Is there Room for Economic and Social Rights in a Neoliberal World? (I)

There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichmarks, rins, rubles, pounds, and shekels. (…) You get up on your little twenty-one inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM, and ITT, and AT&T, and DuPont, Dow, Union Carbide, and Exxon. Those are the nations of the world today. (…) We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business.

Arthur Jensen (CCA Chairman) in the film Network (1976)

If Mr. Jensen is right, we may legitimately wonder about the future of human rights in a world where nation-states have been substituted by transnational corporations and dollars have replaced ideologies. Perhaps, if anything, we should correct one of the statements of Mr. Jensen: Not all ideologies have disappeared. One is alive and kicking: Neoliberalism.

As a philosophical and economic theory, Neoliberalism has been around for about three decades. In spite of its short life, Neoliberalism has already reaped many successes and its power in today’s political economy is unquestionable. While neoliberals expand their influence across the globe, civil society organizations have started paying increasing attention to poverty and social exclusion. Particularly since the mid-1990s, transnational action networks work on economic and social rights as human rights[1]. Yet, thus far the global human rights community has been reluctant to point out the limitations imposed by neoliberal policies, which reflects its self-imposed “agnosticism” in the realm of political economy[2].

It is of critical importance for human rights organizations to be aware of the close interrelation between economic policies and the enjoyment of human rights, particularly, economic and social rights. The aim of this article is to discuss this connection with the following two main research questions in mind: 1) How can we explain the rise and current hegemony of Neoliberalism? 2) Can socioeconomic rights and Neoliberalism coexist?

Understanding the rise and hegemony of Neoliberalism

Peace and stability in the post-World War II era were possible thanks to the compromise of labor and capital. European and American workers accepted a capitalist management and a market-based economy; at the same time, business interests accepted that the state was going to focus on full employment, economic growth and the general welfare of the population, and that for this purpose, corporations had to resign themselves to a certain level of Keynesianism. The relative power of business groups was stronger in the US than in Europe, where Keynesianism went further and adopted the form of social-democracy. The post-war labor-capital class alliance, commonly referred to as “embedded liberalism”[3], brought high rates of economic growth during the 1950s and 1960s, but came to an end with the economic crisis of the 1970s, provoked by the oil embargo of the OPEC, fiscal crises in several countries, and debt crises in others, among other factors. At that moment of political, economic and cultural stagnation, business elites began to see unionized workers and their political figures as the main cause of their problems. Meanwhile, labor adopted a defensive attitude but did not manage to gather enough tools to respond to capital effectively[4]. In this context of mutual mistrust, in the late 1970s and early 1980s, capital prevailed: the time of Neoliberalism had arrived.

But what is Neoliberalism? I hereby borrow David Harvey’s definition: “Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade”[5]. More critically, Harvey adds: “Masked by a lot of rhetoric about individual freedom, liberty, personal responsibility and the virtues of privatization, the free market and free trade, (Neoliberalism) legitimize(s) draconian policies designed to restore and consolidate capitalist class power”[6].

Neoliberalism was not plucked out of the air. The arrival to power of Deng Xiaoping in China (1978), Margaret Thatcher in the United Kingdom (1979) and Ronald Reagan in the United States (1980) set the political scenario to push the Neoliberal agenda from public office. Besides, after his successful coup d’état in Chile (1973), Augusto Pinochet converted to the Neoliberal creed. From the very beginning, Pinochet’s dictatorial regime offered very good prospects for the revival of capital accumulation[7].

Neoliberalism was not born in a theoretical vacuum either. Soon after World War II, some academics began advocating for the institutionalization of an economically ultra-liberalized political system. This is the case, for instance, of the Chicago economist and 1976 Economy Nobel laureate Milton Friedman, who wrote Capitalism and Freedom (1962), where he argued that economic freedom is an “indispensable means toward the achievement of political freedom”; in other words, competitive capitalism would be the only economic regime that is compatible with democracy, so “economic freedom is an end in itself”[8]. Strangely enough, Friedman assisted Pinochet in the establishment of a neoliberal system in Chile, overlooking the horrible human rights violations committed by Pinochet in the absence of the tiniest commitment to democracy and political freedom.

The neoliberal project in Latin America adopted the form of the so-called ‘Washington Consensus’, a program established in the mid 1980s and early 1990s that broadly consisted of three subsequent stages: firstly, an initial period of stabilization, with spending cuts and fiscal austerity; second, a broader process of structural adjustments in the national economy, that is, privatization and labor reforms; and thirdly, export-led growth with trade liberalization[9]. The Washington Consensus introduced a new paradigm of development notably through two mechanisms: first, it partially globalized the development policy analysis, which had hitherto fundamentally been carried out within national frames of reference; and second, it shifted from historicism to ahistorical performance assessment[10]. In Neoliberalism the state is clearly seen “as part of the problem, not part of the solution”[11]. Consequently, Neoliberalism reconceptualizes poverty alleviation “as a process of dismantling social and political institutions that prevent poor people from reproducing themselves via the medium of the market”[12].

The process of neoliberalization has granted business interests the necessary mechanisms for the “accumulation by dispossession”[13], which is characterized by the following four features[14]: 1) privatization and commodification of land, work and public services; 2) financialization, with deregulation of the financial system, which leads to a speculation-based (instead of production-based) global economy; 3) management and manipulation of crises that entail the springing of the ‘dept trap’; and 4) redistribution of resources reversing the flow of the ‘embedded liberalism’ (from ‘upper to lower’ to ‘lower to upper’).

In addition to the accumulation by dispossession, Neoliberalism holds another asset of critical importance. Unlike other pro-capitalist philosophical approaches that mushroomed in the second half of the 20th century, such as libertarianism[15], Neoliberalism feels much more comfortable with socially conservative attitudes, like right-wing populism and neo-conservatism[16]. This does not mean that Neoliberalism and conservatism are necessarily the two sides of the same coin, but this correlation is not at all infrequent. This is clearly reflected nowadays by the discourse and mobilizing structures of the Tea Party[17]. It is noteworthy that this movement was born at the peak of a global crisis that is directly damaging the US economy. The strategy of the Tea Party has so far consisted in asking for neoliberal medicines to treat the illness caused by Neoliberalism itself. For that purpose, Tea Party leaders resort to a recurrent string of devils: ‘liberals’, ‘progressives’, ‘terrorists’, ‘immigrants’, ‘communists’, ‘Marxists’, etc., in an interchangeable way. The great power of Neoliberalism is that it can easily satisfy the two main desires of economic interests in the early 21st century: anti-(welfare)state at the economic level and religion and tradition-based values at the social level.

The rise of Neoliberalism over the last three decades is best understood with a Neo-Gramscian model of analysis. This type of analysis allows us to transcend the realist common meaning of the idea of ‘hegemony’. Realists understand hegemony as the ability of a state to dominate and impose its will over other states. One of the representatives of the realist view, Stephen Krasner, affirms that the international economic structure has experienced profound changes over the last two centuries, and these changes, he argues, “can be explained, albeit imperfectly, by a state-power theory: an approach that begins with the assumption that the structure of international trade is determined by the interests and power of states acting to maximize national goals”, namely, political power, aggregate national income, economic growth and social stability[18]. Another manifestation of the realist argument is Gilpin’s “theory of hegemonic stability”[19], according to which the characteristics of the world economy reflect the will of the hegemonic power, that is, the US since the inter-war period.

The Gramscian sense of the word ‘hegemony’ is substantially different to the one of Realism. Antonio Gramsci (1891-1937) enlarged the ‘state’ in order to include the whole of the political structure, that is, all social institutions, besides public authorities, that influence and shape people’s behavior: churches, educational bodies, civil society groups, corporations, etc. Hegemony becomes a point of reference for the assessment of the relation between social forces. In Gramscian terms, ‘hegemony’ refers to the ability of a social group to exercise a function of political and moral direction in a given society. The hegemony of a social class confers an aura of principles to the social order and shields the stability and cohesion of the state, while incorporating the material interests of the hegemonic class[20].

The rise of Neoliberalism has gone hand in hand with the “second great transformation” of capitalism: Globalization[21]. Globalization takes capitalism to its pinnacle and consolidates the “capitalist world economy”[22]. The spread of Neoliberalism across the globe responds to a deliberate strategy by a globalized economic interest: the “transnational capitalist class” (TCC)[23]. Almost sixty years ago, President Eisenhower famously asserted: ‘What’s good for General Motors is good for America’. In the early years of the 21st century, a global conglomerate of economic interests manipulates generally well-respected liberal values (such as ‘freedom’) in its own interest and exerts pressure (notably but not only through widespread media control) over the whole of the world arguing that ‘what’s good for business is good for everybody else’. This conglomerate of economic interests, this TCC, is the contemporary world hegemonic power.

Neoliberalism does not lead to the disappearance of the state, though. In Friedman’s words, “the consistent liberal is not an anarchist”[24]. Instead, the hegemony of the TCC requires the instrumentalization of the nation-state in its own interest. This is so because “capital as a social relation depends on the power of the state to define, shape and be part of a regime of accumulation”[25]. This is particularly noticeable in the current global crisis, when financial institutions rapidly and effectively benefit by state-funded bailouts at the expense of welfare programs. It is precisely in the context of this crisis when the study of the impact of Neoliberalism over the enjoyment of human rights (particularly, socioeconomic rights) is of critical importance.

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Koldo Casla

[1] For more details, see NELSON, Paul and DORSEY, Ellen, New Rights Advocacy: Changing Strategies of Development and Human Rights NGOs, 2008, Washington DC: Georgetown University Press; and CHONG, Daniel, “Economic Rights and Extreme Poverty: Moving toward Subsistence”, in BOB, Clifford (ed.), The International Struggle for New Human Rights, 2009, Philadelphia: University of Pennsylvania Press, pp. 108-129.

The discussion about the scope of socioeconomic rights is intellectually enriching but quite inoperative for the purposes of this project. Therefore, for the sole purposes of this article this author defines ‘economic and social rights’ as those rights enshrined in the 1966 International Covenant on Economic, Social and Cultural Rights, ratified by 160 states (up to March 2011).

[2] SAIZ, Ignacio, Rights in Recession? Challenges for Economic and Social Rights Enforcement in Times of Crisis, Journal of Human Rights Practice, Vol. 1, No. 2, 2009, pp. 277-293, at 287.

[3] RUGGIE, John G., International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order, International Organization, Vol. 32, No. 2, 1982, pp. 379-415.

[4] GOUREVITCH, Peter, Politics in Hard Times: Comparative Responses to International Economic Crises, 1986, Ithaca: Cornell University Press, pp. 28-34.

[5] HARVEY, David, A Brief History of Neoliberalism, 2005, Oxford: Oxford University Press, p. 2.

[6] HARVEY, D., The Enigma of Capital and the Crises of Capitalism, 2010, London: Profile books, p. 10.

[7] HARVEY, D., A Brief History…, op. cit., pp. 1-19.

[8] FRIEDMAN, Milton, Capitalism and Freedom, 2002 (1962), Chicago: University of Chicago Press, p. 8.

[9] MUNCK, Ronaldo, Contemporary Latin America, 2003, London: Palgrave Macmillan, pp. 52-53.

[10] GORE, Charles, The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries, World Development, Vol. 28, No. 5, 2000, pp. 789-804.

[11] GREEN, Duncan, Latin America: neoliberal failure and the search for alternatives, Third World Quarterly, Vol. 17, No. 1, 1996, pp. 109-122, at 109.

[12] TAYLOR, Marcus, “The Contradictions and Transformations of Neoliberalism in Latin America: From Structural Adjustment to ‘Empowering the Poor’”, in MacDONALD, Laura and RUCKERT, Arne (eds.), Post-Neoliberalism in the Americas, 2009, London: Palgrave Macmillan, pp. 21-36, at 34.

[13] See HARVEY, D., The New Imperialism, 2003, Oxford: Oxford University Press, pp. 137-182.

[14] From HARVEY, D., A Brief History…, op. cit., pp. 160-165.

[15] Libertarianism should not be deemed as a form of radical liberalism. Actually, it is rather the opposite: Libertarianism resembles much more the enemy first liberals stood against: Feudalism. See FREEMAN, Samuel, Illiberal Libertarians: Why Libertarianism Is Not a Liberal View, Philosophy and Public Affairs, Vol. 30, No. 2, 2001, pp. 105-151.

[16] See STERNHELL, Zeev, Les anti-lumières: Une tradition du XVIIIe siècle à la guerre froide, 2010, Paris: Editions Gallimard.

[17] MARCOTTE, Amanda, Who is the Tea Party really?, The Guardian, 25 February 2011.

[18] KRASNER, Stephen, State Power and the Structure of International Trade, World Politics, Vol. 28, No. 4, 1976, pp. 317-347, at 317-318.

[19] GILPIN, Robert, “The Rise of American Hegemony”, in O’BRIEN, Patrick Karl and CLESSE, Armand (eds.), Two Hegemonies: Britain 1846-1914 and the United States 1941-2001, 2002, Aldershot (UK): Ashgate Publishing, pp. 165-182.

[20] Several authors and articles have set the trend of Neo-Gramscian analysis in the study of international relations and international political economy. Two landmark pieces are COX, Robert, Gramsci, Hegemony and International Relations: An Essay in Method, Millennium: Journal of International Studies, Vol. 12, No. 2, 1983, pp. 162-175; and GILL, Stephen and LAW, David, Global Hegemony and the Structural Power of Capital, International Studies Quarterly, Vol. 33, 1989, pp. 475-499.

[21] HOWARD-HASSMANN, Rhoda, The Second Great Transformation: Human Rights Leapfrogging in the Era of Globalization, Human Rights Quarterly, Vol. 27, No. 1, 2005, pp. 1-40. The ‘first great transformation’ of capitalism happened in Europe, particularly in the UK, between the end of the 18th century and the World War II.

[22] WALLERSTEIN, Immanuel, The Capitalist World-Economy, 1979, New York: Cambridge University Press.

[23] STRANGE, Susan, The Westfailure system, Review of International Studies, Vol. 25, 1999, pp. 345-354.

[24] FRIEDMAN, M., Capitalism and Freedom, op. cit., p. 34.

[25] GILL, S. and LAW, D., Global Hegemony…, op. cit., at 479.


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