Neoliberalism? It doesn't exist Daniel Altman International Herald Tribune SATURDAY, JULY 16, 2005
http://www.iht.com/bin/print_ipub.php?file=/articles/2005/07/15/business/wbmarket16.php
Not long ago, Patrick Bond, an author and professor at the University of KwaZulu-Natal in South Africa, was sitting on an airplane, working on a presentation he was soon to make at Oxford. For one particular slide, he spent several minutes rearranging pictures of American troops' flag-draped caskets aboard a cargo plane and of the World Bank president, Paul Wolfowitz, dressed as an astronaut.
Never mind that this was a presentation about water commodification in South Africa - to opponents of "neoliberalism" like Bond, the supposed evils of free markets and expansionist foreign policy are one and the same.
With globalization having somewhat rehabilitated its image, opponents of free markets have settled on a new bugbear, neoliberalism. As with globalization, the word's interpretation is rather flexible. But to its enemies, neoliberalism apparently refers to an American-born urge to create unrestrained markets for everything, everywhere, even if it means overthrowing a government.
The problem is, the real neoliberals don't seem to exist. The U.S. government does not want open markets everywhere, nor do its main economic competitors. If they did, the poor countries so avidly defended by the anti-neoliberals might be in much better shape. The world's wealthy countries simply aren't serious about free markets across borders, and sometimes they struggle to create them on their own turf.
One can forgive poor countries for being fooled, at least initially. When President Bill Clinton signed the African Growth and Opportunity Act, which eliminated tariffs for dozens of African countries' exports, it certainly seemed like the United States was opening its markets wide. The Andean Trade Preference Act and the proposed Central America Free Trade Agreement looked like more steps in that direction.
For its part, the European Union has stuck to a range of special trade deals for its former colonies in Africa, the Caribbean and the Pacific while promising free trade agreements to its Mediterranean neighbors. Japan, the laggard, continues to impose heavy tariffs, especially on rice.
But tariffs and quotas are just two weapons in a country's protectionist arsenal.
Other barriers, like overly strict sanitary standards and country-of-origin rules, continue to keep poor countries' exports off American and European shelves. Corporate lobbyists also clamp the cuffs on specific products. Just ask a farmer in Mexico why avocados sell for pennies there but for dollars north of the U.S. border. Or ask a British wine merchant why California red wines cost three times as much in London as they do in New York.
In addition, subsidies for Western farmers give them a competitive advantage that has nothing to do with their fundamental ability to produce. At the recent Group of 8 summit meeting in Scotland, the rich countries agreed to end these subsidies, but they wouldn't say when. Even if they did, it might not matter. After the global textile trade agreement expired this year, supposedly ending tariffs and quotas after a 10-year phase-out, the United States and EU sought new restrictions almost instantly.
Many markets for services delivered from inside the wealthy countries also remain tightly closed. In Europe and Japan, the government still plays a role in important industries like energy and transport. And even among themselves, the wealthy countries can't agree whether to allow each other to compete in markets for air travel, insurance and other services. When was the last time you took an Air France plane from New York to Chicago?
In other words, opponents of free trade under the banner of neoliberalism must be dreaming - they've never seen free trade in real life, and neither has anyone else.
What seems to irk campaigners against globalization or a supposed neoliberalism is the idea that rich people are going to get richer at the expense of poor people. Yet this is not what free markets do.
When big companies find cheaper labor or raw materials outside their wealthy homes, they may make a profit in the short term. But when their competitors - a feature of free markets - do the same, then the savings are passed on to consumers as lower prices. And it's not as though the poorer people who sold that labor and those raw materials did so unwillingly; though the working conditions and bargaining power of poor people employed by big foreign companies may be subpar, their only alternatives often are subsistence farming or no work at all.
Meanwhile, the restriction of markets is responsible for keeping plenty of people poor, be they fruit farmers in Africa or the long-term unemployed in Western Europe. That is why demands for access to wealthy countries' export markets have crept their way into the vocabulary of the antipoverty lobbies. Yet strangely, the parties that claim to represent the poor in rich countries tirelessly defend the cumbersome labor regulations that prevent the young and the marginalized from finding work.
In short, the world is much further from free trade then either leftist protesters or glad-handing politicians would have you believe.
If the invasion of Iraq by the United States and its allies is, as some anti-neoliberals complain, merely aimed at securing cheap oil, then it fits perfectly with these other jingoist policies. Calling this package of economic and political initiatives neoliberal doesn't make sense, though. It's not new, and it's not liberal. Paleomercantilist, anyone?
Daniel Altman can be reached at daltman at iht.com.
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