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neoliberalism

by on February 6, 2011

It is important to understand this phase in the recent history of the economy. Only by understanding the economy can we understand the politics and power of sustainability possibilities.From Dumenil.

Neoliberalism is a phase of capitalism into which it entered at the transition between the 1970s and 1980s. Its establishment must be understood as a political event, in which all aspects of the economy were involved. Its objective was the increase of the income and wealth of upper classes. It can be interpreted as a process of “restoration” since the progress of the income of these classes had been moderated during the first decades following Word War II in comparison to the rest of the population. Considered from the class viewpoint proper to this objective, neoliberalism was an astounding success, as the income of upper classes grew tremendously. This is a well-known observation. Neoliberalism dramatically increased income inequalities in the United States, in Europe, and within the Periphery.

The means used to achieve this reversal are rather familiar. A new discipline was imposed on workers. Tougher labor conditions, the stagnation (or regression) of purchasing powers, the erosion of welfare protection, and so on were the main aspects of this increased pressure on labor. Management was narrowly targeted to the interest of shareholders. To the year 2000, interest rates remained considerably larger than inflation rates. The main objective of macro policies became the control of price stability, rather than growth and the limitation of unemployment. Financial mechanisms were wildly deregulated. Free trade and the free international circulation of capitals were imposed by governments around the globe, thus allowing the deployment of transnational corporations worldwide. These two latter aspects define what is known as “neoliberal globalization”.

This new social order radically upset the previous configuration typical of the first postwar decades. Despite the violence (colonial wars, Vietnam War, and the like) proper to these earlier decades and ecological devastation, the postwar period manifested a number of “progressive” features—the progress of the purchasing power of the bulk of wage-earners, financial regulation, policies in favor of development and employment, etc.—with significant differences among countries.

In the background now, Egypt, and the US support for Suleiman while reporters are still being arrested and the Google exec is held to the point people fear for his life. Follow on the Guardian blog.

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