Why I am uncomfortable with the term “neoliberalism”
For several reasons, I am quite uncomfortable with discussions about neoliberalism. Let me explain:
- First of all, “neoliberal” is not a term anybody uses to describe their own standpoint. The Economist, the British magazine that is spearheading free-market ideology internationally, for example, insists its position is “liberal”, not neoliberal. Criticism of neoliberalism is thus not addressed at anyone who would respond to that criticism (whether in practice or theory).
- My second reason is related to the first. It is not clear what exactly neoliberalism is supposed to be, or who is promoting it. Jim Yong Kim, the World Bank’s current president, is not a free-market enthusiast. Christine Lagarde, the head of the International Monetary Fund, was one of the more sober voices in the Euro crisis, not one of the most radical. In Germany, many leftists feel that the USA is the fortress of neoliberalism, but the USA have recently introduced (close to) universal health-care coverage and stringent (though probably not stringent-enough) bank regulations. Europe, on the other hand, was once believed to have a social model that was different from North American market enthusiasm. While the US has expanded health-care coverage, however, the EU has been dismantling social protection and has been more hesitant to regulate banks. Oh, and the heads of the rich world’s central banks, from Japan to the US, the Eurozone and Britain have been keeping interest rates low and indicating in their often obscure rhetoric they want governments to do more deficit spending. Apparently an important branch of global economic governance is worried about too weak rather than too strong government interference in markets.
- My third reason is that the obsession with neoliberalism often goes along with a fundamentalist criticism of capitalism, which looks fundamentally misleading to me. The problem is that there is no switch anywhere that we could easily use to move on to a more equal and fairer world. Various kinds of socialism have failed dramatically in huge countries like the Soviet Union, the People’s Republic of China and independent India. Sometimes people suggest that things might be better if Che Guevara had prevailed in Bolivia, or Thomas Sankara in Burkina Faso. I find such notions utterly unconvincing. Why should small countries achieve things that proved impossible in countries of continental dimensions? The truth is that socialist systems have failed in many other countries on all continents, and no, Cuba is not different. People aren’t fleeing to Cuba, they are fleeing from Cuba. Human development is highest in intelligently regulated capitalist societies like Sweden, Denmark or Canada – or, to pick a much poorer, but also impressive example – Costa Rica. When popes bemoan the predatoriness of capitalism, we have an idea of what could make capitalism less predatory. But what would it mean to make it less neoliberal?
Humankind is facing urgent challenges – climate change, poverty, terrorism, to name but three. Yes, inequality is a problem too, and economic globalisation needs to be managed better to tackle it. But that is an argument put forward not only by globalisation sceptics, but more convincingly by François Bourguignon, a former chief economist of the World Bank.
Complaining about evil neoliberalism may serve groups of like-minded people to feel a sense of comfortable unity, but it does not help the international community to rise to the challenges. What we need are policy proposals that spell out pragmatic options and involve those in debate who do not agree with those proposals.