What is the difference between globalization and neoliberalism

The most common conflation is between economic neoliberalism and neoliberal institutionalism. This could arise due to the terminological similarity and the superficial similarities in policy between these approaches.

One problem that arises from the lack of conceptual rigour is that any policy that liberalizes the domestic economy can be seen as a tendency towards a minimal state. Firstly, globalization is not one process driven by a hegemonic class committed to an extreme for of economic liberalism.

More specifically, it entails increased and swifter interconnectedness and synchronization of social activities across territorial dimensions deterritorialization Sheuerman In practice, its elements include increased international and cross-territorial communications and movement of goods and people. Secondly, globalization does not, and has not, affected the various social features and institutions of society equally or simultaneously throughout history.

Specifically, Mann a; b argues that there are four, or five, main areas of globalization: ideological, economic, military, political, and geopolitical. As such, globalization cannot be considered a unified process aimed at achieving a specific goal.

Thirdly, globalization is a phenomenon that has existed throughout history, propelled by political and technological factors.

As such, it cannot be easily attributed to a single political process. FDI is the act of buying companies or production facilities in a different country Cohen Hence, we see that a reduction in protectionism, which is associated with neoliberalism but also the other strands of liberal economic theory, is considered to be related to the present form of globalization.

Consequently, although globalization cannot in anyway be seen as synonymous with neoliberalism, it could in fact be a product of neoliberalism if this theory has instigated the political developments that have facilitated the current wave of globalization.

This shifts was notably instigated by the Thatcher and Reagan administrations, in the U. SOEs are companies where the state owns or controls a substantial part of the enterprise. Privatization is a loose concept but can be identified as the direct sale or the public listing of the entire, or a substantial part, of a SOE Megginson and Netter This is contrary to the other strands of neoliberal theory that argue that relying on market mechanisms are a better way to ensure correct pricing and economic efficiency due to competition Meginson and Netter This is also an aspect covered by other neoliberal theory but these strands would potentially allow for more government regulation and control of enterprise if they deem it beneficial for the aggregate national economy.

As such, the main difference between economic neoliberalism and other forms of liberal theory is that where the more moderate forms of economic liberalism would be likely to support privatization, economic neoliberalism necessitates it regardless of situational variations.

None of the theories specify whether or not the movement should be a short- or long-run process. Rather, the implementation of privatization policies is considered to have followed as a pragmatic response to the economic difficulties of the 70s and the need to reduce government expenditure.

As such, the policies could be inline with any form of economic liberalism or conservatism Marsh The Thatcher government became a model for the U. Reagan administration, which, during the late s, initiated a similar privatization program Tingle However, unlike the Thatcher government, Reagan seemed more inspired by laissez-faire , neoliberal doctrine, and anti-government themes. Furthermore, Henig Ibid. It was not until the late 80s that privatization became a worldwide phenomenon with the bulk of the privatization programs occurring in Latin America, and to a lesser extent in Asia and sub-Saharan Africa before peaking in the 90s with the liberalisation of the former Soviet-block European countries Meggionson and Netter However, the IMF is clear in its argument that privatization is supported due to its perceived positive impact on economic performance Brune, Garrett and Kogut According to neoliberal theory, taxation and redistributive policies are seen as an infringement on personal freedom and government interference with private property.

Neoliberal theory, if realized, would thus require the abolition of the welfare state. Nevertheless, in contrast to privatization, evidence for a reduction in redistributive taxation and government welfare provision is highly mixed.

Some authors have found no evidence to support the notion that there has been a decline in redistributive taxation while some argue that there is evidence to suggest that worldwide, the size of the welfare state has in fact increased Meinhard and Potrafke ; Rudra Others find no significant changes Cohen and Centeno , , while some find that increased exposure to trade has had a negative effect on welfare provisions in both OECD countries Garrett and Mitchell and sub-Saharan African countries Rudra As such, if there has been a reduction in the welfare state, this has arisen after globalization commenced, and can thus not be seen as an independent variable that has affected globalization.

This questions the very notion that there is a clear epochal distinction to be drawn between the Keynesian and neoliberal era. Hence, there seems to be no clear empirical grounds to argue that the proliferation of neoliberalism has led, or will lead, to a reduction or dissembling of the Keynesian welfare state.

This seriously undermines the very argument that neoliberalism has had a profound impact on policymakers worldwide, as well as the idea that neoliberalism has become the hegemonic political ideational discourse. Nevertheless, it is possible that although states have not illustrated a firm commitment to domestic neoliberal ideas, they may still have been influenced by its content in its foreign and trade policies. This theory states that a country can maximize its economic gains by specializing in producing and trading goods that it can produce relatively cheaply.

By contrast, the neoliberal argument is individualist and supports free trade on the notion that it provides individualists with increased consumer choices, freedom to conduct business transnationally, and a greater choice of where and with whom one wishes to conduct business.

Since World War II, there has been a clear reduction in trade barriers such as tariffs and quotas Madsen Similarly, the amount of trade worldwide has increased sharply in relations to GDP and output Hummels However, in a historical perspective, reductions in protectionist measures have often been the result, rather than the cause, of increased international trade Chase-Dunne, Kawano and Brewer Nevertheless, in relations to the GATT, it seems that trade has increased subsequently after each round of negotiation which has contributed to lowering trade barriers Goldstein, Rivers and Tomz , Nevertheless, barriers to trade, notably in agriculture and textiles, are still prevalent.

Hence, it is not the case that there has been a complete shift towards a deregulated economy. In addition, there has been a notable reduction in transportation costs since the last half of the 20 th century that is seen as a contributing factor to increased trade flows Hummels , Most importantly, global trade has had a relatively linear increase since the end of World War II and had already reached high levels before the s and the decline of Keynesianism.

The advent of neoliberalism can thus not be the cause of increased globalization Cohen and Centeno Lastly, globalization has had an unequal effect on international trading patterns, with a disproportionate increase in trade growth occurring between countries that traded with each other before the s Helpman, Melitz and Rubinstein , Neoliberalism Globalization and the Commodification of Global Culture — an article on neoliberalism that pays special attention to culture.

The Consequences of Globalization and Neoliberal Policies. What are the Alternatives? Claudia von Werlhof that examines the consequences of globalization and neoliberalism. Global Econ — resources from Global Exchange about how the global economy functions and how ordinary citizens can fight for a more just world, including information on global rulemakers and trade agreements.

Globalization The Three Tensions of Globalization — a short piece that addresses issues of individual choice vs. Globalisation: Emancipating or Reinforcing? These issues have historical significance.

Consider your resources. If you want to do this the right way, you have to make sure that you have enough resources to sustain the program. Check out the article " Bridging the Immigration Divide " to learn about the formation of the site and the role it plays in linking academic research to on-the-ground work in communities.

The progressive privatization of the global commons has been the primary focus of neoliberal or free market policy since the s. Until this very recent period in history, public resources were largely in the hands of local communities and nations who would distribute their benefits throughout society without an overriding profit imperative. With key commodity, agricultural and manufacturing markets already dominated by a handful of corporations, privatization has opened up a seemingly endless array of profitable opportunities.

Agricultural land, airwaves, water sources, energy sources, healthcare, banking, indigenous knowledge, plants, seeds and even ideas are now increasingly controlled and supplied by corporations for profit. Of great concern is the recent privatization of education.

In the UK, 59 learning academies are replacing existing schools, most under direct sponsorship from the corporate community who provide substantial donations to the government.

As a result, they have a substantial emphasis on business, enterprise and commerce, and are not accountable to the public in the same manner as ordinary schools. Government spin has ensured that the PFI is never referred to as privatization, although it plainly hands over substantial control of public services and resources in exchange for corporate financial aid.

Neoliberals claim that privatized services are more efficient than those run by the state. They believe that market competition and corporate efficiency can drive prices down for consumers. These arguments are used as a sales tool to convince the public and their governments, and privatization is rapidly advancing throughout the developed and developing world.

However, these assumptions are basically incorrect and often irrelevant when considering the functions and purposes of public utilities. Essential services are provided to citizens by their governments to meet basic public welfare needs such as the provision of energy, water and healthcare.

The provision of these services is a human right, and whether they are profitable is not a concern for the vast majority of people around the world. There are many relevant arguments against privatization, and little empirical evidence that privately run services are either more efficient or better value to their customers.

For example, privatization usually creates a natural monopoly, removing the possibility of competition that can benefit the consumer. In many sectors, such as energy, multinational corporations hold the reigns to the market, and through their strategic alliances they control critical aspects of the market such as price — again removing any theoretical market benefits.

And when consumer prices are reduced or a corporation tries to increase profit levels, it often comes at the expense of decent wages, labour standards and the environment.

The resulting economies of scale and efficiency gains come at too high a cost to society. The main issues are those relating to human rights, democracy, ownership, control and accountability. The provision of essential services is a human right, although many in the developing world go without basic services. But corporations are not accountable to the public, only to shareholders — whose priority is profit, not service. The profit motive does not influence government facilities; it can run services at a loss if the social need demanded it.

If a government cannot provide a service efficiently, they may be voted out of office by the public. The issue of water privatization remains one of the most controversial, affecting even the most affluent countries. The UK, for example, is currently experiencing legal restrictions on public water usage, whilst the operators, Thames Water, waste million litres a day through unfixed leaks alone.

This case highlights another point — corporations will not reinvest their profits in order to address a crisis. State owned suppliers on the other hand can reinvest profits to quickly improve standards. At the global level, the coercive influences of the WTO, IMF and World Bank have left little option for many developing countries other than to allow progressive privatization of their public goods and services.

Through trade agreements and structural adjustment programs, the international financial institutions have secured a steady income for their corporate counterparts. Foreign investment in this way results in the foreign repatriation of profit — taking money out of a local system. This reduces industry in the country and undermines local social and economic development.

In this situation, citizens are forced into dependency upon foreign companies and their goods and services, completing the vicious cycle. Water privatization in Bolivia was enforced in as a condition to a loan by the World Bank, in partnership with private interests such as the French multinational Suez. It is not profitable for a corporation to control water distribution in areas of deprivation; they have little incentive to supply to those most in need if they cannot pay for the service. Publicly owned and managed water facilities, with their primary focus on meeting welfare needs and not profit, is best placed to undertake this service.

Further analysis often reveals more complex causes to this impoverishment. These range from unique environmental conditions, such as the lack of proximity to water in sub-Saharan Africa, to the cumulative effect of colonization, political interference and unfair trade structures imposed by dominant countries. In such countries, corporations can often reinforce corrupt practices. In such cases international attention must focus on providing foreign assistance to create more efficient state controlled public services.

When essential services are privatized, a two-tier system is often created. Prices are set by the market and those who cannot afford to pay, go without. Poverty reduction and development can only occur when these basic services, which are often unavailable in poverty stricken areas, are guaranteed to all. Government commitment to provide basic human needs was affirmed in the UN Universal Declaration of Human rights, and as such governments must uphold their commitment and not succumb to neoliberal pressure to relinquish essential services to market forces and private interests.

Neoliberal ideology embodies an outdated, selfish model of economy. It has been formulated by the old imperial powers and adopted by economically dominant nations. Given the state of the global trade and finance structures, wealthy countries can maintain their economic advantage by pressurizing developing countries to adopt neo-liberal policies — even though they themselves do not.

Understandably, many commentators have described this process as economic colonialism. The ultimate goal of neoliberal economic globalization is the removal of all barriers to commerce, and the privatization of all available resources and services. In this scenario, public life will be at the mercy of volatile market forces, and the extracted profits will benefit the few.

The major failures of these policies are now common knowledge. Many countries, particularly in Latin America, are now openly defying the foreign corporate rule that was forced upon them by the international financial institutions.

In these countries, economic ideologies based on competition and self interest are gradually being replaced by policies based on cooperation and the sharing of resources. Changing well-established political and economic structures is a difficult challenge, but pressure for justice is bubbling upward from the public. Change is crucial if the global public is to manage the essentials for life and ensure that all people have access to them as their human right. Skip to main content.

Search form. Neoliberalism and economic globalization 23 November Introduction After the Second World War, corporate enterprises helped to create a wealthy class in society which enjoyed excessive political influence on their government in the US and Europe.

Economic Growth Economic growth, as measured in GDP, is the yardstick of economic globalization which is fiercely pursued by multinationals and countries alike. Free Trade Free trade is the foremost demand of neoliberal globalization. Deregulation Access to new markets and foreign resources is not enough.