Neoliberalism K—UMich 2013 neg 1NCs 1NC: Generic

Democratization does not stem from the logic of capitalism – the democracy their ev references is undemocratic

(Tamas, “Globalisation and prospects of the world society,” CENTRAL EUROPEAN POLITICAL SCIENCE, Vol. 9, pp 12-13, http://cepsr.eu/wp-content/uploads/2013/02/ATT81762.pdf#page=9)//SG

(d) The unfolding of a “social market economy” in the developed European countries has been accompanied and partly preceded by a process of democratisation, namely by the evolution of a pluralistic democracy with a multi-party parliamentary system of more or less proportionate representation, regular free elections and equality of voting rights and power. These achievements, which resulted by no means from the logic of the market and capital, cannot be underestimated, even if they do not ensure a full and real democracy in its strict sense.(Such cannot fully unfold if social inequalities and unequal access to appropriate information cause differences in assertion of democratic rights, A pluralistic democracy presupposes the articulation, representation and reconciliation of the diverging, conflicting interests of all the different segments, strata or classes of the civil society and their proportionate participation in the process of decision-making and control over public issues.) In the prevailing world system not only an appropriate institutional and legal superstructure is lacking, but also a process of democratisation. No pluralistic democracy has developed, and no democratic representation and voting regime exist. The operation of all the existing international organisations,including all the UN bodies, is based upon the principle of state representation, which renders a false equalitybetween a state with a few thousand inhabitants and another one with more than a billion. The world society as a whole, with its social stratification, is not represented proportionally at all. The voting system of the international bodies, whether implying, accordingly, a “one state – one vote” principle (as at the UN General Assembly) or a system of “qualified votes” (as within IMF and WB), is markedly undemocratic.

The capitalist democracy is flawed for 2 reasons

1. It prompted the recent financial crisis due to mismanagement, AND

2. The idea of democracy promotion is no longer a legit goal

(Milja, “Politico-Economic Models of Democracy in Democracy Promotion,” International Studies Perspectives, pg 2-3)//SG

Yet, the present socioeconomic and political juncture has thrown some deep doubt on the relatively firm post–Cold War consensus that democracy and capi- talism are, first, superior systems, and second, naturally compatible and mutually reinforcing. Specifically, two different kinds of “crises” have challenged the self- evidence of “capitalist democracy”2 as the model to aim for. First, the last year has brought with it the unfolding of a global financial crisis, which has prompted many to question the self-evident superiority of the (neo)liberal capi- talist model (Krugman 2008; Soros 2008). While there has by no means been a complete change of mind among international actors on the virtues of capital- ism, this economic system and its more extreme “liberties” are now evaluated with more skepticism.Certainly, the perceived natural connection between capitalism and democracy, the assumption that these systems are somehow automati- cally complementary, has been viewed with somewhat more skepticism given the mismanagement and mis-regulation that has been exposed in Western capitalist democracies and, also, the perceived injustices attached to the publically funded bail-outs of failing firms and financial institutions. Second, the idea of democracy promotion,3 a policy area in which the consen- sus on capitalist democracy has so powerfully been embedded, has also faced a crisis over the last few years. It is no longer self-evident that Western projection of “capitalist democracy” is a legitimate or viable goal. The “recession” in the fortunes of democracy promotion has been brought about not only by the spectacular failures of democracy promotion in the Middle East during the Bush years and the alignment of democracy promotion with violent regime change, but also by the increasing reluctance by many target states around the world to accept the “Western wisdom” on democracy and what it entails(Diamond, 2008).The promotion of a liberal notion of democracy, and its unquestioned attachment to the promotion of market capitalism, has caused some consternation among those political actors and leaderswho would like to envisage alternative non-liberal or non-capitalist models of democracy in their home countries (Robinson and White 1998; Abrahamsen 2000).

[Continued – Footnotes] 2This notion of course is in and of itself a rather troublesome one within the literature, precisely because it con- joins economic and political agendas, something that appears as strangely uncomfortable for many democracy promoters influenced by liberal principles that separate “economic” and “political” agendas from each other. Yet, such notion has been used even by some of the liberal democratizers, such as Clinton’s democracy promotion team (see e.g. Hippler 1995:13). 3By democracy promotion I refer here, alongside Burnell (2000) to various democracy assistance and support mechanisms, which can range from more coercive forms of intervention and conditionality to more subtle forms of persuasion to democratize, such as grass-roots civil society support. The latter trends are today dominant in democ- racy promotion, hence the abandonment by some of the term “promotion” in favour of “assistance” or “support”.

They are wrong - Capitalism doesn’t spur democracy – they both just arose at the same time spurring the misconception that one is a product of the other. By their logic, capitalism creates fascist dictatorships

(Milja, “Politico-Economic Models of Democracy in Democracy Promotion,” International Studies Perspectives, pg 7-8)//SG

AT: Mexico

Mexico proves short term benefits of capitalism are outweighed by long term harms – leads to a complex survival of the fittest mentality amongst the working class

Lugo Ph.D in Anthropology at Stanford, Professor of Latina/Latino Studies at University of Illinois at Urbana-Champaign, 2008

(Alejandro, “Fragmented Lives, Assembled Parts: Culture, Capitalism, and Conquest at the U.S.-Mexico Border,” University of Texas at Austin Press, pp 127-132)//SG

Getting to Work: Bus Drivers, Factory Workers, and Security GuardsThe capitalist forces of globalization operating on the streets of Ciudad Juarez must effectively connect the industrial parks with the working-class neighbor- hoods. The key material nexus in this process is the rutera, which is continuously used by workers to get to work.The majority of maquila workers, after thirty years of industrialization, still cannot afford to buy their own car, so they ride the rutera, or the ruta, as they sometimes call it. Ruteras are vans or buses that are a product of the maquiladora industry itself. They have been in existence since the mid-196os. 1he articulation of neighborhoods, industrial parks, and buses, however, is not without tension. In fact,for late industrial capitalism to succeed in this endeavor, the factory workers and the bus drivers must be pitted against one other. On the one hand, the bus drivers must constantly strive to be efficient for both factory workers and (indirectly) multinational corporations.10 On the other hand, the factory workers need a reliable labor force of drivers to allow them to comply with corporate expectations of arriving at the factory on time. Yet, just like the workers, only in their case on the streets,the drivers are challenged daily by the necessary balancing of time and space within a chaotic urban environment, itself largely created by the needs of late industrial capitalism.Since the mid-198os, most ruteras have been buses(which resemble American public-school buses). In the early 1980s, they were minibuses. Before that, in the late 1970s, they were vans, usually Chevy vans. Before the vans, between 1968 and 1976, most ruteras were four-door cars. The size of the rutera has grown according to the growth of the maquiladora industry. If people have a hard time getting off the buses today, imagine trying to get out of the crowded four-door cars on time. In the beginning of the maquiladora industry, cars were preferred to normal buses because the former were faster and could get to the industrial parks on time . Before the industry arrived, there were only 2 types of expensive public transportation in Ciudad Juarez: transportes urbanos and transportes del valle (buses that circulated in the urban areas and those that connected the rural valley and the downtown section, respectively). Today, the "rural" areas that previously surrounded the city have practically disappeared; the agricultural fields have become new working-class neighborhoods and maquiladora industrial parks (including the major ones, San Lorenzo, Bermudez Park, andRio Bravo in Zaragoza, now a working-class suburb of Juarez). In this process, by the mid-198os, the rutera concept (using a fast-paced vehicle to transport factory workers on time) took over, and thus most ruteras today are buses that circulate and penetrate all corners of the border metropolis, from Malec6n Avenue (along the river in the north) to the Juarez Airport (in the south) and from Colonia Anapra in the west (now bordering Sunland Park, New Mexico) to Zaragoza in the far east (see Figures 4.1- 4.3).Consequently, as the city and the maquiladora industry grew, larger vehicles were needed. Today, the maquiladoras have helped create an urban environment in which huge buses push speed limits in the narrow streets of an unplanned and crowded city. The end results have been chaotic: automobile accidents have increased, often sending maquila workers, who are on their way to work, to the hospital.11 Also, workers have had to adapt their bodies to the wobbling movements of the buses that (while trying to beat other buses) constantly speed up and stop, sometimes from block to block, on mostly unpaved streets in the periphery, just as they have to adapt their waist and buttocks to the wobbling moves of the chairs on which they sit at the factories (two factories where I did participant observation had this "chair problem"-see Chapter 7; also see Fernandez-Kelly 1983).Since the beginning of maquiladora industrialization in Ciudad Juarez, there have never been enough buses or vans for the thousands of factory workers who need such public transportation to get to their jobs daily. Consequently, the driver (always a male), is always expected to pick up as many people as possibleand get everywhere on time.During key rush hours (between 4:30 and 6:ooAM, between 3:30 and 5:00PM, and between 11:30 PM and 1:00AM),it actually takes a while for someone to get out of the rutera; he or she has to struggle (push and shove) in the extremely crowded van or bus just to get to the door. Moreover, once in a while, a person does not want to walk the extra block. Sometimes people demand to be dropped off at exactly the place they want, not one block before, even if the rutera has been stopping consecutively in the previous eight or ten blocks.12 Thus, in the actual transporting of people from their neighbor- hoods to the factories, the individuals who probably feel the most tension in this environment are the drivers, who must drive and produce efficiently for the maquiladora industry (which in turn provides the passengers). Drivers are the individuals responsible for taking hundreds of people to work (50- 60 people easily fit on one bus at any given time). They are constantly caught in a contradiction between getting to the industrial parks on time and picking up everybody who is going to work, at least until the bus is full. Sometimes, workers would pressure the driver because he is causing them to be late.13 But the historical and material conditions responsible for the environment they inhabit are not recognized by the actors themselves. Instead, the workers and the driver end up blaming each other. Many times on the bus, I heard workers comparing andcomplaining about drivers, especially on the way to work.'4The factory workers, however, must balance a much more immediate economic dilemma when riding the ruteras: In no uncertain terms, being late or· being absent has serious economic consequences for the workers. In most factories, if the workers arrive late, after 6:oo AM, they lose the weekly and monthly bonuses as well as other benefits for that particular month (see Figure 6.5). At one of the transnationals where I worked, a worker can be ten minutes late with- out punishment. Between 6:10 and 6:30, tl1ey let you in, while keeping track of those who are tardy. After three "tardies," they "talk" to the worker, giving him or her a warning. Also, after 6:30, the guards might not let you in, sending you home for the day because the company might not want to pay you for nine hours when you have worked only eight and one-half. The guards themselves are capable of returning the workers as they see fit, as we will see below. These local inspections outside the factory are an everyday occurrence. As I recorded in my field journal (which I used to write at the end of the working day) while carrying out participant observation on the streets of Ciudad Juarez:It rained all night. I didn't think I was going to make it. I was late today.It was already 5:25 AM. I also got wet in the rain. Four men and a woman were at the bus stop. Two ruteras (buses) drove by but didn't stop. Three guys began running toward Surgikos (three blocks away), where the rutera usually unloads some of the people. The other guy and I did not run; we walked in the same direction. The woman decided to return home instead. Another rutera passed by; we waved, but it didn't stop. When we arrived at Surgikos, the three guys were still there, waiting. No one had picked them up. By 6:05 another rutera arrived. It was so fulL I tried to get in, but the driver couldn't even close the door, so he asked me to get down. I did. I waited till6:25. It kept on raining. Finally, I caught a rutera. . .. It had men and women. . .. This driver drove quite fast. This rutera went through San Lorenzo, a major industrial park; then we got to Bermudez Park, the largest and oldest industrial park in Ciudad Juarez, where this factory is located. 1arrived at the factory at 6:45AM . I was not the only one who was late. A woman walked in in front of me. The factory guards did not stop us. (Field journal, September 6, 1989)The next day, I wrote:I got up at 4:30, brushed my teeth, washed my face, put my clothes on, and took off running. I arrived at the same corner around 4:45 AM, at least half an hour earlier than the day before. A young woman around seventeen or eighteen years of age, brunette (morena), with long hair down to her waist, was already there waiting for the rutera. She told me that there is only one bus between s:oo and 5:15 AM and that it usually stops to pick up peopleat this corner. This "bus stop" on September 16th Street is about a 15-20- minute walk from where I live in the Colonia Hidalgo, one block away from Hermanos Escobar Street. The other ruteras, she said, usually don't stop because they come full from downtown, where they are stationed (there they pick up the people who have to ride to downtown from their neighborhoods in the western and southwestern peripheries: the most populated sectors of the city [see city population map, Figure 4.2]). Most people living in different parts of the city-west, southwest, east, and southeast-take one rutera to downtown; then another one from downtown to San Lorenzo or to Bermudez Park. A lot of people who live on the east and southeast of the city work in other smaller industrial parks (i.e., Juarez Park, Oneida, or Zaragoza) and take different routes [see city map, Figure 4.1].15The first two ruteras that passed by were full to the maximum. They did not stop. So around 5:40 (we should start working at 6:ooAM), the young woman told me that we would have to walk about four more blocks east- ward, toward Surgikos. There, she said, the rutera unloads some people, confirming my experience of the day before. Actually, we had not walked because it had been sprinkling. We walked as quickly as we could. At ten till six, she said, "Vas a llegar tarde" (You're going to be late). Yes, indeed I was.The rutera finally came, unloaded a few, and we got on and took off.The driver, unlike the previous one the day before, drove much slower and was picking up everybody without really worrying about many of us being late. I had been on the bus for a block or two when the radio announced the time: 6:15. One male voice from the back of the rutera sarcastically told the driver: "Chofer, sube a todos los que quieran (Driver, pick up whoever wants to get on the rutera)." I arrived at the factory at 6:30AM. I was thirty minutes late. The guard told us (another guy was late as well):"Run before I don't let you in." He gestured to us to run in quickly. We ran toward the gate. I guess sometimes the guards help workers in this process: or do they help the company?

AT: Free Trade Good

Development of first world nations is not due to neoliberal economics but has involved protectionism – Britain, US, Japan, and Korea are all examples of this

Dubhashi, Ph.D. at Pune University, former Vice-Chanceller, Goa University, and an erstwhile Secretary, Government of India, December 20, 2008

(Padmakar, “Myth and Reality of Capitalism: Neo-Liberalism and Globalisation,” MAINSTREAM, VOL XLVII, NO 1, http://www.mainstreamweekly.net/article1111.html)//SG

THE “official” history of globalisation has spread the myth that the rich countries, of which Britian was the first, owed their economic development and prosperity to free market and free trade liberal laissez faire policies, low barriers to the international flow of goods and labour and principles of sound money (low inflation) and balanced budgets. The facts are otherwise. The protectionist policies initiated by the first Prime Minister of Britain, Robert Walpole (1721-42), continued until the middle of the 19th century. It helped the British manufacturing industries to establish themselves. At the same time it banned cotton textile imports from India, destroyed the Irish woolen industry and banned the construction of new steel mills in America as also manufacture of high technology products. It wanted colonies to be producing primary commodities to supply raw material at low cost to British manufactures. Once the British industry became internationally competitive, Britain adopted the free trade policy since it was in her interest. In 1846 the Corn Law was repealed and tariff on many manufactured goods was abolished. It was not long before America realised the harmful effects the of the British policy. As the first Finance Minister of the USA, Alexander Hamilton, in his report on the state of manufactures submitted to the US Congress, pointed out, a backward country like the USA should protect its industry in “infancy”. He was the first, not Freindrich List of Germany, who coined the word. Since the USA needed a big progress of industrialisation, the USA progressively raised import tariffs to an average of 45 per cent by 1800. When President Lincoln of the Republican Party come to power, he raised tariffs to the highest level in US history. Thrifts on manufacturing imports remained at 50 per cent until World War I. Following the onset of the Great Depression in 1929, came in 1930 the Smoot Hawley Act which raised tariff even higher. It is with the help of those protectionist policies that the US became the fastest growing economy. The USA was the most protectionist country in the world right up 1930. It was only after the Second World War that the US with its unchallenged industrial supremacy liberalised its trade and started advocating the cause of free trade. But it is still aggressive in taking non-tariff measures when necessary; for example, without liberal federal funding for R & D, the US would not have been able to maintain its technological lead over the rest of the world in key industries like computers, semi-conductors, life sciences, the internet and aero space. It was only after they became the world’s dominant industrial powers that Britain and the USA themselves practised free-market economics. However, they forced non-Western countries like India, China and Japan to practise free trade even though their economies needed protection.

Other countries which followed the footsteps of Britain and the USA on the path of industria-lisation were France, Germany and Japan. The myth is that they were homes to protectionism. But the truth is they had lower tariffs than Britain and the USA. It was only after realising, following 1945, that the “hands-off” policies of the state were responsible for its relative economic decline and defeats in two world wars, that the French state took to a much more active role in the economy through “indicative planning”, nationalisation of key industries and active role of the state owned banks in channelling investment in strategies areas. Countries like Finland, Norway, Italy and Austria which were relatively backward at the end of World War II used similar strategies like high tariffs, state owned enterprises (SOEs) and directing bank credit to strategic industries. Japan, which led the “miracle economies” in East Asia after World War II, did not do so through a neo-liberal policy. Though it did not keep industrial tariffs at a high level, it controlled import through foreign exchange regulation. Exports were promoted to earn the foreign exchange needed to buy up better technology from abroad. Its MITI (Ministry for Industrial Trade and Industry) became well known for its orchestrated drive for industrial development programmes. Through directed credit programme, it subsidised credit into key sectors. Foreign investment was barred in key industries. Foreign companies were required to transfer technology and had to buy specific pro-portions of inputs locally. There were strict ceilings on foreign ownership up to a maximum at 49 per cent. An outstanding example of development in key sectors in Japan was the Toyota Automobile. It started as a manufacturer of textile machinery. It moved into car production in 1933. The Japanese Government kicked out General Motors and Fort in 1939 and with its own money bailed out Toyota. After 25 years of trying it slowly established itself as a car manufacturer. Today Toyota’s luxury brand Lexus has become an icon for globalisation. Korea’s economic growth over the last four-and-a-half decades has been spectacular. From being one of the poorest countries of the world, it has come on par with some European countries like Portugal and Slovenia in terms of per capita income. A myth has been propagated that to achieve this miracle Korea pursued a neo-liberal economic strategy. The reality was different. Korea used measures like tariff protection, subsidies and various forms of government support to nurture new industries. The government owned all banks and directed credit for them. Big projects were undertaken directly by state owned enterprises, POSCO, the steel maker, being the best example. The Korean Government controlled foreign exchange to use hard-earned foreign currencies for importing vital machinery and inputs. The Korean Government controlled foreign investment as well.

AT: Globalization Good

The aff’s logic is flawed –globalization only benefits the privileged while pushing developing countries farther behind

Szentes, Professor Emeritus of the Corvinus University of Budapest and member of the Hungarian Academy of Sciences, 2008

(Tamas, “Globalisation and prospects of the world society,” CENTRAL EUROPEAN POLITICAL SCIENCE, Vol. 9, pp 6, http://cepsr.eu/wp-content/uploads/2013/02/ATT81762.pdf#page=9)//SG

The “revolution” of communication and information technologies can, on the one hand, make easier for several developing countries to catch upwith the most advanced ones,but, on the other hand, may increase, by its very uneven spread and effects,the international development gap.Progress in science and human knowledge, which by its very nature has always been “transnational”, crossing the state borders or other barriers, makes the human society capable to produce in sufficient volume all the really necessary goods for the survival and well-being of everybody, and has opened new perspectives for the development of the economy by generating technological “revolutions”. However,the absolute majority of the world population is still excluded from the benefits of this progress and from the process of development itself. The adaptation and efficient use of modern technologies depend on the quality of labour, i.e. onthe development level of human capital, in regard to which the international gap is even deeper than in per capita DGP.Whilesome of the developing countries(like several Asian ones, e.g. China, India, South-Korea), whichgave priority to education and the teaching of computer technology and knowledge, managed to substantially accelerate their development, the still high ratio of illiterate people in many developing countries contributes to the reproduction of their underdevelopment. Moreover, nowadays a new type of illiteracy appears, namely the lack of knowledge of computer language, which tends to widen the development gap further.The very uneven access to science and the danger of misusing scientific results call for global governance.

The disadvantages far outweigh any perceived benefits

Szentes, Professor Emeritus of the Corvinus University of Budapest and member of the Hungarian Academy of Sciences, 2008

(Tamas, “Globalisation and prospects of the world society,” CENTRAL EUROPEAN POLITICAL SCIENCE, Vol. 9, pp 7-8, http://cepsr.eu/wp-content/uploads/2013/02/ATT81762.pdf#page=9)//SG

(b) Today the main actors of the world economy are the transnational companies. International trade is basically shaped by them, rather than those "comparative advantages" spelled out in conventional trade theories.The economic development of countries depends much more on their foreign direct investment policy, than on the efforts of national producers.They follow, of course, their own business interests and strategic aims, which hardly coincide with those of the host (or even their home) countries.Their worldwide activity, foreign direct investments and operation of their affiliates in the host countries bring about both potential advantages and disadvantagesfor the latter. Althoughneo-liberal scholars are inclined to over-emphasise and overestimate the former, while radical nationalists the latter, no generalisation is justifiable, as it is only in concrete cases and under concrete conditions that one can conclude about which and how much of the potential advantages and of the potential disadvantages are realised.The potential advantages and benefits from the direct investments of TNCs and the operation of their affiliates include not only• the access to additional financial resources, investments or reinvestments over and beyond the host country’s own financial capacity, but also• the access to foreign, more up-to-date production technologies, know-how, management and organisational skills,• international business contacts, additional information facilities and new markets within the TNCs’ network, participation in their organised cross-border trade (avoiding the uncertainties of market fluctuations),• employment and in-service training opportunities for local labour and• secured supply facilities for the local “supporting” firms, contracted manufacturersand service industries, etc.The potential disadvantages, dangers or lossesinclude• the reduction of the scope of “national” decision-making on the structure of production, on the commodity and geographical patterns of trade, i.e. a reduction of the “national sovereignty” over the economy,• the influence on the policy-makers (by strong lobbies or even corruption),•the transfer of “inappropriate” technologies,• the drain of resources, the appropriation of business facilities, state supports,variousprivileges and allowances, the seduction of the most qualified experts, technicians andlabourers, i.e.a kind of “domestic brain drain”, and• the application of restrictive business practice, etc., which all adversely affect thesmaller local firms,•the avoidance of taxation by applying “transfer prices”, the repatriation of profitsover and beyond a “normal” measure,• “trade creation” at the expense of local suppliersand “trade diversion” at the expenseof traditional partners,• therisk of their disinvestments and capital flight causing thereby sudden drop inemployment and deterioration of the balance of payments, etc..The patterns of motivations and interests of TNCs have become much more complex,multidimensional and changeable than ever before.One of the most distinctive features of the contemporary TNCs, as compared to those big companies often called “international monopolies”, which played dominant role in the international capital flows and FDIs before the Second World War,is their great flexibility in organisational structure, business strategy and location policy. Such a flexibility and the fact that their operation is less tied to a certain country, tend to intensify the challenge they set to their partners, both home and host countries, and also opens much greater opportunities for those of the latter following an appropriate policy for real national interest.Their policy of decentralisation of corporate management may increase flexibility and responsiveness, and may give relatively more independence to local firms in the host countries,but its is accompanied by a “functional hierarchy” within their international production systems(i.e. a very unequal allocation of the higher functions, the knowledge-intensive and, particularly, the R&D activities in the “value-chain”), andalso centralization of the strategic decisions in their “home base”.True, they are inclined to transfer even their “home base” to other countries, if they find better conditions there. Due to their more or less monopolistic behaviour, their activities often involve restrictive business practices harmful to the local firms,their competitors and all those outside their corporate system.The transnational companies are seeking not only for foreign resources, large and sophisticated market, higher efficiency(i.e. a higher aggregate rate of profit),strategic, ownership and location advantages, but also advantages of internalisation10 as well as externalisation. While internalisation ensures the advantage of the facility for the TNCs to supervise a wide range of production and service activities and various business functions and also the advantage of centralisation of the decision-making on strategic issues,externalisation also brings about significant advantages, particularly by increasing their flexibility in business operations. Externalisation involves the methods of outsourcing, contracting and subcontracting, and tele-employment. Theapplication of thesemethods brings about obvious benefits, but alsorisks for the participants,whomay become heavily dependent on the companies concerned. It may result in substantial changes in the global industry structures, and open a wide field for the rise of a global stratum of “contract manufacturers” as well as remote-employees, thus providing new opportunities also for the less developed economies.

AT: Privatization Good/SOE Bad

___ (SOE Bad) Saying State Owned Enterpises fail is simply propaganda pushed by privatization agendas. Brazil, Korea, Singapore, Taiwan and many European States prove SOE’s are more beneficial in many instances

___ (Privatization Good) Their privatization good evidence is simply propaganda to subvert any instance of State Owned Enterprises. Brazil, Korea, Singapore, Taiwan and many European States prove SOE’s are more beneficial in many instances

Dubhashi, Ph.D. at Pune University, former Vice-Chanceller, Goa University, and an erstwhile Secretary, Government of India, December 20, 2008

(Padmakar, “Myth and Reality of Capitalism: Neo-Liberalism and Globalisation,” MAINSTREAM, VOL XLVII, NO 1, http://www.mainstreamweekly.net/article1111.html)//SG

NEO-LIBERAL thinkers have spread the myth that state owned public enterprises do not work since people do not take care of things that are not theirs. Public enterprises secure finances from the govern-ment treasury and fritter them away. This was the justification for the massive privatisation programme resolutely implemented by Margaret Thatcher in Britain in the early 1980s. It is forgotten that private enterprises like big corporates have dispersed share ownership and are run by hired managers as in the case of state owned enterprises. Key private enterprises in trouble also get subsidies and government bailouts as in the case of Rolls Royce, nationalised by the Conservative Government in 1967 and British Leyland and British Aerospace by the Labour Government in 1977. The Swedish ship-building industry was nationalised by its first Right-wing government in 44 years. SOEs, like private companies, have to work in a market environment. SOEs are often success stories like the Singapore Airlines. Government linked companies in Singapore not only operate public utility industries like telecommunication, power and transport but also ship-building, shipping, banking, engineering and semi conductors. Eighty-five per cent of housing is provided by publicly owned entities. The Housing and Development Board of Korea also provides another example of successful public enterprise in the form of POSCO (Pohang Iron and Steel Company). Within 10 years of starting production in 1973 (financed by the Japanese Bank after being rejected by the World Bank in the late 1960s), it became one of the most efficient steel producers. Taiwan has had a very large SOE sector accounting for 15 per cent of national output. China has also come up with a unique type of hybrid form of ownership called Town and Village Enterprises formally owned by local authorities but which operate as if they are privately owned by local political leaders. The economic success of many European countries such as France, Italy, Austria, Finland and Norway was achieved with very large SOEs sector at the forefront of technological moderni-sation. The Brazilian state owned company, Petrobras, is a world class firm with leading edge technologies. Embraer, the Brazilian manufacturer of “regional jet”, has become a world class firm. German car marker Volkswagen has the State Government of Lower Saxony as the largest share holder with 18.6 per cent shares. Large scale projects with long-gestation period and enterprises which are natural monopolies can best be taken up by the state. Also people in remote areas can be provided essential services only by state enterprises. Disinvestments of SOEs is not always easy. Privatisation must be done at the right scale, at the right time, at the right price and to the right buyer. The sale of the Cochabamba water system in Bolivia to the American company, Bechtel, in 1999, that resulted in immediate tripling of water rates is a bad example of privatisation. SOEs’ performance can be improved without privatisation by providing competition.

Ev Bias

Pro-neoliberalist evidence has succumbed to an upper-class propaganda strategy—masks the problems inherent in neoliberalism

Harvey, Distinguished Professor of Anthropology and Geography at the Graduate Center of the City University of New York 07-- (David, “Neoliberalism as Creative Destruction”, Annals of the American Academy of Political and Social Science, vol. 610, 3/07, Sage)//AS

So why, then, in the face of this patchy if not dismal record, have so many been persuaded that neoliberalization is a successful solution? Over and beyond the persistent stream of propaganda emanating from the neoliberal think tanks and suffusing the media, two material reasons stand out. First, neoliberalizationhas been accompanied by increasing volatility within global capitalism. That success was to materialize somewhere obscured the reality that neoliberalism was gener ally failing. Periodic episodes of growth interspersed with phases of creative destruction, usually registered as severe financial crises. Argentina was opened up to foreign capital and privatization in the 1990s and for several years was the darling of Wall Street, only to collapse into disaster as international capital with drew at the end of the decade. Financial collapse and social devastation was quickly followed by a long political crisis. Financial turmoil proliferated all over the developing world, and in some instances, such as Brazil and Mexico, repeated waves of structural adjustment and austerity led to economic paralysis. On the other hand, neoliberalism has been a huge success from the standpoint ofthe upper classes. It has either restored class position to ruling elites, as in the United States and Britain, or created conditions for capitalist class formation, as in China, India, Russia, and elsewhere. Even countries that have suffered extensively from neoliberalization have seen the massive reordering of class structures internally. The wave of privatization that came to Mexico with the Salinas de Gortari administration in 1992 spawned unprecedented concentrations of wealth in the hands of a few people (Carlos Slim, for example, who took over the state telephone system and became an instant billionaire). With the media dominated by upper-class interests, the myth could be propa gated that certain sectors failed because they were not competitive enough, thereby setting the stage for even more neoliberal reforms. Increased social inequality was necessary to encourage entrepreneurial risk and innovation, and these, in turn, conferred competitive advantage and stimulated growth. If conditions among the lower classes deteriorated, it was because they failed for personal and cultural reasons to enhance their own human capital through education, the acquisition of a protestant work ethic, and submission to work discipline and flexi bility. In short, problems arose because of the lack of competitive strength or because of personal, cultural, and political failings. In a Spencerian world, the argument went, only the fittest should and do survive. Systemic problems were masked under a blizzard of ideological pronouncements and a plethora of localized crises.

Their neolib good arguments are premised on the notion of neoliberal theory however, in practice, neoliberal’s interventionism strips away social rights – the benefits of neoliberalism are only realized amongst the elite of America

Navarro,M.D., Ph.D., Professor of Public Policy, Sociology, and Policy Studies at Johns Hopkins University, 2007

(Vicente, “NEOLIBERALISM AS A CLASS IDEOLOGY; OR, THE POLITICAL CAUSES OF THE GROWTH OF INEQUALITIES,” International Journal of Health Services, Vol. 37.1, pp 49-51)//SG

Let’s be clear right away that neoliberal theory is one thing and neoliberal practice another thing entirely. Most members of the Organization for Economic Cooperation and Development (OECD)—includingthe U.S. federal government—have seen state interventionism and state public expenditures increase during the past 30 years. My area of scholarship is public policy, and, as such, I study the nature of state interventions in many parts of the world.I can testify to the expansion of state intervention in most countries in the developed capitalist world. Even in the United States, Reagan’s neoliberalism did not translate into a decline of the federal public sector. As a matter of fact,federal public expenditures increased under his mandate, from 21.6 to 23 percent of gross national product (GNP),as a con- sequence of a spectacular growth in military expendituresfrom 4.9 to 6.1 percent of GNP during the Reagan years (2).This growth in public expenditures was financed by an increase in the federal deficit (creating a burgeoning of the federal debt) and increase in taxes. As the supposedly anti-tax president, Reagan in fact increased taxes for a greater number of people (in peace time) than any other president in U.S. history. Andhe increased taxes not once, but twice(in 1982 and in 1983). In a demonstration of class power,he reduced the taxes of the top 20 percent(by income)of the population enormously, at the cost of increasing taxes for the majority of the population.It is not accurate, therefore, to say that President Reagan reduced the role of the state in the United States by reducing the size of the public sector and lowering taxes. What intervention, such thatit benefited even more the upper classes and the economic groups(such as military-related corporations)that financed his electoral campaigns. Reagan’s policies where indeed class policies that hurt the majority of the nation’s working class. Reagan was profoundly anti-labor, making cuts in social expenditures at an unprecedented level. It bears repeating that Reagan’s policies were not liberal: they were Keynesian, based on large public expenditures and large federal deficits. Also,the federal government intervened very actively in the nation’s industrial development(mainly, but not exclusively, through the Defense Department). As Caspar Weinberger (3), secretary of defense in the Reagan administration, once indicated (in response to criticisms by the Democratic Party that the U.S. government had abandoned the manufacturing sector), “Our Administration is the Administration that has a more advanced and extended industrial policy in the western world.” He was right. Noother Western government had such an extensive industrial policy. And today, the huge growth of the U.S. biomedical industry is to a large degree stimulated by an active state intervention. Indeed, the U.S. federal state is one of the most interventionist states in the Western world.There exists very robust scientific evidence that the United States is not a liberal state (as it is constantly defined) and that the U.S. state is not reducing its key role in developing the national economy, including in the production and distribution of goods and services by large U.S. corporations—which, incidentally, are wrongly referred to as “multinationals” but are actually “transnationals.” This empirical evidence shows thatthe U.S. federal government’s interventionism (in the economic, political, cultural, and security spheres) has increased over the past 30 years. In the economic sphere, for example, protectionism has not declined. It has increased, with higher subsidies to the agricultural, military, aerospace, and biomedical sectors. In the social arena,public interventions to weaken social rights (and most particularly labor rights) have increased enormously (not only under Reagan, but also under Bush Senior, Clinton, and Bush Junior), and surveillance of the citizenry has increased exponentially. Again, there has been no diminution of federal interventionism in the United States, but rather an even more skewed class character to this intervention during the past 30 years. Neoliberal narrative about the declining role of the state in people’s lives is easily falsified by the facts. Indeed, as John Williamson, one of the intellectual architects of neoliberalism, once indicated, “We have to recognize that what the U.S. government promotes abroad, the U.S. government does not follow at home,” adding that “the U.S. government promotes policies that are not followed in the U.S.” (4, p. 213). It could not have been said better. In other words, if you want to understand U.S. public policies, look at what the U.S. government does, not what it says. This same situation occurs in the majority of developed capitalist countries.Their states have become more, not less, interventionist. The size of the state (measured by public expenditures per capita) has increased in most of these countries. Again, the empirical information on this point is strong. What has been happening is not a reduction of the state but rather a change in the nature of state intervention—further strengthening its class character.

Their evidence remains ignorant of the striking myths of the neoliberal world -

Dubhashi, Ph.D. at Pune University, former Vice-Chanceller, Goa University, and an erstwhile Secretary, Government of India, December 20, 2008

(Padmakar, “Myth and Reality of Capitalism: Neo-Liberalism and Globalisation,” MAINSTREAM, VOL XLVII, NO 1, http://www.mainstreamweekly.net/article1111.html)//SG

Prof Galbraith of Harvard University had been, through his copious and widely read books, a sustained critic of unbridled capitalism and its adverse consequences on the living of the common people. Thus in his celebrated book, The Affluent Society, he drew pointed attention to the glaring contradiction between private opulence and public squalor. In his New Industrial State, he showed how the operations of the “techno structure” of the corporations which now dominate the economy, have completely overthrown the “conventional wisdom” of traditional economics. The “myths” sedulously fostered by the latter have no relation to the reality of the economic world. The slim volume “Economics of Innocent Fraud”, his last offering, distills the essence of Galbraith several criticisms of the capitalist economy.1 The capitalist economy now a days masquerades in some what neutral impersonal term “the free market economy”. This enables it to escape from the responsibility of its historic crimes and blunders—subjugation of workers by the owners of the means of production, monopolistic abuses, roles of European arms and steel combines in engineering world wars and cyclical booms and busts ravaging the economy. Galbraith exposes a series of myths attributed to the market economy. The myth is that in the market “consumer sovereignty” prevails. The reality in the market is that the consumer sovereignty has been impaired by the manipulation of consumer demand through advertisement, salesmanship with the help of the powerful medium of television and mislending product differentiation The myth is that the economy rewards work in proportion to the discomfort experienced in course of work. The reality is that those who do not have to do physical work and enjoy it are the best paid. The myth is that the market economy consists of innumerable producers including small business and family agriculture. In reality, it is dominated by big corporations. The myth is that the corporations are governed by the decisions of shareholders and their representative Boards of Directors. The reality is that the corporations are managed by its “bureaucracy” who award munificent compensation to themselves despite falling profits and stock market prices. The myth is that the economy consists of two sectors—the private sector and the public sector. The reality is that on expanding part of what is called the public sector it is for all practical purposes in the private sector. Military expenditure (euphemistically termed defence expenditure) by government is determined by the military industry complex. Even foreign and military policies of the government are determined by it. The myth is that the upturns and downturns of the economy can be forecast by “consultants” and experts with the help of economic and statistical analysis. The reality is that they are unpredictable. Sometimes well-published predictions by consultants are intended to serve personal gain. The Federal Reserve system, especially under Allen Greenspan, was endowed with the capacity to use monetary measures such as modification of bank rate to manage the economy. In reality the Central Bank action had minimal effect and no decisive role. The myth had been that the standards of corporate finances are maintained by professional auditors and accountants. The reality is that they had been parties to corporate scandals. The myth is that corporate scandals can be avoided by appropriate regulation. The reality is that public officials, including those of the Security and Exchange Commission, can be unduly compliant and corporate influence does extend to regulators. The myth is that the economic well-being of the people is measured by the GDP. The reality is that the negative social affects of the so-called productive activity like pollution, destruction of environment, the neglect of citizen’s health and education, threat of military action and mass destruction are not taken into account. No wonder human progress is marked by unimaginable cruelty and death caused by wars. It is these myths and frauds which are the basis of the structural adjustment programme, the so-called economic reforms, which were imposed on the developing countries by the international economic organisations, namely, the World Bank, the IMF and the WTO under the influence of global capitalism led by the USA and its allies.

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