The World on Fire - Neoliberalism and Civil Unrest
There is a wave of civil unrest travelling around the world at the moment. Obviously, there are a variety of reasons that are contributing to all this unrest, as different protests and movements are responding to unique circumstances that different nations are facing. However, there are a few common themes that can be observed in many of the ongoing protests around the world, particularly the rising cost of living, and government corruption. These themes are not unique to our era but, there are forces that are specifically responsible for their proliferation in the modern era.
I’m talking about neoliberalism. This is a term that gets thrown around a lot in leftist, anti-establishment and academic circles, but it remains largely obscure to the general public. I personally define Neoliberalism as: The fine-tuning of the state and capitalist system towards maximum profitability for businesses and economic elites. Its practices include the deregulation of the market, an anti-organized labour stance, privatization of the public sector, the expansion of free-trade, and overall pro-business policies.
This is a brief summary of neoliberalism. The ideology has a complex history and there are other aspects to it that are worth exploring. Since the 1980s neoliberalism has had an immense amount of influence on the world, and much of the global unrest that we are seeing can be traced back to it.
The World on Fire
There are quite a few protests movements that are ongoing or have recently ended as February 2020. I’m not attributing all of these to neoliberalism, as many are motivated by unique circumstances. I’m going to group them into a few different categories for clarification. (1)
There is, of course, the environmental movement that has been surging in recent years. Many different cells make up the wider environmental movement. Such as the climate strike movement. Which is the most global movements in history, active in over 150 countries. The Climate strike movement is the youth's response to our inaction on climate change. There are also groups like Extinction Rebellion that are practicing a more targeted form of civil disobedience. There is certainly a big discussion to be had about the contemporary environmental movement, but that’s not what this article is about. I’m going to be focusing on cases that have brought about wider and prolonged periods of civil unrest. The climate strike movement has remained orderly and peaceful in comparison to some of the other protests we are going to discuss.
Protests relating to Sovereignty: Catalonia/Spain
Protests in response to specific laws: Hong Kong/China, Indonesia, India
Protests due to dissatisfaction with the government: Bolivia, Russia, Iraq, Pakistan
Protests about a rising cost of living/political reform: Chile, Venezuela, Haiti Lebanon, Iran, France, Ecuador.
Many of these protests could arguably fall into multiple categories, for example, the 2019 Indonesia protests are certainly are about political reforms (2) but the issue of a rising cost of living isn’t really a talking point of that movement, so I categorized them as a response to specific laws.
You probably noticed that I grouped together a rising cost of living and political reform, initially, these may seem like separate issues but they are quite intertwined. I grouped them together because in the cases that I listed the civil unrest that arose due to an increase in living expenses quickly grew into larger movements that demanded larger systemic reforms. For example in Lebanon, the protests started as a response to a proposed $6 monthly tax on WhatsApp voice calls. This was the breaking point that brought hundreds of thoughts of Lebanese people out into the streets. The country was shut down by the protests as major roads, schools, universities, and banks were closed. With unrest in the air, the protesters called for wider reforms demanding better economic opportunities, better public services, an end to corruption, among other things. As a result of these protests, the government has scrapped the proposed tax and pledged to reduce the wages of politicians by half and offer financial aid to those in poverty. (3)
This is a common story for protests that are motivated by a rising cost of living, they often start due to a small increase in living expenses and become about much wider societal reforms, and it’s here where this wave of global unrest ties back into neoliberalism. The political and economic policies advocated by neoliberalism don’t favour the poor and middle class. In Chile, a country whose economy follows the neoliberal model, the people are fed up with the rising cost of living, especially considering that they have among the highest levels of wealth inequality in developed countries. (4) There is a sentiment running through the Chilean protests that the government is not doing enough to help the average Chilean. The people of Chile are well educated and they're showing that they are not ok with a two-speed system where the rich enjoy the fruits of everyone's labour while the rest of the population, struggles to get by. (5 & 6)
Something worth considering is the attention being given to the different ongoing protest movements in the media. In the western world, media conglomerates are part of the neoliberal machine. There has been a disproportional amount of coverage for the Hong Kong protest in comparison to other protest movements of the same size or larger. FAIR did a study comparing the coverage of the following protests movements: Hong Kong, Ecuador, Haiti and Chile in the New York Times, and CNN. Looking at the coverage of the Chilean protest from Oct 14th to Nov 22nd the New York Times talked about Chile 14 times and CNN 22, the same two outlets covered Hong Kong 59 and 92 times respectively over the same time frame. I think this disproportional amount of coverage speaks volumes, it's ok to push Hong Kong because of its a thorn in the side of China and generally a pro-western protest. (For the record I do support the protesters in hong kong.) The protests in Chile, Ecuador, and Haiti can be seen as anti-neoliberal / anti-colonial. Their lack of media coverage compared to Hong Kong shows that the western media don't want the conversations attached to these protests coming to the forefront of the political dialogue. Here is a graph from the study. (7)
Of the recent/ongoing protests, I think the following can be linked back to Neoliberialism: Chile, Haiti, Lebanon, Iraq (The Pre-airstrike protests), France, Ecuador, Russia, and Pakistan. These protests are responses to problematic government policies and economic injustice, both of which highly correlate with neoliberialism.
But is Neoliberalism really to blame for all this unrest?
Well to answer this I would like to further explore just what is Neoliberalism. What are the values and aspirations of this ideology? And I would also like to look at its overall history but with specific attention to its unique history in Chile.
It’s hard to pin down an exact date for the birth of neoliberalism as ideas are a rather fluid substance. One of the most commonly accepted timestamps for the founding of neoliberialism is April 1947 as this was the creation of the Mont Pelerin Society which was to be an international network of intellectuals whose goal was the promotion of neoliberal values. The group put together a draft statement of their aims. A final agreement of this draft was never was reached, but it is still worth looking at what they came up with to help us understand the original motivations for neoliberalism. “The draft statement argued that individual freedom could be preserved only in a society that protected private property and had a competitive market as the foundation of economic activity. Private property in terms of the means of production was seen as key to decentralizing power and preventing its concentration, which could otherwise jeopardize individual freedom. Freedom of choice across all domains of production and consumption—of the producer, worker, and consumer—was imperative for the efficient and satisfactory production of goods and services. Freedom of choice also extended to individuals who should have the right to plan their own lives rather than be directed by a centralized planning authority.” - Plehwe (8)
Among the most important people in the history of Neoliberalism is, Friedrich von Hayek an acclaimed Austrian economist whose ideas towards the free market and society are essential to neoliberalism. Another important figure is the American economist Milton Friedman, who mentored the next generation of neoliberal economists while teaching at the University of Chicago. Both of these men attended the inaugural meeting of the Mont Pelerin Society and were key members of the group. (8)
It’s worth noting that neoliberalism was founded as a response to centrally planned economies, the threat of communism and collectivist ideologies in general. Socialism and Nazism were seen as dangerous collectivist ideologies that were serious threats to society. These were timely ideas in the 1930s and 40s. Furthermore, Keynesian economics with its favourable outlook towards government intervention in the economy was seen as the encroachment of collectivist ideology in the west. (8)
In opposition to this Neoliberalism has made itself out to be a champion of individualism and greater freedoms. These are meritable causes that are nearly universally acclaimed. Very few oppose societal values of liberty and the greater ability to live and express oneself freely. (9) These are after all good ideals that many people can get behind them. Neoliberalism is very focused on economics, so a big part of the greater freedoms that it promises is economic freedoms. In opposition to Keynesian, and centrally planned communist economies, Neoliberalism seeks to remove any obstacles and interference that could hinder the free market.
The textbook neoliberal approach to economics involves the deregulation and subsequent liberalization of trade and industry, Along with the privatization of state assets, for example, power plants, universities, and prisons. (8)
In his article on Neoliberalism in Guardian (10) George Monbiot wonderfully describes how these practices can be problematic:
“The freedom that neoliberalism offers, which sounds so beguiling when expressed in general terms, turns out to mean freedom for the pike, not for the minnows.
Freedom from trade unions and collective bargaining means the freedom to suppress wages. Freedom from regulation means the freedom to poison rivers, endanger workers, charge iniquitous rates of interest and design exotic financial instruments. Freedom from tax means freedom from the distribution of wealth that lifts people out of poverty.” - George Monbiot
This is the problem with Neoliberalism its laissez-faire approach to economics allows for corporations and the ultra-rich to bend the rules for their own benefit, and this results in a concentration of wealth and power in the hands of economic and political elites. Neoliberalism aimed to prevent the concentration of power in the hands of the state, but its lacking of regulation allows for power to be concentrated in private hands. It goes to the extreme instead of taking a more balanced approach. I just want to clarify here that I'm not saying that living in Stalinist Russia is preferable; I’m saying that going to the extreme in any direction is problematic. When Neoliberalism was founded Stalinist Russia wasn’t a historical boogieman for the follies of communism, it was a real place that was at odds with the western world. So neoliberalism can be seen as the West doubling down on free-market capitalism in opposition to the state-run economies of communism.
Neoliberalism's History in Chile
With the Cold War in our minds, let’s go back to looking at Chile. The year is 1970 and a socialist government was just elected in Chile with President Salvador Allende at its head. “We can’t have that in the western hemisphere,” said the CIA and they proceeded to undermine the new Chilean Government, eventually the CIA supported a coup d'état in the September of 1973. This coup toppled Chile’s socialist government and put the US-backed military dictatorship of Augusto Pinochet in power. (9)
In 1973 there was a serious recession across the capitalist world and political leaders were trying to find a solution. The Keynesian economic policies that had been in place since the 1930s weren’t working anymore. So they decided to use Chile as an economic experiment. They called in a group of economists now known as “the Chicago boys” as they followed the neoliberal approach to economics taught by Milton Friedman at the University of Chicago. This group played an essential role in the restructuring of Chile’s economy. This was the first time that neoliberal economic theory was put to the test across an entire economy. (9)
Following the counsel of the Chicago boys, Pinochet’s Government launched a neoliberal crusade, privatizing public assets, deregulation that further opened up Chile’s economy and natural resources for private exploitation. Foreign investment soared when it became legal for international corporations to repatriate profits from their Chilean operations. At the same time, Pinochet’s government violently put down the groups that could be considered leftist, such as labour unions, the community health centers that operated in impoverished areas, and of course leftist political groups. (9)
The Chilean experiment with neoliberal economics did prove successful at reducing inflation and restoring economic growth. Its success was then used to justify the implementation of neoliberal economics back in the USA & UK. Though neoliberal ideas have been around since the 1930/40s they were never mainstream until the early 1980s under Ronald Reagan in the US and Margaret Thatcher in the UK. (9) These changes were implemented to restore economic growth and mitigate inflation, back in the heartlands of capitalism, the initial success it brought allowed us to continue down the same path we were already on. We didn’t have to fully readdress our socioeconomic system, capitalism could go on. More so Neoliberalism unchained capitalism, it loudly proclaimed that regulations should not stand in the way of capital accumulation.
Neoliberalism Goes Global
Since the 80s neoliberal economic practices have become widespread throughout the world. Its spread has been spurred along through a variety of means, some states have naturally drifted towards Neoliberalism seeking to improve their economies, in some cases, NGOs have been responsible for pushing neoliberal policies (8), The IMF and World Bank have also been responsible for the proliferation of neoliberal policies in the developing world with the requirement for structural adjustment i.e. neoliberal economic reforms in order to receive development loans (11), and there are cases where Neoliberal has been installed after the toppling of a government by military means such as Chile, another example being the 2003 invasion of Iraq. Where after toppling the government of Saddam Hussein US advisers rebuild Iraq from the ground up modelling it in a neoliberal fashion. (9)
With the neoliberal model becoming standard economic practice across the world. As well as the obscurity of just what the ideology stands for has lead to the term Neoliberalism being used lazily as a buzzword for critiquing the absurdities of Capitalism. Neoliberalism is of course highly relevant to specifically late-stage Capitalism as there is a ton of interplay between them, but Neoliberalism is distinct in that it is a specific economic ideology it does not represent the entirety of Capitalism. Neoliberalism also relates to Classical liberalism but once more Neoliberalism can be distinguished by its greater attention to the economic side of liberalism, Classical liberalism is an ideology that casts a wider net, containing more aspects including both political and economic liberalism. The origin of liberal democracies can be traced back to classical liberalism. (12)
With hindsight and the ability to observe objective economic trends on our side, we can critically examine the results of the neoliberalization of the world. In his peace Neoliberalism as Creative Destruction, (9) David Harvey makes an argument that Neoliberalism has resulted in the restoration of class power, with its policies resulting in the concentration of wealth and power among the upper class. There is quite a bit of merit in the argument, especially when we look at economic statistics regarding the concentration of wealth.
Let's examine some statistics that examine inequality in the USA over the course of the 20th century.
The percentage of total income received by the top 1% richest households was about 16% in the 1930s. WWII and the post-war years saw this percentage gap fall, and in the 1960s it fell to around 8% which it hovered around until the 1980s when it began to increase reaching about 15% by the year 2000. (12) This tread of a widening gap continues to increase with the top 1% capturing about 20% of the total income in 2015 (14)
Another important inequality statistic to look at is total wealth. In the USA the top 1% currently have 40% of the total wealth owned. Since the 1980s the wealth gap has been steadily growing yearly. (15)
The recent rise of wealth inequality in the USA can be attributed to 40 years of Neoliberal policies that have favoured the will of corporations and the economic elite. David Harvey's argument that neoliberalism has resulted in the restoration of class power, seems to hold weight when looking at the growth of income and wealth inequality over the course of the neoliberal era.
A further consequence that can arise from the consolidation of wealth into private hands is that wealth gives one the ability to influence politics. Because of this neoliberalism can become a feedback loop. As corporations and the rich can afford to hire lobbyists to directly represent their interests to politicians, they can also fund think tanks to promote their ideas to the masses. They can finance multimedia campaigns to sway public opinion, or they can simply purchase and own media firms. They can hire an army of lawyers to protect themselves and countersue any person or group that threatens them. With wealth comes the ability to buy power and influence, this can then be used to manipulate politics in one's own favour resulting in tax cuts, new business opportunities, or simply a more favourable business climate. In this way, neoliberalism can lead to more neoliberalism down the line. (16) This further proves Harvey's point that neoliberalism functions to restore class power to the elites, at the expense of the poor and middle class.
Here is a powerful visualization of the wealth divide in the USA:
After looking at American’s inequality, let's go back to looking at Chile. The Gini index measures the inequality of nations on a scale from 0 representing perfect equality to 100 representing perfect inequality. The Gini coefficient ranks Chile at 46.6 and the USA at 41.5 this means that Chile has more inequality across its population than the USA. (4) Chile's high rate of inequality is one of the main drivers of the unrest that has consumed the country.
The 2019-2020 Chilean Protests
In October 2019 the first month of the protests, 22 people were killed, and upwards of 2,000 people have been injured. There have also been over 6,000 people arrested. Multiple riots have broken out throughout the month and some of the more radical protesters have burnt down subway stations, trains, buses, and even the office building of an energy company was set ablaze. Chile is truly in a state of unrest. (17 & 18)
These protests first started on October 6th as a response to a 4-cent (In American Dollars) hike in subway fares. The Protest quickly grew into something much larger, on October 25 there were an estimated 1.2 million people gathered in Plaza Italia in Santiago which has since been dubbed Dignity Plaza. (16) The protesters are calling for sweeping socioeconomic reforms in Chile, many of which are focused on alleviating the high cost of living in Chile. There is also talk of drafting a new constitution in April, as their current constitution dates back to the Pinochet era. The current constitution has seen some revisions but it is still very much a neoliberally framed constitution. (1 & 17)
As discussed earlier Chile was used as the testing grounds for neoliberalism, and this legacy continues to this day neoliberal politics never left Chile. During his first term as president from 2010 to 2014 Sebastián Piñera pursued higher levels of privatization in Chile's economy. (1) This is in an economy where the poor and middle class were already struggling to get by due to the high costs of part-privatized education and health systems, and a privatized pension system that fails to provide pensioners with enough money to survive. (5)
This protest is the people of Chile saying no more to neoliberalism. They are demanding something be done to reduce the high levels of wealth inequality in the country as well as the cost of living. These 2 goals are relevant to one another, and it seems like the protesters realize this. Neoliberal politics allows for corporations and the rich to profit off the backs of the poor and middle class. Deregulation allows businesses to cut corners and externalize their production costs onto the whole of society. The privatization of the public sector introduces the motive for profit this typically leads to prices going up. The high degree of privatization in Chile has led to an economy where the rich are profiting off the country's soaring cost of living, and it looks like the masses have had enough of it.
To be fair I think it needs to be mentioned that Chile has often been seen a South America's golden boy. It is often seen as the most developed and politically stable nation in South American. Chile's success can be in part attributed to neoliberalism but as our discussion highlights, this has come at an often hidden cost. This is the inequality, the soaring cost of living and a feeling of disempowerment & contempt amongst the general population. These hidden costs have now risen to the surface in the form of civil unrest.
In a response to the unrest, President Pinera claims that he will take action to address inequality and high cost of living, specifically promising to up the minimum pension by 20%, fast-track a law to introduce a state critical illness cover, cut prices of medicines for the poor, and guarantee a minimum wage of $480 a month. (5) But these promises haven’t quelled the protests, there seems to be revolutionary energy in the streets of Chile. While Pinera's proposed solutions would be a good start, the protesters haven't backed down more substantial socioeconomic changes are wanted. (5 & 17 )
Will Neoliberalism Actually Die?
So what will come from all this unrest, will we see reform, will Neoliberalism actually die? Unfortunately, it's impossible to fully know what the results of the Chilian protests or any of the other ongoing protest movements will be. We can only speculate and hope for the best.
Civil unrest can lead to many different outcomes, the Arab Spring resulted in a plethora of different outcomes across the Arab world, from relatively peaceful reforms in Tunisia and Eygpt to the Syrian and Libyan civil wars. The French and Russian Revolutions were also the products of civil unrest, but so have countless other protests movements that did not impact history. The May 1968 French protests shut down Paris, during them it seemed that France was on the verge of socialism, but infighting on the left and the prolonged period of unrest backfired. 2 months of unrest and worker strikes, resulted in France reelecting the same right-wing president they had before the unrest of May 68. (19) The point I'm making is that protests can ignite the fires of revolution and change the course of history or they can be duds that never result in a substantial change. So it will be quite interesting to see what the results of these modern protests movements will be, will these protests be world-changing or soon forgotten?
I think and hope that these protests against neoliberalism will be important for the sake of humanity moving forward. The modern era is unlike anything that's come before us, we have massive well-educated populations, ever-advancing technology, AI / Automation, on the other hand, we're facing global problems such as rising levels of inequality, and the climate crisis. With all these factors and threats on the table, I think it's fair to say that its time to design new systems that better use and incorporate the tools unique to the modern age. I fully support the idea of a circular economy, we should be eliminating waste, and designing our economies for sustainability and widespread prosperity instead of an endless pursuit of economic growth. (20)
We need to realize that alternative systems are possible. We also need to identify the common threads between many of the global problems we are facing today. Chile and many of the other protest movements today echo many of the same calls made by the occupy movement of the early 2010s. What these protests are against is Neoliberialism in practice. It's interesting that neoliberalism is an ideology that operates namelessly, even though most people can see it's practices yet most would struggle to attach a name to it. Furthermore, neoliberal ideas are often preached as universally good notions that would benefit all, I wanted to show that this isn't really the case and that much of the underlying causes for this wave of civil unrest in the world can be traced back to neoliberal policies.
When I first learned about neoliberalism it was like finding the final piece to a puzzle that I had been working on for years. So many of the negative aspects of globalized late-stage capitalism can be traced back to neoliberal politics. The deregulation, and pro-business policies, have allowed or at least made it easier for corporations to shrug off responsibility and act unethically in the world. The expansion of free trade advocated for by neoliberalism has globalized our economies, this comes with its own series of pros and cons. Such as the exodus of manufacturing jobs in search of cheap labour, and the use of off-shoring practices to avoid taxes. Another aspect/byproduct of neoliberal capitalism is the influence of big money in politics. Our governments are in bed with corporate interests. These are forces that when working properly should be keeping each other in check, but instead, they are working together to protect the interests of the world's financial elite. The system is broken, and yet it refuses to die.
Unfortuaniltly I don't think Neoliberalism will die in 2020, perhaps it may begin to unravelling but this will be a process. For this is an ideology that has been prominent on the world stage since the 1980s. It's not a government that can collapse, its a collection of ideas that has ingrained itself into our society. Furthermore, it has many supporters who are in positions of power. The best we can hope for is that the Chilean protests and the other ongoing protests movements succeed. If successful they will hopefully result in substantial and experimental socioeconomic changes that can be used as examples for others to follow. As I said I think its time to start exploring alternatives and that's what these protest movements have the potential to lead to.
(1) The numbers that help explain why protests are rocking countries around the world, by Rick Noack - Washington Post
(2) Not just about sex: Indonesia's protests explained, by Andreas Illmer - BBC
(3) Lebanon protests: Huge crowds on streets as government acts - BBC
(4) Gini Index - World Bank
(5) Explainer: Chile's inequality challenge: What went wrong and can it be fixed? by
Aislinn Laing, Dave Sherwood, Fabian Cambero - Reuters
(6) 18 Killed as Hundreds of Thousands of Protestors Take to the Streets in Chile. Here’s What to Know, by Rachael Bunyan - TIME
(7) With People in the Streets Worldwide, Media Focus Uniquely on Hong Kong by Alan Macleod - FAIR
(8) Neoliberalism by Tejaswini Ganti - Department of Anthropology, New York University
(9) Neoliberalism as Creative Destruction by David Harvey - American Academy of Political and Social Science
(10) Neoliberalism – the ideology at the root of all our problems, by George Monbiot - the guardian
(11) Structural Adjustment - Investopedia
(12) Liberal Democracy - encyclopedia.com
(13) Neo-Liberal Dynamics: A New Phase? By Duménil, Gérard & Levy, Dominique (2004) - research gate
(14) One chart that shows how much worse income inequality is in America than Europe, By Emily Stewart - Vox
(15) Nation’s top 1 percent now have greater wealth than the bottom 90 percent, by Christopher Ingraham - Seattle Times
(16) The truth about lobbying: 10 ways big business controls government, by Tamasin Cave and Andy Rowell - The Guardian
(17) Why Chileans Are Protesting for a New Socioeconomic Order, By Peter Kornblu - The Nation
(18) Chile’s protest violence escalates as 3 die in fire at ransacked supermarket - South China Morning Post
(19) Events of May 1968 - britannica.com
(20) What is a circular economy? - Ellea Macarthur Foundation