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Neoliberalism and Development Single Cycle Degree programme in Comparative International Relations – Development Policies Second Cycle (D.M. 270/2004) Final Thesis Neoliberalism and Development Supervisor Ch. Prof. Francesca Coin Assistant supervisor Ch. Prof. Antonio Trampus Graduand Chiara Zadra Matriculation Number 812650 Academic Year 2015 / 2016 Neoliberalism and Development – Chiara Zadra RIC 812650 This page is intentionally left blank 2 Neoliberalism and Development – Chiara Zadra RIC 812650 TABLE OF CONTENTS LIST OF FIGURES AND TABLES………………………………………... p.6 ABSTRACT…………………………………………………………………. p.7 INTRODUCTION………………………………………………………….. p.9 PART 1 – THEORIES OF NEOLIBERALISM…………………………. p.15 1.1 IS THERE REALLY NO ALTERNATIVE?………………………….. p.16 1.2 WHAT IS THE NOVELTY OF 'NEO'-LIBERALISM?……………… p.20 1.3 THE SPHERES OF APPLICATION OF NEOLIBERALISM……….. p.23 1.3.1 The Role of the State……………………………………. p.23 1.3.2 The Market……………………………………………... p.25 1.3.3 The Opposition Market / State………………………….. p.31 1.3.4 Upper Class Power……………………………………… p.33 1.4 THE TWO ECONOMIC SCHOOLS OF THOUGHT……………….. p.38 3 Neoliberalism and Development – Chiara Zadra RIC 812650 1.4.1 The Austrian School……………………………………... p.40 1.4.2 The Chicago School……………………………………… p.43 1.5 CHRONOLOGY OF NEOLIBERALISM……………………………. p.46 1.5.1 ColloqUe Walter Lippman……………………………… p.46 1.5.2 Mont Pelerin Societ……………………………………... p.47 1.5.3 Embedded Liberalism…………………………………... p.53 1.5.4 The 1973 Chilean Coup d'état…………………………... p.57 1.5.5 The Consolidation of Neoliberalism………………………. p.62 PART 2 – GEOGRAPHY OF NEOLIBERALISM……………………… p.64 2.1 HOW NEOLIBERALISM AFFECTS DEVELOPMENT IN THE GLOBAL SOUTH.…………………………………………………… p.65 2.1.1 Trying to define development…………………………… p.65 2.1.2 Neoliberalism defied by the East Asian Miracle………… p.73 2.1.3 A departUre or a deepening of neoliberalism?…………… p.75 2.1.4 Neoliberalism and development civil society actors…….. p.78 2.1.5 ConclUsion……………………………………………… p.84 2.2 THE RELATIONS BETWEEN CORE – PERIPHERY…………….. p.86 4 Neoliberalism and Development – Chiara Zadra RIC 812650 2.2.1 Neoliberalism and the periphery: six geographical themes p.90 2.2.2 ConclUsion……………………………………………… p.110 2.3 CASE STUDY: MALAYSIA AND NEOLIBERALISM…………….. p.112 2.3.1 Malaysian Socio-Economic Growth…………………….. p.112 CONCLUSION…………………………………………………………... p.143 BIBLIOGRAPHY………………………………………………………... p.148 WEBSITES…………………..………………………………………….... p.157 ACKNOWLEDGEMENTS……………………………………………... p.160 5 Neoliberalism and Development – Chiara Zadra RIC 812650 LIST OF FIGURES AND TABLES FIGURES • Fig. 1 World Wealth Levels, 2016. Source: Credit Suisse Research Institute, Global Wealth Report 2016 TABLES • TABLE 1. Structural Change in GDP (% share) Source: The World Bank, World Development Indicators Online, http://data.worldbank.org/country/Malaysia • TABLE 2. Inter-Ethnic Average Income Ratios, 1970-2009 Source: Official Malaysia Plan documents. • TABLE 3. Resource Balance 2000-10 (% of GDP)Source: Malaysia, 2006, 9MP and 2011, 10MP. 6 Neoliberalism and Development – Chiara Zadra RIC 812650 ABSTRACT Despite the stifling financial crises and the always more frequently increasing criticisms, Neoliberalism is still enduring. Nevertheless, it has hitherto proven to be inadequate and irredeemable; global vulnerability and uncertainty, angst and widespread economic disparities demonstrate the unreliability of the beforehand promised outcomes of the globalized neoliberal society. Hence, neoliberalism interferes with the welfare of the majority; as a matter of fact, just a handful of certain persons definitely achieve economic prosperity. With neoliberalism, unnatural laws and practises typical of the market ideology, for instance, the logic of competition, have progressively penetrated in the everyday life of individuals. Moreover, the process of neoliberalization, in order to effectively implement democracy and mulishly boost economic growth in developing countries, has frequently been characterized by violence and coercive brutality. So, despite all of this, why is neoliberalism still regulating our logic when dealing with our idea of future? How is it possible to modify it or, alternatively, replace it, finding a new way to conceive the government of human beings? In this thesis we will firstly try to provide a comprehensive analysis of the theories, historical evolution and application of the neoliberal doctrine. Secondly, a focus on the geographical development of this phenomenon will be unpretentiously introduced, in attain to describe the consequences of the controversial application of neoliberal policies in developing countries in different parts of the world. 7 Neoliberalism and Development – Chiara Zadra RIC 812650 Finally, a more detailed attention will be devoted to the specific case of Malaysia. Precisely, we will investigate the last fifty years of the country's economic growth, to understand the effects and consequences due to the neoliberalization process which involved the country. 8 Neoliberalism and Development – Chiara Zadra RIC 812650 INTRODUCTION The meaning of the term “neoliberalism” has changed during history, also evolving to negative significations. It is a deceitful concept, suggesting different things to different people. Commonly we intend with “neoliberalism” a series of principles, philosophical, political and economic, which are not accurately specified. Generally, this theory promotes free market and few interference by the state on public life. Moreover, personal freedom and private property are among the individual rights neoliberalism firmly defends. Due to its derivation from the nineteenth century current of classical liberalism, the neoliberal theory is connected with the “laissez-faire” ideas. The appellation was spread globally from Chiapas, Mexico, after the Zapatista's collisions with neoliberalism. Over the last two decades, this theory has developed increasingly as a field of study. Neoliberalism has been largely criticised. Not only in the exploited global South, yet in the global North as well; as a matter of fact, there are many episodes to mention in different fields. One field I am really fond of is music. Many musicians of the “Western countries” have protested towards the new polices, especially during the 1980s in UK. As a case in point, after a failed attempt by Margaret Thatcher in 1980 to ban in her country the word “sandinista” – referred to the Nicaraguan guerrilla fighters who had dismissed the president Anastasio Somoza Debayle – the punk band The Clash decided in December 1980 to label their album Sandinista!, in which there are 9 Neoliberalism and Development – Chiara Zadra RIC 812650 songs including references to the politics of the iron lady.1 Nevertheless, despite all the criticism, neoliberalism is still enduring at the present day. The promises of globalization turned out to be highly unreliable. The nowadays situation is, to my opinion, disastrous: a report by Oxfam revealed that only eight persons possess the wealth of half population on earth2. This is definitely a consequence of the global capitalism and, therefore, neoliberal logics, which have increased the level of inequalities in favour of a handful of capitalists, bankers and multinational owners. These are somewhat a class of “untouchables”: they get even more and more rich, also thanks to the fact that they evade taxes and know how not to be punished (by several escamotages) (Hardoon 2017). Conversely, common people, who are getting increasingly poorer (the middle class is slowly disappearing), are severely punished when not paying taxes; in addition, there is always less assistance and welfare for average citizens (Hardoon 2017). Notwithstanding our socio-cultural progress, we still live in a reality where we have to fight to survive. To me, it is desirable to reach the point in which nobody will never be forced to exploit someone else in order to strive to earn a living. Throughout this thesis I attempt to provide a valid discussion of how neoliberalism endangers the international social equilibrium, especially when imposed 1 http://www.panorama.it/musica/joe-strummer-margaret-thatcher/ 2 Hardoon, Deborah, An Economy for the 99%: It’s time to build a human economy that benefits everyone, not just the privileged few. (Jan 2017), Oxfam Briefing Papers, Oxfam. 10 Neoliberalism and Development – Chiara Zadra RIC 812650 in developing countries, distancing itself from the welfare of the majority and from the logic of cooperation at the base of our social life. Hence, we will investigate the theories of neoliberalism, as well as the impacts it produces, in concert with globalization, on the process and advancement of democracy in the global South, during this contemporary scenario of global capitalism. “If you tremble with indignation at every injustice then you are a comrade of mine.” (Che Guevara). I personally feel moved when I learn about injustices. My aim is that as many people as possible may grasp the complexities of the present global situation. The topic of my thesis is really vast, hence I modestly hope that my work, dealing a theme so frequently tackled, may be adequate and readable. Furthermore, the subject of my thesis follows the specialisation in my international relation studies – developing policies – and issues which I personally feel interested in. The decision of adding the case study on Malaysia is due to my personal work experience in Venice with tourism – the encounter with several Malaysians in the city, allowed me to discover the remarkable transformation which involved
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