5 CAUSES AND CONSEQUENCES OF NEOLIBERALISM - CULTURE VOCABULARY - 2025

The causes and consequences of neoliberalism have been determined by certain political, social and economic crises that, according to the different regions of the world, have evolved differently.

Neoliberalism is an ideology that promotes a change in the configuration of the capitalist economy, where the State does not participate, leading to the privatization of public services. Followers of neoliberalism believe that this system contributes to the economic and social development of a country.

The antecedent in the history of neoliberalism are the liberal conceptions that the classics of the political economy of the English bourgeoisie had. Its first appearance was before World War II and it continued with much more presence in the 60s and also later in the 80s and 90s.

Neoliberal strategies began in Latin America at the end of the seventies as a result of the great economic imbalances that existed. Other pioneer countries in neoliberalism are the United States, Germany and England.

As the poor get poorer and the rich get richer, the better off gain increasing control over money. This increase in inequality damages the level and sustainability of growth.

Milton friedman

As world trade has expanded, foreign investment has made it a way of transferring technology and knowledge to developing economies.

One of its main speakers is Milton Friedman, who argued that the State does not have to be an active actor in the national economy, but that the one who must exercise control of the economy is private capital.

Those who run privatized and semi-privatized services in the UK increase their wealth by investing little and charging a lot.

In Mexico, Carlos Slim obtained control of practically all fixed and mobile telephony services and quickly became the richest man in the world.

Causes of neoliberalism

1- The economic crisis

With the devaluation of the currency, exports are made cheaper and the country's position is more competitive.

The neoliberals indicate that all the variables of the economic system must be unregulated, that is, disconnected from state control. They also point to a liberalization and deregulation of banks.

To try to solve the economic problems in the 70s and 80s, almost all the states of the capitalist world had to follow some of these measures.

Although those who were really forced were the underdeveloped countries. These countries saw poverty and social inequality increase after years of applying these measures.

2- The political crisis

When governments lose their ethical authority, they simply divert the attention of the people to issues that may interest them. In this way, citizens are carried away by feelings rather than arguments.

3- Bankruptcy of the stock market

The fall in prices of the New York Stock Exchange in 1929, known as "The crash of 29", was the biggest crisis known until then.

It caused the ruin of many investors, large businessmen and small shareholders, as well as the closure of companies and banks.

This caused many citizens to remain unemployed, in addition to the problem that spread to almost every country in the world.

The consequences were a great economic crisis that led to the principles of neoliberalism.

4- Disappearance of the welfare state

The welfare state disappears when social protection is reduced, job insecurity appears and the privatization of public services such as electricity, rail and air companies, education, roads, health, etc.

5- The class struggle

Neoliberalization was considered as a recovery project for the bourgeois class. Neoliberal politics directly attacks the unions and bets on and supports the private merchant classes with industrial, financial and real estate interests.

This results in service workers having precarious contracts and lower pay.

Consequences of neoliberalism

1- Modification of workers' rights

The process of economic liberation entails greater wage flexibility, lowering minimum wages, reducing public employment and creating a decrease in employment protection. Restrictive labor laws are created that facilitate the dismissal of workers.

The worker is left vulnerable since the employer can decide more freely about his continuity in the company.

Workers are constantly being monitored and evaluated, leading to unbearable situations. Preference is given to cheap labor.

2- Elimination of public health

What is intended with the privatization of the health system is a better management of taxpayer taxes, with more than considerable savings in public coffers in order to offer a better service to citizens.

In 1983 Thatcher began privatization in the English healthcare system, first with hospital logistics services such as laundry, cleaning and cooking. Later the hospitals were completely privatized.

3- Weakening of the poorest countries

One of the measures that are adopted and that weaken the poorest countries is the reduction of state financing to everything that is not related to the reproduction of capital and especially everything destined for social purposes.

The cut in social spending, the liberalization of prices in basic products, the social benefits of the great fortunes, among other measures, does nothing more than condemn the poorest countries to remain indefinitely, in an economic marginalization having to depend on other countries.

4- Increase in taxes

Taxes on consumption are increased, while it is reduced on the highest incomes.

5- Opening of borders for merchandise

You want to win in competition by eliminating restrictions on commercial exchanges. This fact causes wages to go down.

References

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