Prior to the 1970s Neo-liberalism was little more than a suggested policy by
fringe economists (Utting, 2015). This would change when the Breton Woods
system of fixed exchange collapsed, leading to the debt crisis of the early 1980s
and creating a “new global financial environment” (Chossudovsky, 2010,
p.2794). This new environment and the uncertainty surrounding the state’s role
in relation to the economy, would lead to two of the leading capitalist countries
re-aligning their policies to coincide with those preached by Hayek and Friedman
(Jones, 2014). After attempts to enact Neo-liberal policies in South America had
proved contentious, the ideology was introduced to the global stage, this
introduction was via the UK Conservative government of Margret Thatcher,
alongside the US Republican government of Ronald Reagan, both enacting Neoliberal
policies during the 1980s (Robinson, 2006).
- A ‘crisis containment’ strategy enforced by Global Institutions.
International Financial Institutions, such as the World Bank and International
Monetary Fund, governments of the major capitalist countries, domestic political
and business elites and transnational corporations have all promoted Neo-liberal
Structural Adjustment Programs (SAPs). These SAPs, have been promoted in the
economies of “most developing countries in order to facilitate the increased
integration into the global economy” (Harris & Seid, 2000, p.11), the majority of
these programs have entailed “Neo-liberal structural reforms” that aimed to
“transform the institutional framework of the economy” (Hyun-Chin & Jin-Ho,
2006, p.7). The convergence of different political actors around these Neo-liberal
policies was named the ‘Washington consensuses’ (Sheppard & Leitner, 2010).
The scope of this consensus cannot be overstated, Chossudovsky (1991, p.2)
informs us that the decisions made by this “Washington based international
bureaucracy”, “affect the livelihood of more than 80 per cent of the world’s
population”. Although the results of this “forced implementation of neoliberal
globalisation” (Pramono, 2003, p.117) are as yet contested, the former Chief
Economist at the World Bank believes that these reforms and the policies entailed
have been “an almost certain recipe for job destruction and unemployment
creation – at the expense of the poor”, going on to say their blind acceptance
would lead to “high unemployment and shredding of the social contract” (Stiglitz,
2002, p.84).