i aim in this blog to highlight the role of society and highlight the negative attributes within it. i know however that no human in the history of the world has or ever will find a solution in which all people are happy and treated fairly, all i can do is offer to highlight what i believe the issues are. In this post i focus on the Neo liberal world and how it leads to growth of class separation, and i hope to show my view point on the situation.
Class structure and the role neo liberalism plays
within it
Capitalism
is an economic and political system that has primarily emerged in the past 200
years resulting in dynamic growth in fields such as technology, consumerism and
health care. Its focus is based around the ability to gain capital. In the 1980’s
neo liberalism emerged as a modification of the capitalist system. It ‘proposed
that human well being can be advance by the maximisation of entrepreneurial
freedoms with in an institutional framework’ (Harvey 2007:145), that was best
represented through free markets, private property and trade. This system was
championed by the likes of Ronald Regan and Margret Thatcher, and their
governments became synonymous with privatisation of previously nationalised
enterprises such as the coal mines in Britain. Welfare institutions that had preceded
the neoliberal policies were severely cut back on. I will analyse the ways in
which the class system has been affected by neo liberal policies within the
societies it has been imposed on, and argue that the governments and
institutions imposing these policies are acting only for the benefit of a few
rather than for the greater good of society. To do this I will firstly analyse
how neoliberal policies work, then show the effects of it, with focus on the
southern cone of Latin America, and then look at how the system is perpetuating
itself.
David
Harvey argues in his paper neo liberalism
as creative destruction that neo liberalist ideals began to appear to
counter the ‘rising unemployment and accelerated inflation’ (Harvey 2007:149)
of the 1970’s that was spawning socialist ideals and creating angst among the
working classes. Ruling classes were beginning to be challenged, and Harvey
argues that neo liberalist ideals were championed by elites who were acting
decisively to ‘maintain their power’ (Harvey 2007:149). So how do these
policies work? At a time when economic growth was diminishing, a reorganization
of the economic and political system was needed, a system that sought to fight
socialist ideals and re establish economic growth emerged. The neoliberal policies
worked through articulating the idea of privatising institutions and emphasised
the need to slacken government regulations in areas such as banking in order to
create competitive markets that would lead to increased efficiency and growth
of capital. The neo liberalist policies created competitive institutions as
well as ‘opening up new fields for capital accumulation’ (Harvey 2007:154) such
as healthcare and universities. These enterprises, removed from government control
had far less regulations placed upon them and chasing profit became the key
goal leading to increasingly competitive markets. Under the neo liberalist
policies of capital accumulation the neoliberal companies and institutions
raised the prices of goods and services and striped down the amount of
employees they had in order to create a system could create profit as efficiently
and rapidly as possible. The system worked as a ‘redistribution of wealth’(Harvey
2007:155) via ‘accumulation by dispossession’ (Harvey 2007:155) in which the
financial resources of the working and middle class were dispossessed, and then
accumulated by those who control the neoliberal privatised enterprises. The
overall idea is that what is good for business is good for the country overall.
The privatisation of previously government controlled services such as
education and healthcare and the reduction in government regulation in areas
such as price regulation on products such as food led to a situation that
favoured the well of and excluded those who could now no longer afford those
services
Before
this system became globally hegemonic (Harvey 2007:145) it was initially tested
not in the United States or Britain but in the southern cone of Latin America. The
Pinochet regime that came to power in 1973 overthrowing the democratically
elected Allende government in Chile, and the Menem government of the 90’s in
Argentina were clear representations of this. In Naomi Klein’s paper the shock doctrine, the rise of disaster capitalism we see how through a combination
of terror and economic advising the neoliberal policies of Pinochet led to a
deeply divided and unequal society. Pinochet’s economic policies were guided by
the Chicago boys (a group of economist who had been educated in Chicago) who
advised Pinochet on neo liberalist policies. Following the Chicago boys advise
Pinochet ‘privatised some state owned companies, allowed new forms of
speculative investment; he flung open the boarders to foreign imports, tearing
down barriers that had long protected Chilean manufacturers… he also eliminated
price controls’(Klein 2007: 92). The result was that the country was flooded
with cheap imports and local businesses unable to compete were closing down
leading to record levels of unemployment (Klein 2007: 92). Milton Friedman from
the University of Chicago was the main advocate of neoliberal policies and he
advised Pinochet to take even more drastic neoliberal steps. Friedman urged Pinochet to cut
spending much further and emphasised the need for complete free trade
(Klein 2007: 94) in order to improve Chile’s economy. Education and
healthcare took the greatest hits (Klein
2007: 95) representing the removal of welfare institutions that had benefited
the lower classes.
At the time the result of the extreme neoliberal policies resulted in roughly
74% of the average families income going into buying bread and thus forcing
people to cut out on luxury items (Klein 2007:98). By the time Pinochet changed
economic policies the Chilean society had become deeply unequal with ‘45% of
the Chilean population falling below the poverty line by 1988
(Klein 2007: 100).’
whilst ‘the richest 10% of Chileans had seen their incomes raised by 83%’
(Klein 2007: 100).
Economic growth under the Pinochet regime did not benefit the masses, and it
was only able to be so drastically experimented with in society because of the fear
that the Chilean people had of the Pinochet regime.
Menem’s government instilled
economic policies that essentially rearranged Argentina society into an ‘asymmetrical
hourglass’(Guano 2008:182) , with an increasingly small middle class that was
being pushed into a growing lower class, via similar processes that took place
in Chile. Like Pinochet, Menem opened up Argentina to free trade and
privatisation and although many middle class people resented neo liberalism for
negatively effecting their position in society they ‘were enthralled with by
Menem’s pledge to bring Argentina up to first world standards’ (Guano 2008:184).
The city of Buenos Aires became a neoliberal play ground with the articulation
of public and private space (Guano 2008:182). Shopping malls sprung up with
that ‘offered safe separation between classes – that guaranteed that the
growing population of the slums would not interfere’ (Guano 2008:186) with the
lives of the upper and middle classes. The shopping malls essentially
represented modernisation that was available only to the upper and middle class.
Swanky new areas such as the redeveloped waterfront of ‘Puerto Madero’ (Guano
2008:189) in Buenos Aires created a
shiny façade of progress that worked as a form of ‘neoliberal propaganda’ (Guano
2008:190). The redevelopment and potential of consumerism ‘enthralled the crowd
even when personal possession was far beyond their reach’ with the promise of
progress enchanting all but benefiting a few (Guano 2008:203).
The
neoliberal system in which the gap between upper and lower classes is constantly
growing was and is able to perpetuate itself through various different
mechanisms. One of the main mechanism that allows for this system to perpetuate
itself is the link between elite universities and the financial institutions
such as the banks of wall street that have such a powerful say in global
finance, and neoliberal politics. These investment banks go directly to ‘Harvard and
Princeton’ (Ho 2009; 43) maintaining an active recruitment process at these
schools (Ho 2009; 66) which for the
investment banks are seen as the training grounds of the global elite. The
banks and universities work to create a culture of impressiveness and
‘smartness that is strategically utilized to bolster wall street’s legitimacy’ (Ho
2009; 69) with the smartness leading to market dominance (Ho 2009; 69) and the globalised nature of the banks meaning
these elite students who graduate into the banking system have a role not only
in America but are now becoming globally dominant (Ho 2009; 71). These banks
are money making neoliberal industries in which profit is the key focus, they
attract the students from the best universities and thus within business they
are globally respected. Educational institutions have played a key role in the
spread of neoliberal policies whether it be Milton Friedman and the Chicago
boys advising Pinochet or the Harvard graduates going to Wall Street.
Neoliberalism
separate classes because it gives those in privileged positions who are able to
pay for a good education a way to make even more financial gains, with the ‘top 1% of income earners in Britain having doubled their share of the
national income from 6.5% to 13%’ (Harvey
2007:150) in the space of twenty years. This is a
pattern which has been repeated throughout the world. The issue is that the
lower classes do not have an opportunity to counter the neoliberal policies
that place capital accumulation above anything else because with the removal of
the welfare state and the focus on profits they are being left behind and are
unsupported. Even I a left leaning human engage completely in a society that
engages in class separation. I pay a fee for my education in order to improve
my future prospects, a fee that many people who are below a certain economic
fresh hold cannot afford, and thus I am separating myself from the lower
classes. I also shop in shopping malls such as the pacific centre that separate
the public from the homeless of the downtown eastside of Vancouver. To address
the issue of class divide a societal change needs to occur or else the
situation will perpetuate, yet questions remain such how can change society? Will
we see a re-growth in the socialist state? And how willing are the upper
classes to give up the gains created through neo liberalist policies?
