Neoliberalism – which is a political and economic ideology that advocates for less government intervention in domestic markets – has reported dwindling support from even some of its dedicated supporters. The paper shall look at the reasons behind this occurrence by examining the business culture created under neoliberalism and some viable recommendations will be given to making this phenomenon conducive for business.
The business culture that developed under neoliberalism
Many economists, analysts, and stakeholders agree that neoliberalism has fuelled a capitalist culture in which a small group of people lives in very comfortable conditions while the needs of the majority keep being ignored. Here, individuals, corporations, and countries that already possess more resources and power have been empowered even further while the rest have been forgotten. In other words, capitalism has grown by leaps and bounds. (Harvey, 2005)
It should also be acknowledged that neoliberalism has fostered global dimensions in business. Many have asserted that one of the most instrumental forces of globalization is the phenomenon of neoliberalism. However, proponents and opponents alike have agreed that the elements of globalization have not been exchanged equally. Neoliberalism has perpetuated and rewarded Anglo-Saxon initiatives on a much higher scale than it has promoted the lives of people in developing or underdeveloped nations.
Because of this, most countries have witnessed greater power being granted to their leaders and powerful individuals as well. The latter observations have been prevalent in democratic as well as undemocratic nations. In the end, some of the theoretical assumptions made about the benefits of neoliberalism have not been realized. (Harman, 2007)
Neoliberalism has been at the forefront for promoting technological advancements and also for rewarding creativity. This is large because it has eliminated numerous hurdles spearheaded by national governments.
On the other hand, neoliberalism has caused a monopoly of various state’s economic systems by corporations. Now numerous firms have been granted similar rights to those rights granted to individuals and this has heightened their influence and power. As a result, society’s needs have been ignored and these effects have been felt in distant countries that have interacted with some of these multinationals. (Treanor, 2008)
Neoliberalism has also created a business culture that hinders exports and promotes imports. In other words, the phenomenon has failed to deliver on one of its most prominent promises. Proponents of neoliberalism such as Margaret Thatcher and Ronald Reagan asserted that many countries of the world would get richer if they adopted this form of trade. These advocates asserted that neoliberalism would restore the balance of trade in many developing nations. On the contrary, it has been shown that neoliberalism hampers the process of exporting manufacturing goods thus encouraging the entry of these very materials into countries.
It causes the creation of manufactured products in more developed nations and thus propagates more importation in developing or underdeveloped nations. In the end, poor countries remain dependent on foreign countries for commodities that they helped create through their resources. Therefore, their imports are much higher than their exports and their balance of trade perpetuates their state of poverty. Overly, poor countries keep getting poorer and the elite maintain their status as well.
Neoliberalism has created an immense focus on global institutions of trade and finance such as the International Monetary Fund and the World Bank. It has also propagated a series of free trade agreements and many regional issues. Opponents of this phenomenon have argued that emphasis on international bodies has subverted the powers of specific nations to control their destiny. (Treanor, 2008)
It has also been argued that neoliberalism hampers environmental sustainability because it promotes greater mobility of individuals. This has been brought on by the fact that neoliberalism encourages entrepreneurs to look for the most cost-effective place to do business even when that place is kilometers away from the entrepreneur under consideration. This means greater resource usage, greater pollution, and more environmental harm.
The neoliberalist’s concern is to further his economic interests; environmental concerns are relatively irrelevant to them. Many have therefore questioned whether the phenomenon is sustainable because if the very resources required by investors are being overused, then chances are that there will be fewer opportunities for future generations. In the end, capitalism is causing the death of more capitalism.
Productive values of neoliberalism and whether these can provide a viable alternative model for business
Will Hutton is in essence a representative of the British center left. He believes that current depictions of capitalism hence neoliberalism must be restructured and even calls for the adoption of a new or alternative model embracing several productive values. For instance, the United Kingdom needs to stop relying on the US as the latter’s capitalism is a ticking time bomb. Instead, the latter author argues that the best economic position for the UK would be within the European Union.
He claims that if the UK continues with its dependence on the US, it is bound to fail as the US has grown to become one of the most unequal societies in the western world. Hutton (2002) explains that this has been brought on by its adherence to traditional liberal values. In other words, one of the production values that Hutton offers as a viable alternative for business is the adoption of a model of neoliberalism in which free movement of capital is allowed but this is done in the European context.
Secondly, Hutton (2005) believes that another productive value is for the UK government to maintain minimal interference in citizens’ revenue. One way in which this can be achieved is through the introduction of a flat tax rate. This author believes that if Britain was to instate such a means of revenue collection, then it would encourage the creation of new businesses or lead to the implementation of creative ideas.
He says that a country like Germany has already embraced this system of neoliberalism and so has Russia. Hutton further explains that such a system can work if the poor are exempted from it. In other words, if the government only taxed those who earned a minimum of say ten thousand pounds annually then this would prevent oppression of such a vulnerable group. In essence, the latter author is trying to show that neoliberalism can work if government intervention through taxes is reduced to a very narrow and direct level.
In another article, Hutton (2008) argues for one more productive value – less government intervention in credit market planning. He believes that the market has the potential to assess consumer demand and meet its expectations more effectively than the government. However, he asserts that this has its risks, especially when dealing with long-term investments.
Neoliberalism has favored multinational corporations at the expense of the environment and society. It has furthered globalization and capitalism but in a negative light. However, Hutton believes that neoliberalism can still work for the UK if it cooperates with the right partners, if it minimizes government intervention through taxes and if the market was allowed to plan for its own s’ expectations.
Hutton, W. (2002). The world we’re in. London: Polity Press.
Hutton, W. (2005). “One tax that the rich will love.” The Guardian. 12.
Hutton, W. (2008). “This terrifying moment is our one chance for a new world.” The Guardian.
Harvey, D. (2005). A Brief History of Neoliberalism. Oxford : Oxford university Press.
Harman, C. (2007). Theorising Neoliberalism. Journal of International Socialism. 12(3): 67.
Treanor, P. (2008). Market, Ethics and liberalism. NY: the New Press.