The global order, shaped by international institutions, played a pivotal role in promoting these policies to achieve higher economic growth, improved human development, increased capital accumulation, and the creation of an idealized job market. This economic model, commonly referred to as neoliberalism, sought to transform the socio-political and economic dimensions of the world for the supposed benefit of its people. Key intellectual contributors to neoliberal thought include American economist Milton Friedman, Austrian academic Friedrich Hayek, Peter Saunders, and Robert Nozick. Political figures such as, Margaret Thatcher, and Ronald Reagan also played instrumental roles in shaping a world order grounded in neoliberal principles.
The end of World War II accelerated the adoption of neoliberal policies in Western-aligned nations, serving two key purposes. First, it aimed to counter the Stalinist model and curb the influence of the USSR. Second, it facilitated capital accumulation for the capitalist class while maintaining the illusion of developmental progress for the masses. The state-market dichotomy was strategically constructed to obscure class-based polarization.
This essay examines the outcomes of neoliberal policies and seeks to address critical questions: How were neoliberal policies exported to different parts of the world? Who are the primary beneficiaries of this economic model? Has the pursuit of freedom been realized under neoliberalism? Why is individualism considered essential for economic efficiency and development? Can the state function as a guarantor of freedom for the masses, or does true freedom necessitate the absence of state control? Has globalization improved human development indicators across societies?
A significant case study in the history of neoliberal implementation is the 1973 coup in Chile, in which the socialist government of Salvador Allende was overthrown by the military dictatorship of General Augusto Pinochet. The coup was backed by right-wing parties, the U.S. Central Intelligence Agency (CIA), and the authoritarian government of Brazil, as part of America's broader Cold War strategy to prevent the spread of communism in Latin America (Lowe, 1997). Under Pinochet’s rule, the moderate socialist policies of Allende were dismantled, and Chicago School economists were given the opportunity to experiment with neoliberal economic reforms. By 1980, these policies had reduced inflation from 1,000% to manageable levels, but the benefits were unevenly distributed (Lowe, 1997). While the ruling elite and foreign investors reaped substantial profits, the general population suffered economic hardship. The long-term consequences of these policies became evident in the 1989 general election, where the civilian candidate backed by Pinochet was decisively defeated. The Chilean experience demonstrated that neoliberal values predominantly serve the interests of the elite, as the structural foundations of neoliberalism inherently reinforce class domination by concentrating wealth and power within the richest strata of society (Harvey, 2007).
This was not a new phenomenon, as the theoretical developments of neoliberalism reveal the formation of rules favoring capitalist classes. Peter Saunders, in developing his own theory of social stratification, distinguishes three types of equality (Saunders, 1990). The first is formal or legal equality, which involves all members of society being subject to the same rule or law. However, he acknowledges that this does not mean that “everybody ends up in the same position.” The second is equality of opportunity, meaning that people have an equal chance to become unequal. He describes a society based on this principle as meritocratic. The third type is equality of outcomes, which Saunders rejects while accepting the first two. Drawing from Hayek, he argues that this form of equality undermines both equality of opportunity and legal equality. Furthermore, he does not differentiate between positive discrimination and discrimination, advocating for the removal of positive discrimination from society. Both Saunders and Hayek assert that inequality is justified because it promotes economic growth. Additionally, Saunders considers socialist regimes to be more repressive than capitalist ones. However, these views do not align with historical realities. The expansion of capitalism following the Industrial Revolution depended on the slave trade. In South Africa, the apartheid system and the capitalist free market separated racial groups, granting Black Africans very limited opportunities. Similarly, in Chile, Pinochet’s regime was more repressive than that of his predecessor, despite embracing a free-market system.
Saunders’ ideal vision of a society where social mobility is based purely on merit within a free-market system was refuted by the study of Gordon Marshall, Howard Newby, David Rose, and Carolyn Vogler (1998). Their research found that patterns of social mobility were influenced by class, even when educational attainment was taken into account. A broader analysis suggests that a student from a rural village may possess more merit, but their lack of social capital and symbolic capital—compared to a student from an upper-class urban background—would hinder their social mobility. The study clearly demonstrated that the free market does not ensure that merit is equally rewarded across all social groups. Therefore, the concept of social justice is essential to fostering a truly meritocratic society.
In the United States, the top 1%’s share of national income was 16% before World War II, but after the war, it declined to 8% and remained at that level for the next three decades. In the 1970s, the U.S. economy experienced a downturn—economic growth stagnated, real interest rates turned negative, and dividends and profits shrank. This created anxiety among the ruling class. Another major challenge to their monopoly was the rising tide of socialism and the increasing demand for entitlement-based rights in democratic societies. Following the implementation of neoliberal policies, the share of the top 1% rose from 8% to 15% by the mid-1980s (Harvey, 1997). However, a significant shift that cannot be captured solely through percentage figures is the absolute increase in wealth among the top 1%, as the U.S. economy had grown substantially since the post-war period. Additionally, these policies led to rising costs in education, healthcare, and other social sectors. The essence of neoliberalism lies in class warfare, as its policies reinforce class structures by restricting access to education, healthcare, and other essential services for the masses. Consequently, elements of social justice are crucial in contemporary economic politics shaped by neoliberalism.
The perpetuation of neoliberal policies relied on a combination of incentives and coercion. Western democracies provided substantial financial aid to newly independent countries for industrial, social, and political development. Simultaneously, capitalist nations orchestrated coups in various countries to establish free-market regimes, as seen in Chile, Iraq, and Afghanistan. The establishment of international organizations such as the International Monetary Fund (IMF), the World Bank (WB), and the World Trade Organization (WTO) served a singular purpose: to homogenize the global economy and counteract the influence of socialist economies. Neoliberalism promotes an explicit and self-conscious normative project of multilevel governance, which is consistent at the federal, regional, and global levels (Harmes, 2006). The World Bank’s World Development Report 1997 describes the horizontal and vertical separation of powers in the U.S. Constitution as the classic mechanism (1997, p. 49). Horizontal separation refers to the division of powers among government organs such as the executive, judiciary, and legislature, while vertical separation refers to the decentralization of power between central, state, and local governments. However, this federalism is not rooted in the classical constitutional model but rather in market-preserving federalism, which emphasizes the right to exit—the principle that corporations and individuals should have the freedom to exit the market at any time. This principle has been instrumental in shaping labor laws, as neoliberalism opposes trade unions in industrial settings and advocates for a hire-and-fire system.
Neoliberal economists glorify the supposed distinction between state and market, but is such a separation truly possible? Karl Marx was among the first to critique the theoretical and practical division between politics and the market in classical liberalism. He argued that social relations of production and inherent conflicts are embedded within the production process. Thus, capital markets are not neutral spaces for interaction between equal individuals; rather, they prioritize the interests of capital over labor. Production and exchange cannot be viewed as occurring in a non-authoritative, depoliticized manner. Ellen Wood summarizes the Marxist perspective, stating:
The differentiation of the ‘economic’ and the ‘political’ is, of course, not simply a theoretical but a practical problem. ..Capitalist appropriation and exploitation actually do divide the arenas of economic and political action and actually do transform certain political issues—struggles over domination and exploitation that historically have been inextricably bound up with political power—into distinctively ‘economic’ issues” (1981, p. 67).
Thus, in the liberal economic framework, the political arena is deliberately separated from the economic sphere. However, the coercive mechanisms of the state are increasingly being utilized by market forces to integrate labor into new market relations.
Karl Polanyi reinforced Marx’s argument in The Great Transformation by distinguishing between “embedded” and “disembedded” economic orders. Embedded economic orders are those in which the market and the state are integrated, and the market is seen as a means to an end rather than an end in itself. He argues that economic orders function within the broader social order that contains them (1944: 71). In contrast, disembedded orders are those in which politics and economics are separate, with politics being subordinated to the market, as seen in free-market capitalism. Here, instead of society being embedded in social relations, social relations become embedded within the economic system (1944: 57).
To further illustrate this point, Polanyi develops the concept of “fictitious commodities,” referring to land, labor, and capital. These are considered fictitious commodities because they are inputs of production rather than products created for sale. Therefore, the principles of supply and demand should not be applied to them in the same way as to other goods.
This can be understood through a simple example. If the demand for petrol is lower than its supply, the market will naturally lower its price. However, in a society where unemployment is high, industries may exploit the surplus labor by offering lower wages and fewer benefits. In such cases, workers will not remain passive; instead, they may organize strikes and protests, leading to political instability. This instability, in turn, threatens capitalist interests. Thus, while the commodification of land, labor, and capital may seem theoretically sound, in practice, it has disastrous consequences.
David Harvey identifies four key elements of the neoliberal economic system: privatization, financialization, the management and manipulation of crises, and state redistribution. The commodification, privatization, and corporatization of public assets have been defining features of the neoliberal project. New avenues for capital accumulation have emerged, reinforced by international institutions such as the World Trade Organization (WTO). For instance, the establishment of Intellectual Property Rights through the TRIPS agreement has led to the privatization of genetic materials, seed plasmas, and other biological resources. As a result, corporations now extract rents from the very people who played a vital role in developing these resources. A striking example of this is the attempt by an American company to patent certain forms of Bangladeshi folk music, forcing indigenous communities to pay for what they originally created.
The degradation of the global environment is another consequence of neoliberal policies, driven by the commodification of nature in all its forms. Intensive industrialization and agricultural methods, aimed at maximizing capital accumulation, have accelerated environmental destruction. This process can be understood as the systematic transfer of public assets from the state to private corporations.
The financialization of global capital is another byproduct of neoliberalism. This process is often facilitated through speculation, predation, fraud, and outright theft. Financial instruments such as stock options, Ponzi schemes, asset destruction through inflation, corporate fraud, and stock manipulations exemplify the greed and exploitative nature of capital accumulation. Eric Wolf notes that the interconnected contradictions of this system have intensified to the point where it now appears quasi-random. While this does not mean the market is incomprehensible, it does mean that future market developments are highly unpredictable (1997).
Additionally, neoliberalism has deliberately facilitated the transfer of wealth from poorer to richer nations. Brahma Chellaney observes that South Korea, for instance, encourages large corporations to move water-intensive industries abroad, as seen in POSCO’s relocation to the Indian state of Odisha for steel production. The neoliberal state also employs government programs and tax policies to redistribute wealth in ways that benefit capital accumulation. This process has fueled speculation in financial markets while exacerbating economic insecurity, homelessness, and distress migration, particularly from rural to urban areas.
Thus, neoliberalism has failed to provide the promised economic freedom and prosperity for the masses. Instead, it has become a tool for the elite class to reassert its dominance over the economic dimensions of society, further entrenching its power in other arenas. The violent and repressive means by which neoliberalism is enforced in various parts of the world reveal the true motives of militarily advanced nations—namely, the expansion of economic imperialism under the guise of post-colonial development. The term post-colonial holds little meaning for many developing and underdeveloped nations, as wealth extraction, military interventions, and externally induced political instability remain ongoing realities. The erosion of sovereignty through international organizations is an accepted fact in contemporary global politics.
Reimagining global economic mechanisms is essential to ensuring universal access to basic needs. Sustainable growth must take precedence over the ruthless exploitation of human and natural resources to restore social balance and stability.
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