Table of Contents
Introduction
In the first part of this paper, we will discuss the origin and development of neoliberalism, secondly, I will overview some of the criticisms of neoliberalism and in the last, I will forward my critique of neoliberalism from the Ethiopian context.
Meaning and Definition of Neoliberalism
What is Neoliberalism?
Neoliberalism has no clear definition and précised connotation nevertheless different thinkers commonly define it as the absence of limited intervention of the state in the market.
The projects of neoliberalism on its establishment were either Utopian or political projects; the first one aimed to realize a theoretical design for the reorganization of international capitalism; whereas the second one aimed to re-establish the conditions for capital accumulation and restore the power of economic elites (Harvey, 2005).
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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 (Harvey, 2005).
Neo-liberalism is the formation of economic and political policy in which individuals are free and liberated and the role of the state is limited. The substantial role of the state in neoliberalism is simply a guardian and prepare a comfortable horizon to individuals. Individuals are free from the excessive power of the government.
Harvey disclosed the ultimate roles of the state in this economic and political strategy, and these are: ‘to creating and preserving an institutional framework appropriate to such practices, giving Guarantee, the quality, and integrity of money, setting that military, defense, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets’ (Ibid). Thus, the role of the state particularly in the market is limited or minimum and individuals are free and it is taking out from the intervention of individuals market.
Turner also explained in the neo-liberal state, the state sovereignty is surrendered and personal and individual freedom can be guaranteed”, (2008).
Moreover, liberalism … begins with the recognition that men, do what they will, are free; that a man’s acts are his own, spring from his personality, and cannot be coerced (R.G. Collingwood). According to Collingwood, men are free to do what they want to do on the market and this implied the state does not intervene in individuals markets.
In neoliberalism, there is an excessive limitation of state intervention on the market and giving absolute freedom of individuals.
Neo-liberalism is the 1970’s economic and political strategy; it is the new adjustment or the reform of the class+ical liberalism. Classical liberalism was the dominant economic and political strategy that was in the US and Uk in the mid 19thc. ‘Classical liberalism’, is an economic-political ideology which ‘arose in tandem with the Enlightenment movement of the plate 17th and the 18th centuries which proclaimed reason as the foundation of individual freedom’ (Roy, 2010), it is emerged to give a response to the industrial revolution and urbanization in Europe and North America. This ideology initially concerned with the statement that individuals are free in the state. Hence, neo-liberalism connoted as a new or reform of classical Liberalism.
According to the figurative thinkers of classical liberalism John Locke, in the ‘state of nature’, all men were free and equal, therefore possessing inalienable rights independent of the laws of any government or authority. Naturally endowed with the right to life, liberty, and property, humans could legitimately establish only limited governments whose chief task consisted of securing and protecting these individual rights, especially private property (Ibid).
Turner explained the core strategy of neo-liberalism in four main principles. The first one is, it places stress on the importance of the market order as an indispensable mechanism for efficiently allocating resources and safeguarding individual freedom.
The second principle of neo-liberalism is the appearance of legal state with universal and strong law of a state; it is “(Rechtsstaat) is an instrument of law for the regulation of conflicting relations among autonomous individuals in a market society”. “The function of this state is to secure social cohesion and stability through the preservation of individual liberties.8”
The third principle of neo-liberal is ‘its advocacy of minimal state intervention’. This principle shows the role of the state is limited and minimal; it cannot intervene in an individual’s market. In short, Turner, argues, ‘The roles and responsibilities should be determined by the public interest’.
The last and core principle of the neo-liberal is concerned with private property. According to Turner’s saying, this principle disclosed that the neo-liberal is ‘A system of full private ownership forms an indispensable part of a neo-liberal social order, reinforcing the irreplaceable value of the individual against the collective.’ (Turner, 2008)
To sum up, there are four ultimate values of neo-liberalism and these are; private property, absence of state intervention on market, state as guardian, and individual freedom.
According to Harvey, the focal point and established character of neoliberalism are individual freedom and human dignity and it is deserved as a significant value of civilization. And, the freedom of individuals is determined by the market freedom of the individuals; individuals are responsible for their action in the market place. Harvey clearly said that ‘the assumption that individual freedoms are guaranteed by freedom of the market and trade is a cardinal feature of neoliberal thinking, and it has long dominated the US stance towards the rest of the world’ (2005). But I found this economic-political strategy inappropriate to generate development at the same time by expanding the freedom of individuals; rather it would be a cause for the market crises. Moreover, this strategy is illegitimate to apply in poor countries like Ethiopia.
The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulation’s welfare state. These recommendations include deregulation of business; privatization of public activities and assets; elimination of, or cutbacks in, social welfare programs; and reduction of taxes on businesses and the investing class (Kotz, 2000).
This paper argues that it is a problem of applying neoliberalism in Ethiopia for several reasons.
Some neoliberal states achieved economic progress 1970’s to 1980s, though 1990 this was changed. Though, ‘Japan and the major Western European economies have been relatively depressed in the 1990s’ (Ibid).
In the history of the neoliberal period state intervention, gross domestic product growth rates were declined. This state intervention, gross domestic product growth rates relates to the practical aspect of neo-liberalism as a reconstitution of the power of economic elites’ (Harvey).
Neoliberalism Failures
Despite the aim of neoliberalism was to realize a theoretical design for the reorganization of international capitalism and to re-establish the conditions for capital accumulation and restore the power of economic elites, but it failed to actualize the project. Harvey argues neoliberalism has not been very effective in revitalizing global capital accumulation (Harvey, 2005).
Critical Reflection
This part contains my criticism towards neoliberalism from the Ethiopian context; the neoliberal policy is not comfortable to apply in developing countries. There are several reasons why I would say the neo-liberalism is harmful to Ethiopia and other developing countries. Many African countries were suffered from this structural adjustment of neo-liberalism. One of my arguments against neoliberalism is the incompatibility to generate economy or development by expanding an individual’s freedom on market and privatization and the other ones is, the demolition of the native culture and indigenous tradition. In this paper, I would say to apply the neo-liberalism in one country we need to critically understand the economic, social, moral, and political nature of the country.
Accordingly, I would say applying neo-liberalism in Ethiopia is bad for the most two reasons: moral/cultural Impact and economic impacts.
Moral and Cultural Impact
In this paper, the first point of my criticism towards neoliberalism appeals to moral and cultural values. Ethiopia is one of the diversified countries with multiple cultures, values, norms, language, religion. Following this, there will be diverse interests and if there hence, applying neo-liberalism in this country is problematic and it will be disputable to the society.
As the national wide there are morally right and wrong acts according to the community. Homosexuality is one of the most immoral and socially wrong by the community; it is strictly condemned by the people in Ethiopia. According to all religions in Ethiopia that homosexuality is prohibited. The societies are tied by norms and values; they couldn’t do whatever they want to do.
However, neoliberalism recommends direct converse with the social and moral dogmatism of peoples in Ethiopia, that individuals are free. In this regard, the principle of neoliberalism never stands against homosexuality, rather neoliberal states promote, and indirectly enforce other countries to advocate, follow, and apply this strategy beyond market freedom. Therefore, it is difficult to negotiate the communal/social values and cultures and individual freedom.
This is primarily related to the notion of moral value and the individual’s conception of the good. And this reason makes applying neo-liberalism problematic in the country that related to moral and cultural aspects; it will destruct the indigenous moral and cultural values. These moral and cultural values have a substantial role in the economic cultivation of the country. According to Meles:
Concerning the issue of neoliberal political economy and social capital, Meles argues that creating the proper merge of norms, values, and rules to reduce uncertainty and transaction costs is a critical factor in accelerated growth and development. He noted that the creation of such social values and norms is called social development or social capital accumulation. Social development is thus not only an essential element of development but also a critical instrument of accelerated economic growth. He explained that the accumulation of social capital, which plays such a critical role in accelerating economic growth, is a public good that has increasing returns to scale. (MelesZenawi’s 2007 paper, ‘African Development: Dead Ends and New Beginnings’)
According to neo-liberalism that individuals have a free choice which means persons should be free on self-regarding activities.
Here on the neo-liberalist notion of ‘free choice’ there are several individual’s own choices to value their ends. But on the other hand, Ethiopian citizens are characterized by a multi-diversified, state of norm, culture, religion, and tradition even they share different choices in this regard when we apply neo-liberalism in our country as a theory of political economy different hitches would be occurred.
For instance, in this theory (neo-liberalism) there is not any universal criterion that employed us to detect citizen’s choice, following this it is too difficult to govern our choices since the choices are varied with the variation of our interests and desires. For this reason, the absence of universal criterion leads to the difficulty to give answer and unite in one all choices.
When we see in Kantian freedom all individual’s choices are subject to a universal moral law. Then, one becomes free (attains free will) by subjecting him/herself into a universal moral law. For this reason, we can remember n what we did yesterday, what we will do tomorrow, and what is right and what is wrong. Cite
However, in neo-liberalism, we can remember that what we did yesterday but we can’t predict what will we do tomorrow since our actions are varied with the incensement and variation of our desires( in this case I analogize neo-liberalism with fashion…it seems like a sort of fashion…). And we can’t say this moral duty is right and wrong since there is not an objective moral standard in neo-liberalism and individuals are free to do for what they want to do even if an individual breaking our norm, culture, religion phases. For this reason, there is no universally and intrinsically valid thing in neo-liberalism.
But I do not mean that it does not have the values of freedom and consumption rather Instead of boldly thinking and focusing on the freedom we should think of development since we are poor and developing.
This in turn leads to the weakening and destruction of traditional and communally accepted norms and values. Thus, I would argue it will be problematic applying this system in Ethiopia, since peoples in Ethiopia live with the center of tradition and communal accepted norms and rules and citizens feel the sense of embeddedness, cooperation, supporting each other, fraternity, compatibility, and they are going to be affected by the individualistic notion of neoliberalism.
However, in neoliberalism by the name of globalization immoral and culturally blamed values are practiced in some places today.
In neoliberalism man is free if he/she is a master over himself (over his own body and mind) and the state has limited intervention towards individuals activity; the activities that are concerned with one’s conception of good are related to private control than state control. Here, a government limits the activities that are harmful to others (limits crimes). But the government fails to restrict the harmless wrongdoing like homosexuality and prostitution which affects the person himself. In this regard, the norm, culture, and even religion of our country strictly deny/disallow such practices like homosexuality. For this reason, I would say, neo-liberalism protects us from harming others but it should not forcibly stop someone from harming themselves. Thus, if the state has no power to stop the people/individuals from harming themselves and their culture (value), its result will be the destruction of social norms.
Therefore, neo-liberalists’ notion of free choice, morality, and actuality of individual behavior leads to the development of abnormal or unusual behaviors (like homosexuality, lesbianism) upon a society.
So, based on the notion of the morality of the people, neo-liberalism is illegitimate to apply in Ethiopia, since Ethiopia is multi diversified and state of religion and norms. Moreover, it is difficult to apply it because of the neo-liberal idea of freedom is not inclusive or it does not satisfy the idea of those who favor a common good (like communitarianism and republicanism), and to those who need some objective rule on how individuals should live their lives (Kantianism).
Economic Impact
The other problem of applying neo-liberalism in Ethiopia is related to market privatization. speaking Ethiopia is the poorest country in the world; people have no sufficient food. Infrastructures are not well accomplished and people have no access to social services. People in Ethiopia have no access to health, education, water, electricity, and internet services. And, the government has limited potential to promote and access these all services to the people. The major source of income of the government of Ethiopia to promote infrastructures is the giant enterprises, like Bank, Telecommunication, water, and others.
When the government follows neoliberalism these institutions will be privately owned and the government will not have the financial income to give services and promote infrastructures to the society. In neoliberal state business/profitable institutions and companies would be transferred from the government to the private corporates and owned by them. However, in Ethiopian economic status, it is difficult to privatize these giant companies.
In this regard, I would say it is problematic to apply neo-liberalism in Ethiopia and Africa in general, because the major source of income for the poor countries, like Ethiopia, are these companies. For instance,
Sub-Saharan Africa, despite over two decades of neoliberal economic and social reforms, has not seen a market-based recovery. Instead of a market-based recovery, what many of the countries on the continent have seen instead is social, economic, and environmental collapse, while others have experienced escalating levels of violence and civil war, supported by the legacy of three decades of western sponsored militarization. (O’Manique, 2004, p. 169)
This Quotation indicates that when we come and think of the history of neoliberalism in Africa, in the past 30/40 years, Africa was forced to apply this ideology and also affected by this ideology. The consequences of this ideology are such: civil war, regional conflict, poverty, economic destruction.
But later on, African countries understand this destruction and after they escape and search for another path. First, neoliberalism is usually more associated with trade, capital, and the state regulation of these. As David Harvey claimed it is characterized: a move to open markets, low state intervention, free movement of capital and goods, and privatization of previously nationalized industries. And the state still has a role to play in providing defense and financial infrastructure, but it is more laissez-faire than interventionist.
Moreover, the problem of neoliberalism also appeals to the limitation of state intervention. The role of the state in neoliberalism is limited; it only acts as a guardian. Unless the government intervenes in the economic crises or inflation it would proceed to social dispute (disorder) conflict.
The Western countries and America intentionally advise Ethiopia/Africa just to apply this ideology, specifically: about selling and privatizing huge institutions Bank, Telecommunication, Electricity, and others. In this sense, the intension of the neo-liberal state is just to push the state out of economic/developmental activities and empowering few private investors to control the nation’s wealth and making the majority of social observers. Conversely, applying neoliberalism in Ethiopia is not advisable due to the necessity of state or government intervention in the economy to fill the gap in the market and fastening the economic development process.
In this regard, I agree with the former Prime Minister of Ethiopia, Meles Zenawi’s criticism of neoliberalism, “he argues that neo-liberalism results in poverty, unemployment, economic deflation. Meles argued, “the neoliberal paradigms advocacy of such a state in developing countries is thus likely to keep such countries held up in poverty traps” (MelesZenawi’s 2007 paper, ‘African Development: Dead Ends and New Beginnings’).
To sum up, I would say, the political-economic strategy of neoliberalism cannot generate economy and wealth, it simply theoretically targeted on the freedom of individuals. But, for the citizens of Ethiopia wealthy and economic prosperity is a necessary condition than any other thing agendas of neoliberalism. With this regard, Harvey well explained the economic failure of neoliberalism, “he clarifies or shed a light neo-liberalism has not so much been about generating wealth, but about redistributing it (Harvey: ).
