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CHAPTER 1

Polarising Development – Introducing Alternatives to Neoliberalism and the Crisis

Thomas Marois and Lucia Pradella

Polarising the Debate on Alternatives

Neoliberal economic policies, with their emphasis on market-led development and individual rationality, have been exposed as bankrupt not only by the global economic crisis but also by increasing social opposition and resistance. Social movements and critical scholars in Latin America, East Asia, Europe and the United States, alongside the Arab uprisings, have triggered renewed debate on possible different futures. While for some years any discussion of substantive alternatives has been marginalised, the global crisis since 2008 has opened up new spaces to debate, and indeed to radically rethink, the meaning of development. Debates on developmental change are no longer tethered to the pole of 'reform and reproduce': a new pole of 'critique and strategy beyond' neoliberal capitalism has emerged.

Despite being forcefully challenged, neoliberalism has proven remarkably resilient. In the first years since the crisis erupted, the bulk of the alternative literature pointed to continued growth in the BRICS (Brazil, Russia, India, China and South Africa) and in other big emerging market countries to affirm the necessary role for the state in sustaining capitalist development. New developmental economists have consequently reasserted themselves. Their proposals converged into a broader demand for global Keynesianism (Patomaki, 2012) – a demand that is proving to be less and less realistic in the face of a deepening global economic crisis.

Advocates of 'reform and reproduce' – be they new developmental or neo-Keynesian – share deep commitments to capitalism and the subordination of workers to the needs of accumulation. In contrast, this book represents a collaborative attempt by a group of Marxian-inspired scholars to explore real and potential alternatives to the exploitative reality of neoliberal capitalism. Despite varying approaches, contributors to this book understand that neoliberalism and the ongoing crisis are an expression of the fundamental contradictions of capitalism. They reflect on the alternatives that workers, women, peasants and oppressed peoples have defended and struggled to create. At the same time the book seeks to provide an analysis of capitalism, and its crisis, as a global phenomenon, and in doing so overcome academic divisions between development studies of the South and the study of neoliberalism in the North.

Importantly, a guiding theme helping to shape the book has been a refusal to accept nation-states as self-contained units of analysis: that is, the 'methodological nationalism' found in much of the developmental literature. Contributors instead seek to understand the case-specific dynamics of neoliberalism in ways that capture the global tendencies of capitalist accumulation as an integrated whole. In this approach contemporary development is not separated from existing labour and social movements, just as concrete alternatives depend on real social mobilisations. Capitalist development is taken as an inherently antagonistic and polarising process shaped by class struggle. Alternatives are assessed by the extent to which they enable the fulfilment of social aspirations for an equal and just existence free from exploitation and oppression. The contributors' critical analyses thus seek to reveal the contours of different and better possible forms of social development.

The book is structured as follows. Part I, Alternative Themes, develops a broad analysis of capitalist relations of production, social reproduction, climate change, crisis and alternatives. Part II, Alternative Cases, explores the specificities of capitalist development in Latin America, Asia, Africa, the Middle East, North America and Western Europe. The remainder of this Introduction is intended to orient the reader to the book's key concepts, with reference to specific contributors as relevant. It is organised around four sections. The first explores neoliberalism in historical and conceptual terms. The second considers the current crisis and the alternative opportunities it may or may not have opened up. The third questions the extent to which new developmentalist approaches offer substantive alternatives to neoliberalism. The final section then pulls together some of the vital theoretical and practical elements of what our contributors pose as alternatives. As a whole, the book intends to spur debate on the nature and varieties of neoliberalism, the social impacts of its crises, and the forms alternatives must take.

Interpreting and Resisting Neoliberalism

Neoliberalism is a historical phenomenon. In the early 1970s firms began to feel acutely the impact of falling profitability. Many managers and owners believed the mounting power of organised labour was responsible. Indeed, this emerging structural crisis of capitalism was amplified by increasing labour militancy and social opposition, and by the rising challenge of socialism and nationalism from the Global South – the greatest wave of decolonisation in world history (Arrighi, 2007: 136). The power of the United States reached its nadir with its defeat in Vietnam (1975), with the Iranian Revolution in the late 1970s, and with the spread of revolutionary struggles, notably in Latin America. It is against this backdrop that the rise of neoliberalism becomes understandable.

Neoliberalism's set of pro-market and anti-labour policies were first implemented by the brutal US-backed Pinochet dictatorship in Chile (1973). The monetarist economic principles of the infamous 'Chicago Boys' guided the process. At this time, however, many other governments in the South resisted initial demands by the Northern-dominated international financial institutions (IFIs), notably the World Bank and International Monetary Fund (IMF), to implement rapid 'shock therapy' structural adjustment programmes.

The 1979 to 1982 Volcker Shock changed matters dramatically. Paul Volcker, then head of the US Federal Reserve, allowed US interest rates to skyrocket from around 5 per cent to over 20 per cent, ostensibly to halt persistent inflation and to shock the US economy out of stagnation. This move sparked a global rise in interest rates and a wave of profound economic crises in Africa, Asia, Latin America and the Soviet bloc. Governments in these countries lost the ability to service their debts because of the dramatic falls in the prices received for and the quantity of their primary goods exported. This triggered the 1980s debt crisis, which opened an opportunity for governments North and South to press more systematically for neoliberal transformation.

Instead of mobilising workers and peasants against this new form of economic imperialism, governments in the South began to reorient their economies toward intensified export production in order to earn the foreign currency needed to repay their loans. With the fall of the Soviet Union, neoliberal shock therapy was also extended to Russia and other Eastern European countries. In the former Yugoslavia, Iraq and Afghanistan, Western governments mobilised their military power to facilitate the entrenchment of neoliberal policies at a terrible human cost.

Neoliberalism has entailed processes of contested socio-economic transformation. Amidst great popular resistance and economic instability, post-war state-led strategies of development gave way to market-oriented neoliberal ones, or the so-called 'Washington consensus'. The economist John Williamson identified ten policies characteristic of the consensus: fiscal discipline, reduction in public expenditure, tax reform, financial liberalisation, market-determined exchange rates, trade liberalisation, an open door to foreign direct investment, privatisation of public service and state-owned enterprises, deregulation, and secure property rights. These policies have led to higher unemployment, worsening social inequalities, widespread impoverishment, peasant land dispossessions, unsustainable urbanisation and increased worker exploitation.

Contributors to this book describe many of the specific developmental transformations in the Global South, and how neoliberal processes have led to an expansion of the global reserve army of workers and accelerated international migration. At the same time, financial and trade deregulation have enhanced the power of finance capital and multinational corporations, which they have used to pursue the outsourcing and offshoring of many industrial and service activities. This globalisation of production has brought with it intensified processes of ecological destruction.

Women and the poor are the most negatively impacted by the neoliberal privatisation of public services. As women increasingly enter into the workforce, the privatisation of public services magnifies their 'double burden'. Such transformations have been global, having negative impacts on workers in the South and, increasingly, in the North.

The neoliberal policies shaping these transformative processes are derived from neoclassical economic theory. Neoclassical theory obscures and naturalises the exploitative foundations of capitalism because it reduces labour to just another factor of production, not unlike other 'technical inputs' like land and capital. The social reproduction of workers is further assumed to be a private, genderless process restricted to the household, when it is in fact vital to overall capital accumulation processes. In not dissimilar ways, neoclassical economics tends to treat the environment as an externality. Further embedded in this kind of approach is a tendency towards methodological nationalism. Certain models presuppose that capital and labour do not move internationally and that international trade represents merely exchange of commodities between national units. It follows, in theory, that by promoting domestic specialisation according to a given country's comparative advantage, free trade would spontaneously stabilise participating 'national' economies at an equilibrium level, maintaining employment and growth in all of them.

With its emphasis on liberal, market-based notions of individual equality and freedom, neoclassical economics conceals underlying social polarisations and exploitative relationships characteristic of capitalism. In reality, neoliberal transformation favours the interests of the strongest capitals internationally (see Shaikh, 2005). Despite the proclaimed spontaneity of the market, moreover, neoliberalism does not lead to a retreat of the state. Rather, neoliberalism is marked by the class-based restructuring of the state apparatus in ways that have responded to the evolving needs of capital accumulation (for example, around new financial imperatives). What is more, as today's capitalism is dominated by Northern powerhouses like the United States and Western European countries, the extension of capitalist relations globally embodies these imperialist powers' aspirations to retain supremacy in the hierarchy of states.

Neoliberalism, in fact, has always occurred through and within states, never in the absence of states. Actually existing neoliberal transformations are mediated by the hierarchical position of a given state within the world market and by specific social struggles. Consequently, neoliberal transition in the United States is not the same as neoliberalism transition in India or Iraq, and each entails specific national, class, racial and gendered dimensions. Yet contributors to this book recognise that neoliberalism is a class-based political and economic project, defined by the attack of capital and neoliberal state authorities on the collective capacity of organised labour, the peasantry and popular classes to resist the subordination of all social, political, economic and ecological processes to accumulation imperatives. The subsequent consolidation of neoliberalism globally has thus been to the benefit of global capital, and has come at the expense of workers, women and the poor. Relations of imperialist domination, environmental exploitation, racial and gender oppression are constitutive dimensions of this class struggle.

Neoliberal consolidations nonetheless generate new social resistances. Many contributors to this book identify continuing processes involving the recomposition of working classes and the formation of important social movements. With the 1999 demonstrations in Seattle, these struggles assumed an inter-American character. Various indigenous groups, trade unionists, faith-based and women's organisations marched alongside environmentalists and farmers in a collective bid to shut down the World Trade Organization (WTO) talks (Burbach, Fox and Fuentes, 2013: 2). In the new millennium, the 'alter-globalisation' movement has attained a truly global scale. Yet the movement has not been without problems. Notably, the activists and organisations have failed to produce precise sets of collective demands or a coherent international political programme. Pre-existing antagonisms among workers and peoples across lines of national and social oppression were not overcome. The movement, as a result, failed to articulate collective resistance across national, regional and international levels (Prashad, 2013: 235). After the huge demonstrations against the war on Iraq (2003), it gradually faded away.

Still, resistances to neoliberalism grew thereafter, especially in the Global South. In some cases these made significant advances. For example, while the United States and other Western states were bogged down with military aggressions in the Middle East, US control over Latin America eased. Social mobilisations there enjoyed new spaces for action, which helped give rise to a variety of progressive governments less subservient to imperialist interests and the competitive imperatives of neoliberal development. In this book, Abelardo Marina-Flores suggests that progressive income redistribution and the reinforcement of regional integration processes are among the most significant achievements. Susan Spronk and Sarah Miraglia highlight the progressive, albeit imperfect, gendered dimensions of the Bolivarian transformative movement in Venezuela.

Neoliberal transformations also create new socio-economic conditions that may undermine US and Western hegemony. As several authors attest, for example, the relocation of industrial production towards East Asia has generated new centres of accumulation. Consequently, Western imperial powers now face a major challenge with the rise of China and India. So too have other big emerging capitalisms, like Brazil, Russia, South Africa, Indonesia and the Gulf States, become ever more important centres of accumulation. This has lent support to arguments suggesting global hegemony has started to shift from the West to the East.

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Copyright © 2015 Lucia Pradella and Thomas Marois.
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