avoided, the way we see and use the environment needs to change as resources are rapidly being depleted.

In conclusion, I have argued that Neoliberalism has impacted World Politics by increasing inequality, be it within or between states or even between genders, on an economic as well as a political level, and that it has contributed to the ecological problem we face. Neoliberalism seems to be the accepted standard in today’s world and we can wonder if it may not ingrain its view of humans as self-interested, utility-maximising individuals into the wider public. If this is the case, it may become further rooted in society and its impacts amplified.

Bibliography
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WHO (2010) Neo-liberal ideas. Available at: http://www.who.int/trade/glossary/story067/en/ (Accessed: 3 November 2015).
Levi-Faur, D. (2005) ‘The Global Diffusion of Regulatory Capitalism’, The ANNALS of the American Academy of Political and Social Science, 598(1), pp. 12–32.
Brenner, N., Peck, J. and Theodore, N. (2010) ‘After Neoliberalization?’, Globalizations, 7(3), pp. 327–345.
Stierli, M., Shorrocks, A., Davies, J. B., Lluberas, R. and Koutsoukis, A. (2015) Global Wealth Report 2015. Available at: https://publications.credit-suisse.com/tasks/render/file/?fileID=F2425415-DCA7-80B8-EAD989AF9341D47E (Accessed: 10 November 2015).
Krugman, P. (2014) ‘Why We’re in a New Gilded Age’, The New York Review of Books (May).
Cammack, P. (2014) ‘Why are some people better off than others?’, in Edkins, J. and Zehfuss, M. (eds.) Global Politics: A New Introduction (second edition). London: Routledge, pp. 405 – 428.
Chang, H.-J. (2011) 23 things they don’t tell you about capitalism. New York: Bloomsbury Publishing Plc.
Wade, R. (2011) ‘Global trends in income inequality’, Challenge, 54(5), pp. 54–75.
Lanchester, J. (2010) Whoops!: Why everyone owes everyone and no One can pay. London: Penguin Books.
Weisman, J. and Lipton, E. (2015) In New congress, Wall St. Pushes to Undermine Dodd-Frank Reform. Available at: http://www.nytimes.com/2015/01/14/business/economy/in-new-congress-wall-st-pushes-to-undermine-dodd-frank-reform.html (Accessed: 7 November 2015).
Hardoon., D. (2015) Wealth: Having it all and wanting more | Oxfam GB | policy & practice. Available at: http://policy-practice.oxfam.org.uk/publications/wealth-having-it-all-and-wanting-more-338125 (Accessed: 5 November 2015).
Barker, D. K. and Feiner, S. F. (2010) ‘As the world turns: Globalization, consumption, and the Feminization of work’, Rethinking Marxism, 22(2), pp. 246–252.
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Skidelsky, R. and Skidelsky, E. (2012) How much is enough? The love of money and the case for the good life. London: Allen Lane.
Friedrich, J. and Damassa, T. (2014) ‘The History of Carbon Dioxide Emissions’, World Resources Institute, 21 May. Available at: http://www.wri.org/blog/2014/05/history-carbon-dioxide-emissions (Accessed: 6 November 2015).
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World Bank (2012) Turn Down the Heat: Why a 4°C Warmer World Must Be Avoided. Washington DC: The World Bank.

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