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Cultural Studies
CULT 320
Ariella Horwitz

 The theory of neoliberalism and the other is its practice. And they are rather different from each other. But the theory takes the view that individual liberty and freedom are the high point of civilization and then goes on to argue that individual liberty and freedom can best be protected and achieved by an institutional structure, made up of strong private property rights, free markets, and free trade: a world in which individual initiative can flourish. The implication of that is that the state should not be involved in the economy too much, but it should use its power to preserve private property rights and the institutions of the market and promote those on the global stage if necessary.  Liberal theory goes back a very long way, of course, to the 18th century: John Locke, Adam Smith  Then economics changed quite a bit towards the end of the 19th century and neoliberalism is a really revival of the 18th century liberal doctrine about freedoms and individual liberties connected to a very specific view of the market. And the leading figures in that are Milton Friedman in this country and Friedrich Hayek in Austria. In 1947 they formed a society to promote neoliberal values called the Mont Pelerin Society. They took the view that state interventions and state domination were something to be feared. And they weren't only talking about fascism and communism, but they were also talking about the strong welfare state constructions that were then emerging in Europe in the postwar period and also talking about any kind of government intervention into how the market was working.  The stresses within the US economy, where the US was trying to fight a war in Vietnam and resolve social problems at home. The United States started printing dollars, we had inflation, and then we had stagnation, and then global stagnation set in in the 1970s. The 1970s was, if you like, a moment of revolutionary transformation of economies away from the embedded liberalism of the postwar period to neoliberalism, which was really set in motion in the 1970s and consolidated in the 1980s and 1990s. The labor market should be flexible and open and free of any union constraints became very appealing in the 1970s  Paul Volcker brought inflation down quite savagely in about three or four years, but in the process he generated massive unemployment. And massive unemployment of course was disempowering for workers and at the same time the deindustrialization that I mentioned accelerated. So there was quite a massive loss of industrial jobs, manufacturing jobs, in the early 1980s. And of course that means less union power. If you close down the shipyards and the steel industry lays off people, then you have fewer people in the unions. The loss of jobs in the unionized sector disempowered the unions at the same time unemployment was rising; unemployment disciplines the labor force to accept lower paying jobs if necessary.  Because neoliberalization, in so far as it opens up the market, globally as well as within nations, in so far as it did that, it gave the Chinese an opportunity to suddenly venture into the global market in ways that could not easily be controlled from elsewhere. I think the reforms in China were initially meant to try to empower China in relationship to what was going on in Taiwan, Hong Kong, Singapore. The Chinese were very aware of these developments and wanted to compete in some ways with those economies. Initially, I don't think the Chinese wanted to develop an export-led economy, but what their reforms led to was the opening up of industrial capacity in many parts of China, which then found themselves able to market their commodities on the world stage, because they had very cheap labor, very good technology, and a reasonably educated labor force. Suddenly the Chinese found themselves moving into this global economy, and, as they did so, they gained much more in terms of foreign direct investment, so suddenly Chi
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