What is neoliberalism?TEPC220-12A (HAM) / PCSS201-12A

(HAM) 

Social Issues in Aotearoa/New Zealand Education

Education and New Zealand Society

Rationale for this course

There are four main aims for this course:1. to introduce students to the underlying political and

economic theory behind neoliberal ideology as the main educational policy paradigm in New Zealand since 1984;

2. to introduce students to an episode of contemporary educational history in New Zealand since the election of the Fourth Labour Government in 1984;

3. to introduce students to the notion of ‘policy enactments’;4. to consider some of the ‘lived effects’ of policy in schools.  

Restructuring of state education

• The restructuring of state education systems and particularly higher education in many Western countries during the last two decades has involved a series of significant shifts:

- away from education as free and secular to private, personalised and religious;

- away from “equality of opportunity” that historically defined NZ’s welfare state;

- away from state education to private education;- away from an emphasis on administration and policy to an

emphasis on management; • This phenomenon needs to be viewed in the context of the

rise of neoliberalism as the predominant ideology of globalization.

A Brief History of Neoliberalism

• Harvey traces the intellectual roots of neo-liberal thought to the Austrian political philosopher Friedrich von Hayek (author of The Consititution of Liberty). It is, Harvey says, a form of utopianism the dangers of which were first identified by Hayek’s contemporary Karl Polyani back in 1944.

Karl Polyani• “The idea of freedom ‘…degenerates into a mere advocacy

of free enterprise’, which means ‘the fullness of freedom for those whose income leisure and security need no enhancing, and a mere pittance of liberty for the people, who may in vain attempt to make use of their democratic rights to gain shelter from the power of the owners of property’. But if, as is always the case, ‘no society is possible in which power and compulsion are absent, nor a world in which force has no function’, then the only way this liberal utopian vision could be sustained is by force, violence and authoritarianism. Liberal or neo-liberal utopianism is doomed, in Polyani’s view to be frustrated by authoritarianism, or even outright fascism”.

Ronald Reagan• 40th President 1981-89• Governor of California, 1967–1975• First term, 1981–1985• "In this present crisis, government

is not the solution to our problems; government is the problem.”

• “Reaganomics”: Reagan implemented policies based on supply-side economics and advocated a classical liberal and laissez-fair philosophy, seeking to stimulate the economy with large, across-the-board tax cuts.

• Second term, 1985–1989• End of the Cold War

Deng Xiaoping• As leader of the Communist Party

1978-92), Deng was a reformer who led China towards a market economy.

• "To learn knowledge and truth from the West in order to save China.”

• Gaige Kaifang (lit. Reforms and Openness): Since 1979, the economic reforms accelerated the capitalist type, while maintaining the Communist-style rhetoric.

• advanced the "four modernizations" (economy, agriculture, scientific and technological development and national defense)

• “Socialism with Chinese characteristics”

• “Planning and market forces are not the essential difference between socialism and capitalism. A planned economy is not the definition of socialism, because there is planning under capitalism; the market economy happens under socialism, too.”

Margaret Thatcher• Longest serving British PM 1979-1990• Strongly influenced by Hayek and

Milton Friedman• Agenda of lowering direct and

increasing indirect taxation; attack on labor unions; privatisation of state assets.

• “I think we have gone through a period when too many children and people have been given to understand "I have a problem, it is the Government's job to cope with it!" or "I have a problem, I will go and get a grant to cope with it!" "I am homeless, the Government must house me!" and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then also to help look after our neighbour and life is a reciprocal business and people have got the entitlements too much in mind without the obligations” (1987)

Augusto Pinochet, Chile • President of the Government Junta

(1973-1981), President of the Republic 1974-1990.

• In 1973 led a coup d’etat to depose Allende of a democratically-elected socialist government

• Killed, interred and tortured thousands of political opponents

• Under the influence of the free market-oriented libertarian “Chicago Boys” implemented economic reforms including tariff cutting, opening markets, curbing union activity, privatising social security, and privatisation of state assets.

• Transferred power to a democratically elected President in 1990

• Human rights violations, embezzlement and tax evasion

David HarveyDavid Harvey is Distinguished Professor of Anthropology at the City University of New

York, well known for his research and writing on globalisation and social change.

• “Future historians may well look upon the years 1978–80 as a revolutionary turning-point in the world’s social and economic history. In 1978, Deng Xiaoping took the first momentous steps towards the liberalization of a communist-ruled economy in a country that accounted for a fifth of the world’s population. The path that Deng defined was to transform China in two decades from a closed backwater to an open centre of capitalist dynamism which sustained growth rates unparalleled in human history … Margaret Thatcher [was] elected Prime Minister of Britain in May 1979, with a mandate to curb union power … Then, in 1980, Ronald Reagan was elected President of the United States and, armed with geniality and personal charisma, set the US on course to … curb the power of labour, deregulate industry, agriculture and resource extraction, and liberate the powers of finance both internally and on the world stage. From these several epicentres, revolutionary impulses seemingly spread and reverberated to remake the world around us in a totally different image … [These leaders] plucked from the shadows of relative obscurity a particular doctrine that went under the name of ‘neoliberalism’ and transformed it into [a] central guiding principle …

• http://newlearningonline.com/new-learning/chapter-4-learning-civics/david-harvey-a-brief-history-of-neoliberalism/

A Brief History of Neoliberalism by David Harvey 1/5

http://www.youtube.com/watch?v=PkWWMOzNNrQ

• There are two things to be said.  One is, if you like, the theory of neoliberalism and the other is its practice.  And they are rather different from each other. 

• But the theory takes the view that individual liberty and freedom are the high point of civilization and then goes on to argue that individual liberty and freedom can best be protected and achieved by an institutional structure, made up of strong private property rights, free markets, and free trade: a world in which individual initiative can flourish.  The implication of that is that the state should not be involved in the economy too much, but it should use its power to preserve private property rights and the institutions of the market and promote those on the global stage if necessary.

Interview with Harvey – Sasha Lilleyhttp://mrzine.monthlyreview.org/2006/lilley190606.html

• SL: Did this group see their role as promoters of these ideas in the political realm?

• DH: They took the view that state interventions and state domination were something to be feared.  And they weren't only talking about fascism and communism, but they were also talking about the strong welfare state constructions that were then emerging in Europe in the postwar period and also talking about any kind of government intervention into how the market was working.  They saw their role as very political, not only against fascism and communism, but also against the power of the state, and particularly against the power of the social democratic state in Europe.

• SL: The welfare state was characterized by a compact of sorts between labor and capital, the idea of a social safety net, a commitment to full employment -- you call this "embedded liberalism."  Up until the 1970s it was supported by most elites.  Why was there a backlash against the welfare state and the push for a new political economic order in the 1970s that gave rise to the political implementation of neoliberal thought?

The History of Neoliberalism

• Neoliberalism - the doctrine that market exchange is an ethic in itself, capable of acting as a guide for all human action - has become dominant in both thought and practice throughout much of the world since 1970 or so. Its spread has depended upon a reconstitution of state powers such that privatization, finance, and market processes are emphasized. State interventions in the economy are minimized, while the obligations of the state to provide for the welfare of its citizens are diminished. David Harvey, author of 'The New Imperialism' and 'The Condition of Postmodernity', here tells the political-economic story of where neoliberalization came from and how it proliferated on the world stage. While Thatcher and Reagan are often cited as primary authors of this neoliberal turn, Harvey shows how a complex of forces, from Chile to China and from New York City to Mexico City, have also played their part. In addition he explores the continuities and contrasts between neoliberalism of the Clinton sort and the recent turn towards neoconservative imperialism of George W. Bush. Finally, through critical engagement with this history, Harvey constructs a framework not only for analyzing the political and economic dangers that now surround us, but also for assessing the prospects for the more socially just alternatives being advocated by many oppositional movements.

The New Zealand Experiment – Jane Kelseyhttp://www.converge.org.nz/pma/apfail.htm

• New Zealand used to claim credit for being the birthplace of the welfare state, for being the first country to give women the vote, and for building a harmonious multi-racial society.

• Today, however, it is becoming infamous for what is known as the "New Zealand experiment." Economic theories which had never been tried, let alone proved, anywhere else in the world became New Zealand government policy--first at the hands of a Labour government from 1984 to 1990, and then continued with equal, if not greater, fervor by its National government successor.

• The "fundamentals"--market liberalization and free trade, limited government, a narrow monetarist policy, a deregulated labour market, and fiscal restraint--were taken as "given," based on common sense and beyond challenge. These radical policies were systematically embedded against change.

NZ “the perfect field trial”

• Kelsey’s study reviews the political underpinnings of the early 1980's, and the full dimensions of the neo-liberal programme imposed over more than a decade, spanning two Labour governments followed by two terms of National Party rule. Kelsey writes in the full knowledge that New Zealand became a privileged prototype for neo-liberal reform, endorsed by international agencies (IMF), business associations (European Management Forum) and think tanks (International Institute for Economics).

• New Zealand was the perfect field trial for extreme structural reform. It was small and geographically separate, it has a single-house parliament dominated by the executive and it was dosed up to the eyeballs with all the toxins that the reformers said were poisoning capitalism. Import controls, capital controls, strong trade unions, a redistributive welfare state, a large state sector; New Zealand was hooked on all the bad drugs….

• As a consequence of these reforms, inequality in New Zealand grew more rapidly than in any other country. The government created an underclass where none had existed before.

• http://www.guardian.co.uk/business/2002/jan/21/comment.debt

Welfare state regimes1. Liberal WS – means-tested assistance, modest

universal transfers; severely circumscribed by liberal work-ethic – limits of welfare; strict entitlement rules; state encourages market (US, Canada, Australia)

2. Corporatist-state – state bureaucracy replaces market as provider of welfare but upholds status, with strong Church backing & preservation of traditional family values (Austria, France, German, Italy)

3. Social democratic model - Universalist & decommodification of social rights with aim of promotion of equality

The Historical Development Welfare Models

• In reaction to the dominant individualist philosophy of the day, political philosophers proclaimed the duty of the state to secure the common good of all its members, typically defined in terms of morality, social cohesion and equity.

• The improvement of public and private morals was perhaps the least contentious of the aims, since it was widely agreed that ignorance, disease, fecklessness, drunkenness, criminality and squalor were associated with extreme poverty.

• social cohesion could not be achieved without equity, or justice in distribution, denied by the system of market rewards.

Education as welfare• Education is seen as fundamental to

the welfare state – for citizenship, political participation and democracy, and determining of employment and life chances

• Also fundamental means for the distribution of social goods and a way of achieving a fair, equal and decent society that is cohesive

The Crisis of the Welfare State

1. Anti-state critiques - ‘individualism vs community’ (Peters & Marshall, 1996)

2. Left-wing critiques e.g., Ivan Illich’s ‘deinstitutionalization’ and ‘deschooling’

3. New-right – attacks on ‘big bureaucracy’; decentralization, deregulation, devolution; growth of welfare dependency

4. Fiscal crisis of the state – oil shock of 1970s, aging populations & the inexorable rise in welfare costs

Anti-State critiques • From the late 1970s, a combination of anti-statist critiques

and public sector deficits created a climate of fiscal retrenchment. The New Right (neoliberals) argued that the constant enlargement of social welfare undermined economic growth, political legitimacy and traditional community and family values. Left-wing critiques emphasised the fiscal and legitimacy crisis.

• older economics literature emphasised the inexorable growth in the demand for welfare, based on the simple proposition that welfare was a ‘superior’ good (demand increases more than proportionally as income increases). (Endogenous)

• sociological explanations emphasise the exogenous growth in the demand for welfare. The welfare crisis is said to arise from the emergence of new categories of objective need – an ageing population, family breakdown, feminisation of the labour force, wage dispersion and unemployment – so that the crisis of welfare is essentially a crisis of adaptation.

Neoliberal critique of the WS

• Neoliberals are united by the belief that state intervention to promote egalitarian social goals has been responsible for economic decline, and has represented a violation of individual rights, self reliance and initiative.

• Neoliberals believe that equality and freedom are incompatible and that freedom construed in individual and negative terms (i.e., freedom from intervention) is indispensable for economic vitality and individual well-being.

• The theoretical underpinnings for this view are to be found, in part, in a contemporary rejuvenation of neoclassical liberal economic theory which privileges both the market as an institution above all others, and market values over all other values.

Neoliberal analysis (1)• Neoliberals have focused their attention increasingly on the

rising and apparently irreversible tide of welfare expectations, arguing that the welfare state has evaded both investment and work incentives.

• In their eyes, the welfare state has directly contributed to the economic recession suffered by Western countries since the mid-1970s.

• The combined effects of social policies -- including guaranteed minimum wages, superannuation, and the exponential growth of health and education sectors -- have strengthened organised labour vis-a-vis capital, augmented wages as against capital goods, and increased state borrowing's from itself, leading to a decline of profitability and capital shortage.

Neoliberal analysis (2)• Neoliberals argue that the so-called perverse effects lead to

greater state interventionism in both social and economic terms. But the more the state helps, they argue, the more it will have to help and at diminishing levels of effectiveness.

• Increasing levels of intervention, while leading to the current crisis of an imbalance between state receipts and expenditure, tends in the long term to rob economic liberalism of its vitality. "It sounds the death knell of the market economy, of competition -- in a word, of private enterprise".

• At bottom, the perverse effects of economic and social intervention represents to neoliberals a fundamental threat to individual political and democratic freedom. The policy solution is both simple and straightforward -- a revival of the classical articles of faith of economic liberalism; a return to the principles of a so-called free-market economy; a re-privatisation of the public sphere aimed at capital accumulation.

Welfare Dependency and the New Moral Ideal

• Neoliberalism has emerged as the dominant paradigm of public policy.

• Citizens have been redefined as individual consumers of newly competitive public services.

• The public sector itself has undergone considerable downsizing.

• Management has been delegated or devolved while executive power has been concentrated even more at the center.

• Nowhere is this shift more evident than in social welfare. There has been a clear shift away from universality to a “modest safety net”.

• The old goals of participation and belonging have been abolished. User-charges for social services have been introduced across the board.

Cuts to Social Welfare• There have been substantial cuts in benefits and other

forms of income support. • Eligibility criteria have been tightened up. Targeting of

social assistance has become the new social philosophy and there is a greater policing of the welfare state aimed at reducing benefit fraud.

• Neoliberals want to free people from the dependence on state welfare. The old welfare policies discouraged effort and self-reliance. Neoliberals hold that the welfare state was responsible for producing young illiterates, juvenile delinquents, alcoholics, substance abusers, and drug addicts.

• Government and state monopolies in the delivery of social welfare services has encouraged the growth of “dysfunctional families”. The common problem with health and education is that they are monopoly services run by the public sector. These services need the discipline of market forces. Neoliberals argue that the welfare problem as one that delivers benefits as of right which has led to a loss of personal responsibility.

New Welfare Rhetoric• The main impetus behind welfare reform, the New Right maintain,

is not fiscal, but moral. • The welfare state has robbed dependents of their status as moral

beings. Therefore, any state policy of assisting the poor ought not to be based upon the concept of welfare rights for the demand for rights removes the relationship between giver and the receiver from the moral domain.

• Sole parents stand out as the most disadvantaged of the disadvantaged. Poverty has a gendered and ethnic face and when we talk poverty we must talk not about individuals but families, specifically sole female parent families.

• The new welfare rhetoric of individual self-reliance, competition and enterprise advanced as a blanket and universal solution to the problem of welfare dependency simply does not respect the facts. To argue that the welfare state has caused dependency is simplistic and wrong-headed.

• To want to moralise and to pathologise the state of welfare dependency, is to hold the poor and disadvantaged responsible for being poor and disadvantaged.

Welfare, families & women

“What some writers are calling ‘the coming welfare wars’ will be largely wars about, even against, women. Because women constitute the overwhelming majority of social-welfare program recipients and employees, women and women’s needs will be the principal stakes in the battles over social spending likely to dominate national politics in the coming period. Moreover, the welfare wars will . . . be protracted, both in time and space. . . ‘the fiscal crisis of the state’ is a long-term, structural phenomenon of international proportions. . . And the fiscal crisis of the welfare state coincides everywhere with a second long-term, structural tendency: the feminization of poverty.”Nancy Fraser, ‘Women, Welfare, and the Politics of Need Interpretation’. In: Unruly Practices: Power, Discourse and Gender in Contemporary Social Theory, Cambridge, Polity Press, 1989, p. 144.

The moral construction of poverty

• Policy constructions of the poor and the moral dictates involving work, marriage and the domestic code.

• welfare policy occurs around the questions of who is morally excused from work, constructions of the domestic code, and who is excused from childbearing and child rearing outside of marriage.

• naming the problems of poor, solo-mother families as dependency tends to make them appear to be individual problems, as much moral or psychological as economic.

Some Useful Weblinks1. What is neoliberalism?http://www.socialistproject.ca/leftstreamed/ls1.php 2. “The essence of neoliberalism”, Pierre Bourdieuhttp://mondediplo.com/1998/12/08bourdieu 3. “Theorising Neoliberalism”, Chris Harmanhttp://www.isj.org.uk/index.php4?id=399&issue=1174. A Primer on Neoliberalismhttp://www.globalissues.org/article/39/a-primer-on-neoliberalism