Pro-capitalism economists, triumphant after the fall of socialist block economies, have nominated neoliberal economics as the lone mainstream economics theory. US political scientist Francis Fakuyama hailed the global triumph of political and economic liberalism: “What we may be witnessing is the end point of mankind’s ideological evolution and the universalisation of Western liberal democracy as the final form of human government.”
Enthused international economic governance institutions prescribed wholesale adoption of neoliberal policies of liberalisation, privatisation and globalisation to countries across the globe, including India.
Milton Friedman, one of the chief architects of economic neo-liberalism, represented the tactical approach of this school of thought to label all other stream of economics as bad economics: “There is no such thing as different schools of economics; there is only good economics and bad economics.” So, it took tremendous effort to hoist liberalism as the definitive version of political and economic thought.
But another economist Joan Robinson said, “The purpose of studying economics is…to learn how to avoid being deceived by the economists.” It is necessary to understand the economic and social outcomes of the prevailing economic policies.
1 Rise in economic instability: There were over 100 crises in the last 35 years, including the worldwide recession of 2008. Seventy per cent of the gains from these economic policies have accrued to developed countries. Forty-eight countries are left worse off while only a few developing ones were positively impacted.
2 Corporates are gaining: As per Oxfam, eight men now own the amount of wealth equal to the poorest half of the world. The incomes of the richest one per cent increased by 180 times in the last two decades. In the US, new research by economist Thomas Piketty shows that over the last three decades, the growth in the incomes of the bottom half has stagnated at zero, whereas earnings of the top one per cent shot up by 300 per cent. Left unchecked, which is almost certain if these policies continued, the trends threaten to pull societies apart. It increases unrest, crime and weakens fight to end poverty.
3 Static salaries, uncertain jobs: Astonishingly, all deformity to increase the deprivation of labour is called ‘labour reforms’. These include wage stagnation, casualisation of work, irregular hours, freedom to hire and fire, weakening labour protection laws and de-unionisation. Corporations are squeezing the costs of labour across the globe, except for the executives; this ensures less and less of the economic pie to workers and producers (especially producers of primary products, like the farmers).
As there is a disenchantment with the outcomes of mainstream economic policies, there are signs that more people in rich countries are no longer willing to endure the status quo. It is interesting to watch how the public in the developed world is reacting to these outcomes. There are broadly two kinds of
1 The re-emergence of political leadership owing alliance to the socialist polity. The rise of Jeremy Corbyn (UK), Bernie Sanders (US) and the New Democratic Party (Canada) testifies this. But there is fierce resistance to their call for change from the political and economic structures that have evolved in the last few decades.
2 Conservative movements, like the far right and right-wing parties, blame migration policies for the misery but keep quiet on neoliberal policies. In Europe, the last decade has seen right wing and far-right parties making significant electoral gains in 15 countries. Interestingly, right wing parties in their propaganda assign problems to cosmopolitanism and promise to promote nativism as an alternative; but often prefer silence over neo-liberalsm.
Here is a dichotomy. Globalisation, an important constituent of neoliberal economics, requires individual aspirational cosmopolitanism, often called neoliberal cosmopolitanism. But political power emerges from nativist promises. The challenge is to build a positive alternative, not one that increases global and societal divisions. Some positive signals are already there.
After heavily relying on the disillusioning neoliberal policies in the past and now alarmed by the rise of right wing populist movements, European Union (EU) leaders are talking again of ‘put the best interest of citizens in the heart of the EU agenda’. After two years of consultations, EU leaders assembled in Gothenburg, Sweden, on November 17, 2017 and signed a document on behalf of the EU council called ‘European Pillar of Social Rights’ that is clubbed into three categories: equal opportunities and access to labour markets; fair working conditions; social protection and inclusion.
In India, the right wing ruling party had brilliantly combined its historical nativism (as a part of its cultural nationalism) with the neoliberal economics by creating the hype of the so-called, ‘Gujarat Model’ for the last many years. But the recent election shows that the grandiloquence is losing its appeal. Unlike the Western rich countries, the contemporary progressive movements in India have a double advantage. The people are progressively disillusioned with both the historical nativism as well as the neoliberal economic policies.
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