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The Strange Non-Death of Neo-liberalism

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Amy Hallam

on 28 November 2013

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Transcript of The Strange Non-Death of Neo-liberalism

Market
State
1970's
1980's
2008
1990's
Before...
The evolution of liberalism....
Today "Liberalism" is a confused term
European Liberalism= Civil/market
American Liberalism= Civil/intervention
What capitalism is...
Summary
Thinking about neo-liberalism and socialism, where does your opinion lie on the extent of state intervention?

Do you think that corporations still hold too much power after the events of 2008?

Should the government intervene in corporation regulations, like in the 1:12?
State
Market
Corp.
What capitalism pretends to be...
Neoliberalism and the Chicago School
CHICAGO SCHOOL:

• Government intervention is the worst possible outcome.

• Welfare is the overall wealth of an economy - does not take into account distribution.

• Claims that the natural end is the emerging of giant firms.

• The firm should be concerned only in profit maximisation and the interests of the shareholder.

• Argues that the more the government is involved in the economy, the more avenues corporations have for political influence.

NEOLIBERALISM IN ACTION:

Implementing neoliberalist policies:
• Ronald Reagan in the U.S.
• Margaret Thatcher in the U.K.
• Bob Hawke in Australia
• Roger Douglas in New Zealand

• Lower Taxes
• Deregulation
• Privatisation
• Control of the money supply
Giant Firms, the Market and Corporate Political Power
Economic and political power translate into each other.
GIANT FIRMS:

• Market-dominating strategies

• Multi-national

• Not fully subject to consumer sovereignty and market forces


FIRMS'POWER:

•Anti-trust law

• Firms maximise shareholder interests which can be at odds with consumer welfare.

• Due to their size, giant firms have significant lobbying power.


What is left of what is right?

Politically, victory of neoliberalism

Historical defeat of the political centre-left

Victory of the right and its preference for strong, wealthy and powerful individuals

Problems?
• Job insecurity
• Growing inequality
Economic philosophy
Achievement of the market is to use individual striving to achieve collective welfare.

Political parties and mass media are becoming unfit to link public and political elites.

Mass media as creatures of giant corporations and wealthy individuals.

Corporate interest and wealthy individuals dominate democratic processes.
Place all institutions in society (hospitals, universities, charities, governments) under an obligation to behave as though they were business corporations.

Inequality of wealth leads to inequalities of power.

Corporations become the dominant organizations in society.
Impossible to envisage an economy that is not dominated by giant firms and in which they are unable to translate economic power into political influence.

Political power remains overwhelmingly tied to the level of the nation-state.
Civil society = 'the power of the powerless'
Matches in opposition the might of both corporate and government institutions

Civil society will be stronger, the more that the state and the giant firm are challenged.

Best position than political parties to shape debate appropriate to our times.
Needed to make a good society:
state, market, corporations and civil society

Competition of values
Values can only emerge from disputes and struggles
CIVIL
SOCIETY
CORP.
MARKET
STATE
Greenpeace vs. Nestlé
Beyond State, Market and Corporation
Back to the state?
Neoliberal political project
Quadrilateral of forces
Agenda
- What is
Neo-liberalism?

- What neoliberalism is and
pretends to be?

- 2008 financial fiasco,
what went wrong?

- What are we to do next?

The Crisis
State
Market
Corp.
Investment Banks: Goldman Sachs, Morgan Stanley, Lehman Brother, etc...
SEC, secretary of treasury
Financial
market
Main actors
Neoliberalism assumptions
1) Markets regulate themselves

2) Government intervention is evil;
incompetent and arrogant

3) Once an equilibrium is reached
(without governments help), an
optimal outcome is also reached


Condition: pure market
Pure market conditions, and market failures
1) All prices are comparable everything is traded

2) Market entry is without barriers, with multiple providers and purchasers

3) Maintenance of high volume of transactions

4) Market participants are perfectly informed (Information Symmetry)

5) Economy and politics are separated
"Played big private games at public loss"

- Deregulation continues (under Obama)
- Investment banks have grown bigger
- CEOs keep getting big bonuses
"the forces that gain most from neoliberalism- global corporations, particularly in the financial sector- maintain their importance moreover less unchallenged. Although it was the behavior of the banks that caused the 2008-09 crisis, they emerged more powerful than before"
Andrew Shang, chief advisor China Banking Regulatory commission
The current state of affairs (US)
Why is there no change?
Financial market
SEC, Secretary of Treasuary
Where did it start?
Liberalism as "liberty"
But, the growing power of employers led some back to the state as a counterbalance
Economic
Social
After the apparent failure of economic liberalism we needed a new idea
Communism with total control
US/Scandinavian with intervention
Social Democracy
Keynesian management
Welfare states
Some neocorporalism
The alternative:
Ordoliberalismus- State preservation of markets
Or
Neoliberalism
: Fundamental preference for markets rather than the state to be the problem solver.
The problem: Keynesian policies have an inflationary tendancy
Neoliberal market solution
Reagan, Thatcher & deregulation
Economic philosophy and past safeguards
State
Market
Full transcript