NEOLIBERALISM

NEOLIBERALISM and the end of liberal democracyPRESENTED BY :NIMMY MERIN MATHEWSRUTHY MOHANAFRIN SHAHNAS

"Neo-liberalism" is a set of economic policies that have become widespread during the last 25 years .

"Liberalism" can refer to political, economic, or even religious ideas.

It is presented to poor and working people as progressive compared to conservative or Rightwing.

Economic liberalism is different.

"Neo" means we are talking about a new kind of liberalism.

The liberal school of economics became famous in Europe when Adam Smith, an Scottish economist, published a book in 1776 called THE WEALTH OF NATIONS.

He and others advocated the abolition of government intervention in economic matters. No restrictions on manufacturing, no barriers to commerce, no tariffs, he said; free trade was the best way for a nation's economy to develop. Such ideas were "liberal" in the sense of no controls.

This application of individualism encouraged "free" enterprise," "free" competition -- which came to mean, free for the capitalists to make huge profits as they wished.

Then the Great Depression of the 1930s led an economist named John Maynard Keynes to a theory that challenged liberalism as the best policy for capitalists.

He said, in essence, that full employment is necessary for capitalism to grow and it can be achieved only if governments and central banks intervene to increase employment.

The belief that government should advance the common good became widely accepted.

But the capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate elite to revive economic liberalism.

That's what makes it "neo" or new.

To be simple, the main idea of neoliberalism is the economic policy related to the claim that the flow of the market economy should be maintained through the desire to intensify and expand the market, by minimizing the intervention of government and reinforcing the efficiency in the market. According to neoliberalism, government should take care of very limited range of nation economy such as security, restrictions for extreme monopolies.

Now, with the rapid globalization of the capitalist economy, we are seeing neo-liberalism on a global scale.

"what the Right offers is to turn the world into one big mall where they can buy Indians here, women there ...." and he might have added, children, immigrants, workers or even a whole country like Mexico.- Subcomandante Marcos .

The main points of neo-liberalism include:

THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone."

CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care.

REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role. Of course, they don't oppose government subsidies and tax benefits for business.

DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environment and safety on the job.

PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.

ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy.

Around the world, neo-liberalism has been imposed by powerful financial institutions like the International Monetary Fund (IMF), the World Bank

Advantages of Neoliberalism

Neoliberalism amplifies the efficiency of market economy. On the ground that policies with neoliberalism reduce the influences from governmental managements, companies, the group of producers, can gain tremendous power in the market. Enterprises will produce goods more actively to increase their profits. As a result, interactions between consumers and producers will be revitalized and size, efficiency of market will be maximized. During above process of development, the competitive power and creativity of companies will be dramatically developed too.

One of the greatest examples that neoliberalism facilitated the liberal flow of economy can be FTA. FTA, which stands for Free Trade Agreement, is the form of transaction that induces abolition of tariffs or international limitations related to trading goods between two countries. Neoliberalism is considered to be the main power of globalization. Since neoliberalism encourages free trade between nations and integrity of markets, globalization has been accelerated by the name of realization of neoliberalism.

Problems of Neoliberalism

Opponents of neoliberalism strongly urge that neoliberalism is the main cause of increasing gap between rich and poor in modern society.In these days, only top 1% of world population is taking 40% of finances in the world. Riches are becoming much richer based on their original properties while poor people are sinking down and suffering great economic hardships in their lives.

This phenomenon occurs not only between individuals but also between companies.

. Moreover, unemployment rate can be augmented because of neoliberalism. In the world of neoliberalism, a person with less ability is the target of unemployment or fire since a person with diverse and intense ability will get the job. There is no care from government related to unemployment.

globalization, which is the phenomenon deeply associated with realization of neoliberalism, cannot be considered as positive status quo. They claim that over-globalization provoked destruction of some folk cultures in each nation and forced developing countries or poor countries to follow developed countries economic pressures or mechanisms.

Solutions for the problems (How neoliberalism can be ideal)government should concern about welfare system so that poor people can get enough financial support to lead safe life. If the world is only sustained by laws of neoliberalism, poor people cannot earn any chance to success or improve their economic conditions, however, they will get opportunity to enlarge their family budgets and go forward for their dreams when government provides financial back-up to them.

Next, the legislative council should think about how government can aid jobless people. Recently, some of the nations are helping unemployed people by offering living expenses and find the jobs for them. As a result, the unemployment rate in those countries had evidently decreased and livelihoods of the public

Finally, nation must manage how much the country should be globalized. Under powerful phenomenon called Globalization, people might lose their own cultures, which are developed through ancestors and themselves. Therefore, government has to supervise the balance between folk cultures and new cultures that came into because of globalization.

Comparing incidents in the US and INDIA

What is Occupy Wall Street ?

The promotional image for Occupy Wall Street movement which went viral on social networking sites all around the world and called for protestors .

What is Occupy Wall Street ?

Occupy Wall Street is a people-powered movement that began on September 17, 2011 in Liberty Square in Manhattans Financial District, and has spread to over 100 cities in the United States and actions in over 1,500 cities globally.

OWS claims to be fighting against the corrosive power of major banks and multinational corporations over thedemocratic process, and the role of Wall Street in creating an economic collapse that has caused the greatest recession in generations.

What is Occupy Wall Street ?The movement does not have any face and its decision making body is the New York General Assembly (NYGA).

The NYGA is open to everyone and anyone can attend its meeting and air their suggestions. The rationale behind it was to enforce OWS as a truly people controlled movement not headed by anyone one person or a group of people.

Some experts believe that not having a face may have worked against the movement in the long-term.

What is Occupy Wall Street ?The slogan of the movement was We are the 99%, revealing that the movement is about the rest of America that bore the brunt of the financial crisis while the bankers of Wall Street who arguably caused the crisis, got financial bailouts from Congress.

It also refers to the concentration of wealth among the wealthiest 1% of America.

Origins of OWS

OWS was initiated by Kalle Lasn and Micah White of Adbusters, a Canadian anti-consumerist publication, who conceived the idea of a June 2011 occupation in lower Manhattan.

Adbusters proposed a peaceful occupation of Wall Street to protestcorporate influenceon democracy, the lack of legal consequences for those who brought about the global crisis of monetary insolvency, and an increasing disparity in wealth.

Antecedents for Occupy Wall Street (OWS) include the British student protests of 2010, as well as Greek and Spanish anti-austerity protests of the "indignados".

Goals of OWS

The RIL Basin

Background

KG Basin is considered to be the largest natural gas basin in India. A total of 19 discoveries have been made in the block during 2002-08

In 1991, Reliance Industriesgot the rights to explore the D6 block as perE AND P(exploration and production)

Reliance Industries discovered the biggest gas reserve in Krishna Godavari basin . The site is called Dhirubhai 6 which is 7,645 sqkm in areaThe on-land portion covers 28,000 sq km and the offshore portion, including deep waters, covers an area of about 145,000 sq km.

Incidents

In 1999 the government came up with the New Exploration Licensing Policy (NELP) allowing private players to enter

Later RIL (divided between the two brothers)bagged the contract for D6 block of the Krishna Godavari river basin in Andhra Pradesh

Production sharing contract (PSC) was signed in April 2000 between the government and RIL and its minor (10 %) partner, NIKO Resources Ltd (a Canadian corporation), for exploration & production of gas/oil.

Around 7 trillion cubic feet of natural gas was discovered by Reliance in the Krishna Godavari basin in October 2002

The D6 was to produce 40 million MMSCD (Million Cubic meters per day), which was revised to 80 MMSCD.

Initial development cost at $2.4 billion was revised in 2006 to $5.2 billion in the first phase and $3.3 billion in the second

Family pact made in 2005, where RIL was to supply 28 million cubic meters of gas a day at $2.34 per million units to RNRL for 17 years

RIL did not supply the gas at the agreed rate

As per the pact, Reliance should have relinquished 25% of the total area outside the discoveries in 2004 and 2005, but the entire area was declared as a discovery area

Without drilling adequate wells, Reliance kept on claiming that there was potential for petroleum

The investments were quadrupled on paper & the capacity of commercial production was doubled resulting in drastically reducing/ delaying the profit sharing with the government.

Implications

After getting the contract in 2000 for exploration & production, RIL began to assert that the whole basin is full of gas & convinced the government to declare the entire region as discovery area in 2009

According to CAG the discovery area as per the contract was mere 5% of this area,& rest should be surrendered to the government in 3 stages

Reliance Executive Director P M S Prasad on 29 June wrote to oil secretary G C Chaturvedi protesting that his firm has not received the full copy of CAG report & was not consulted on issues in the report

RIL refused NTPC to sell the gas at $2.34 & instead forced the govt. to grant them a price of $4.2, all the while when ONGC was being allowed a price of $1.83.

RIL demanded import parity price of $14.2 while the production came down to 31 MMSCMD (from 61) when it was supposed to go up to 80, apparently due to technical snags and lack of gas!

Despite lack of gas and production, Reliance managed to give British Petroleum, 30% stake including the D6 region for $7.2 billion in 2011

Keep in mind that Reliance was supposed to be only the contractor and the assets like natural gas is a national property!

THANK YOU.