A Brief history of
Neo – imperialism, History and Methods
Till the 1960s,
neoliberalism had the same status in economics
as Wahhabism (a
supremacist, fundamentalist and intolerant
version of Islam)
had in Islam. (1-1). How it became the guiding
principle of
Western countries is an interesting question.
Neoliberalism
claims that human beings are best served by
liberating the
entrepreneurial class through strong private
property rights,
free market and free trade. State’s only role
was to protect
these by guaranteeing integrity of finance by
legal means and
also by deploying the police and the army.
Education, health
and welfare would be taken care of by those
who needed it.
Environment would take care of itself.
Even old style
welfare states in Northern Europe and New
Zealand embraced
it. Nelson Mandela betrayed Post Apartheid
South Africa by
adopting neo-liberal policies.
Neoliberal pundits
occupy academia, media, think tanks,
corporations,
finance ministries and international finance
institutions.
Aggression and
Coups in Service of Corporations:
On
9/19/2003 Paul Bremmer in Iraq ordered full privatization
of public enterprises, full
repatriation of foreign profit, full ownership
rights to foreign firms, elimination
of trade barriers; thus giving away the
real reasons for the invasion (4-2). Strikes by the
coolies were
forbidden, unionization restricted,
flat tax unrelated to income
imposed; never mind that all these
impositions were in violations
of Geneva and The Hague
Conventions. 3
“Sovereign”
Iraqi Government took over in 6/2004 with power
only to confirm existing laws and
shortly before that Bremmer
added copyright and intellectual
property rights (5-4).
First
attempt at neoliberal state was made after Pinochet’s
coup on 9/11/73 which implemented
neoliberal policies facilitated by
thousands of killed and disappeareds.
A team of Chicago boys,
adherents of Milton Friedman, were
called in. 8-5
The
US had also been training and funding Chilean economists
at Chicago since 1950s to counteract
left wing tendencies in Latin
America. The experiment went sour all
over in the continent’s debt
crisis of 1982 (8-6).
Import
substitution-promotion of indigenous industry via Tariffs
and Subsidies had been promoted Post
WW II to prevent threat
of another depression. 7). Undiluted
Capitalism and communism
had failed. 9-8
Breton-Woods
agreement and institutions like UNO, WB
and IMF were attempts to stabilize
international relations. The price of
Gold was fixed at $ 35 per
ounce. 9
USA
and Europe turned into liberal-democratic states and
concentrated on Keynesian full
employment, economic growth,
welfare, and state intervention in
national industries. The USA
underwrote growth, promoted class
compromise between labor and
capital, but for much of the third
world it remained a pipe dream. The
state internalized class conflict,
the left and unions had real influence.
By
the end of 1960s, unemployment and stagflation were up.
Britain was bailed out by IMF in
1975-76. 10 Tax and welfare
expense were reduced. US dollar
escaped into European banks. Fixed exchange rate of currencies was abandoned in
1971. 11
Socialist
parties advocated more intrusive regulation-open
market socialism. The left acquired
power in Portugal, France, Spain,
Britain and Scandinavian countries.
Even the USA passed regulatory
reform, but they did not go beyond
social-democratic solutions 10-12).
The corporatist world reasserted and the result was Washington
consensus of 1990s. 13 Clinton and
Blair both were closet
neoliberals.
Stagflation
had hurt every one. Discontent goaded the state to contemplate the possibility
of a true socialist alternative to papering
over of the class divide.
It was a clear threat to capitalist hegemony.
In Sweden,
Rehn-Meddner plan to buy out private
business gradually and turn
the country into a worker’s democracy
was adopted (14-harvey p15).
There
had been substantial change. Share of the top 1% of the population
in the national income fell from 16% in the pre WW II USA, to less than 8% by
mid-1970s. It was due to the loss of control over finances. 15-harvey p 15
Coups,
subversion and civil wars in Latin America, Iran and
Indonesia were one kind of solution
but suitable only for the third world countries.
Neoliberal
agenda was restoration of class power. By the end
of 20th AD, the share
of wealth of top 1% had gone up to15%
(21% by 2010), ratio of worker-CEO
salary from 1:30 in 1970s to
1:500 by 2000. Bush Jr made it more
acute (13-16).
Britain and USSR as well as China followed suit, but Mexico and India and OECD
countries were more loyal than the king. (Ambani brothers
of India are worth more than 90
billion US dollars, while more than 500
million people live on less than a
dollar a day). 17 Sebastian
That
theoretical Utopianism-Freedom of the market equates
individual freedoms is only an
attempt at legitimation of means to
reaffirm the power of the capital.
In
1947 neo-liberals Ludwig Von Mises and Milton Friedman,
among others gathered around
philosopher Friedrich
von Hayek to create Mont Perelin
society named after the Swiss spa
they had met in first.
Founding
statement: the central values of civilization are in
danger…the position of individuals
and voluntary groups …
undermined by extension of arbitrary
power…the group holds that
these developments…question the
desirability the rule of law…
fostered by a decline of belief in
private property… with out (which)…
difficult to imagine a society
…freedom may be effectively preserved
(15-18).
There
is a contradiction between free market and individual
freedom, between human dignity and
the need of coercive state
apparatus, as well as the judicial
trick of defining corporation as
individuals. 19
The
elite, fearful of mixed economy, were prepared to accept
the whole range from McCarthyism to
Neoliberalism. Nurtured by the
likes of Heritage Foundation and the
Chicago School, the movement
moved center stage in 1970s. The
prize controlled by Swedish
Bankers; Nobel went to Hayek in 1974
and to Friedman in 1976.
It
really came into its own with the advent of Thatcher and
Reagan who demolished the Post WW II
Social Democratic state.
She declared, “No
such thing as society, only individual men
and women (17-20).
In 10/1979, Volcker
dramatically changed USA monetary policy.
Fight inflation at
any cost. Ditch Keynesianism.
By July 1981
interest rate had risen close to 20%; recession
was unleashed to
empty factories and break unions, driving
debtor countries to
insolvency through structural readjustment,
the Volcker shock
(18-21). Monetarism had hitherto been
paralleled by
acceptance of union power and welfare-statism.
Carter had already shifted to
deregulation (Airline and Trucking).
Reagan faced down Air traffic
controller’s union in 1981. Federal
minimum wage fell 30% below poverty
level by 1990; there was
fast decline in real wages as well.
Reagan went the whole hog;
deregulation (tax breaks, transfer
of investment to non-unionized South
and West (after working class
leaders attain power, they behave
worse than those used
to power-Thatcher and Reagan compared
to the Rockefellers).
Outsourcing started in real earnest. Top tax rate fell from 70% to
28%. 22-harvey-p
26
After the 1973 OPEC
oil embargo, prices shot up. British
intelligence
reported that the USA had planned to invade
Saudi Arabia and
other oil states, but the states agreed to
recycle all their
petro-dollars through NY banks (20-23).
The banks loaned
money to third world countries and
obtained secure
conditions through the USA government.
The USA functions
through satraps. In the 1920s and 1930s
the USA intervened
in Nicaragua and found Somoza to fight
nationalist
Sandino. Somoza opened the country and assisted
in other Central
American countries. This was the model
adapted in Post WW
II. CIA coup in 1953 in Iran was a link in
the same chain 21-24).
Before 1973, the US
investment was direct; exploitation
of raw material
(oil, minerals and agriculture), Telecom and auto.
Now banks focused
on lending capital. Borrowers were forced
to borrow at
usurious rates (22-25). Rise in USA interest rate
exposed the
countries to default; Mexico 1982-84. Reagan had
it rolled over in
return for neo-iberal reforms. All Keynesian
influences were
removed from IMF (24-26).
Under liberal
regimen banks take losses; under neoliberal,
borrowers pay
through the nose, no matter the
consequences and
that includes surrender of assets. The USA
capital got high
returns (23-27).
In
Indonesia and Philippines, the Chinese held economic power
through
trade.
Large manufacturing
corporations became more financial
institutions even
though they still engaged in, for example
auto manufacture
loss in production was offset by gain in
investments. Mergers
helped along by deregulation diversified
interests. US Steel
bought interest in insurance (22-28).
Neoliberalism meant
financialization of every thing. It deepened
the hold of finance
over economy including the state (28-29). Shareholders were bilked out of
millions; immense fortunes made
in short periods
through speculation (Warren buffet and George
Soros). Carlos Slim
took over Telecom in Mexico and expanded
into Circuit City
and Barnes and Noble (25-30).
Walton-Wal-Mart
integrated into Chinese and retail world
wide-sales $ 500
billion/year.
Net worth of 358
richest people is equal to that of world’s
2.3 billion people.
200 richest people are worth $ 1 trillion.
Top three
billionaires are worth more than the GNP of all least
developed countries
(33-31).
All 247 editors of
Rupert Murdoch papers supported the war
in Iraq (Tony
Blair consulted him before taking major decisions
on a regular
basis). 32- Harvey p 35
The idea of
freedom, “thus degenerates into a mere advocacy
of free enterprise-
and explains the neoliberal authoritarianism
of G.W.B (36-33).
Corporations
withhold AIDS drugs (34). Halliburton makes
war profits from
wars which seem to be designed specifically
for the purpose (35). Neoliberals
created immense concentration
of power and wealth
in energy, Media, Pharmaceuticals,
Transport and
retailing and have the power to persuade that
every one is better
off.
The Evil Quad: Public Opinion manipulated:
Neo-liberals
regimes were established in Chile and Argentina
through what I call
the ‘Evil Quad- landowners, the clergy,
the army and
bureaucrats; army coups, backed by the USA. In
the UK, the USA and
other developed countries, opinion was indoctrinated through
cultural socialization and by distractions like
cultural prejudice,
belief in God and country, status of females,
fear of socialism,
fear of immigrants and slogans like freedom
(1-36).
Corporations and
the Media owned by them, Think Tanks,
Universities and
Churches funded by them and
professional
associations together control the whole spectrum
of opinion in
mainstream parties. The state used its coercive
apparatus to
maintain consent. WB, IMF are freely used before
coups and
subversion.
The left was
already in disarray due to its internal contradictions.
Further, Berkeley
Free Speech Movement of 1968, student
upheaval of the
same year, which demanded social justice
were brutally
suppressed.
Individual freedom
and social justice are not wholly compatible.
Social justice
requires sacrifice. In 1968, there was a conflict
between students
(freedom) and the left (social justice-France
CP and students in
1968). Neo-liberals drove a wedge between
the two in the name
of freedom.
In the USA, the
left has never been able collect on one platform.
Its agenda was
hijacked by mainstream parties. In 1960s
Vietnam was the
catalyst to bring some cohesion in the left.
They also took up
Civil and women’s rights.
Lewis Powell, soon
to be elevated to SC, wrote a secret memo
to the Chamber of
Commerce that opposition to free enterprise
had gone far
enough. Strength to oppose it lies in
organization…planning……consistently…indefinite…years…
financing…political
power…lead assault on major institutions” (4-37).
In 1970s
Corporations spent nine hundred million per year
on political
process. It rose close to 2 billion/year in the 21st CAD. Think
Tanks, Heritage Foundation, American Enterprise Institute and other foundations
sponsored research and an avalanche of books followed by TV programs (5-38). Universities had
been the hotbed of the left and were especially targeted.
Because of
bureaucratization and deindustrialization, N.Y and many large cities had urban
crisis in 1960s. Neo-cons reduced federal aid in early seventies. In 1975
investment banks led by the Citigroup (Chairman Walter Wriston had equated
government intervention with communism) refused to roll over debt. Bail out
involved wage freeze, cutbacks on welfare and public service and decline if
trade unions. CUNY had tuition introduced. 7-39Unions kept demands low or face loss
of pension due to bankruptcy of the city (7-40).
The working class
and ethnic groups descended into racism and crack cocaine in mid-1980s and were
further hit by AIDS in 1990s.Crime became the main recourse for the poor.
Guiliani’s claim to fame was fascistic persecution of the victims. Thomas
Edsall “during 1970s business refined its ability to act as a class…dominant
theme…defeat of bills…consumer protection…enactment of antitrust legislation…”
and moved to capture the republican party (14-4).
1971 campaign
finance law legalized financial corruption. In 1976 SC defined corporations as
individuals and corporate contribution to political parties protected under
first amendment freedom of speech. Political Action Cimmittees (PAC) dominated
both political parties, and the number went from 89 in 1974 to 1467 by 1982 and
favored right wingers (16-42).
Democrats were
ambivalent, though enjoying a popular base, they could not pursue an
anti-capitalist course (17-43). Republicans sought alliances with the Christian
right to get a popular base. Jerry Falwell’s moral Majority offered what
appealed to the working class, which was cheated out of its share by the
affirmative action. Cultural nationalism, racism, homophobia and anti-feminism
mobilized the base. The likes of Irving Kristol and Norman Podhoretz provided
“intellectual” foundation to moral values, gave bad name to liberalism,
distracting attention from unbridled commercialism. 44-harvey
p 50
The duo of big
money and Christian right managed to exclude liberals from the Republican Party
and persuaded the working class to vote against its interests. 19-45 Democratic Party
under Clinton chose corporate links over its traditional base, tightening the
belt of the poor, and loosening that of the rich, as Blair had done in the UK
(20-46).
Reagan had cut back
on the budget and regulation. (22-47). The National Relations
Board took little time to reverse the decisions deemed by business to be
favorable to labor. Regulation was good only for labor. New tax depreciation on
investments let corporations get away with out tax. N.I.H funded drug research
products handed over to Pharmaceutical firms (24-48).
Reagan had already
crushed Air Traffic controllers in 1981 and accommodation between corporations
and unions was over. 49 Jobless % in mid 1980s was 10%. Jobs went
South and assisted by tax breaks to Asia, manufacturers threatened plant
closures and did it many cases. Labor unions had been de-clawed, and their
leadership often in the pocket of capital. Real wages stagnated and fell and
benefits cut back under Neo-lib dogma, that unemployment was always voluntary
because it was underwritten by welfare.
Clinton dealt a
body blow to welfare system. Government intervention was the actual problem.
Harvard, Princeton and U.Penn business schools were munificently funded by
MNCs. They train foreigners too.
In the UK, there
was no viable Christian Right. Corporations were class based, with links to
levers of power. Labor party was beholden to the unions. Post WW II
conservatives had shied away from hitting at the benefits to the poor;
socialized health, education. (27-50).
The city of London
remained a center of international finance. It has always been monetarist
rather than Keynesian. Protection of finance capital with interest rate
manipulation conflicted with the needs of domestic industry. It was hit with
balance of payment crisis in 1970s.
In 1975, inflation
rose to 26% and jobless to over 1 million. State and the unions got into
conflict. Coal miner’s union went on strike in 1972 and 1974, the first since
1926. The conservative government under Heath declared national emergency,
three day working week and called an election in 1974 which it lost. Labor
settled the strike in miner’s favor. But Labor could not afford settlement
terms. In 1975-76 there was a financial crunch; choice was to submit to IMF
terms or declare bankruptcy and lose integrity of sterling. It, of course chose
IMF course with cutbacks in welfare (29-51). Workers launched a series of
crippling strikes in the winter of discontent 1978 (30-52).
The government
fell. Thatcher came in and made monetarism the state policy. She provoked
miner’s strike in 1984 which lasted a year. 31-53 Miners lost. She opened the
country to foreign competition and further reduced labor power. She also
demolished steel and ship building Industry and offered the country to MNCs
especially to Japanese auto manufacturers as an offshore base for European
operations.
Thatcher fought
rearguard action against municipal councils and that included jailing of half
the councilors in Liverpool. She cut back central funding of municipalities.
When they raised taxes on property, she took away their right to tax.
She privatized
state enterprises whole sale, shedding labor to make them attractive, giving
away family silver. Subsidies were hidden by not including valuable land and
assets, public housing sold to tenants, helped other privatizations.
Finally she imposed
a poll tax which was too much to bear even for her neo-con supporters and led
to her downfall.
She tried to
demolish education, health care and welfare, bureaucracy and judiciary, but did
not meet with quick success. She introduced tuition in higher education.
Thatcher was
supported by the middle class and by the splintering of working class. She
brought the consumer and debt culture and made the minority position into
mainstream. Blair and Clinton followed suit.
The neo-liberal
state is riven by contradictions and is an unstable political form. It favors
private property law, rule of free market/trade.
The state must use
its coercive apparatus to protect these rights. They are very keen on
privatizing assets in the third world. Ground rules for market competition must
be properly observed. Privatization and deregulation will increase efficiency
and improve its competitiveness in the international market. Each individual
has to take responsibility for welfare, education and health (pension
privatized in Chile and Slovakia). GWB proposed it for the USA.
Free mobility of
capital was crucial; all limitations like tariffs, taxes, environmental
planning must be removed. State sovereignty must be surrendered to the market,
except for the vaguely defined national interest. States must be forced to open
their markets, except the labor one.
Neo-lib is highly
suspicious of democracy, and views it as a luxury possible only where a strong
middle class exists; governance should be by the elite and experts ought to be
preferred by the executive and judiciary order to parliamentary decision
making. 54- Harvey p 66
Contradiction and
Grey areas:
Electric grid,
water sewerage and gas lines are natural monopolies and competion in the same
geographic region would make no sense.
When costs are
externalized e.g. pollution, some less irrational neo-libs conceded need for
state intervention (hard boiled ones claim that cure will be worse than the
disease) but should be through the market, like pollution trading. Competitive
failure resulting in rise of costs e.g. currency speculation should be dealt
with by the market and not by regulation.
Better informed
players have the advantage (2-55). Patents set monopoly prices. Neo-libs are
in a state of denial. New Pharmaceutical products require invention of new
diseases; the system contains an inherent flaw which promotes instability in
social relations (3-56).
Individuals are free to choose but
not to choose strong collectives like trade unions or vote for the state
intervention parties. To fight that neo-lib depend upon WB, IMF, Federal
reserve and WTO etc but denying their core argument, intervene to suppress
social movements.
A composite picture of neo-lib
states can not be offered yet as they are still spread over a wide spectrum.
Biases arise in treatment of labor and environment as commodities. But in a
conflict the state favors business to labor and quality of environment. They
also favor financial institutions to general public welfare.
But Opportunism
plays a part. GWB imposed steel tariffs and subsidies to US agriculture.
Europeans do the same. 57- Harvey 71
Transition from
communism or social democracy (East and West Europe) to neo-lib takes some
doing and results in chaos (Russia). Rationally developing states-Singapore,
Malaysia and China, keep state enterprises, irrationally developing ones like
India and Pakistan do not and pay little attention to social infra-structure,
health and education too (4-58).
Opening of Capital
markets is the conduit for IMF, and WTO membership and these states drawn into
neo-lib circle. In the 1997-98 Asian Crisis saw core states fall into line.
China and Taiwan had not opened capital markets and suffered less (5-59).
IMF covers risk in
internal financial markets. James Baker, Reagan’s treasury secretary used IMF
to impose structural adjustment on Mexico and NY city investment banks,
extracting resources from the third world to pay international bankers (6-60). Third world
entrepreneurs have to be backed by their own states.
The US lends
resources at 12% interest while the US bonds pay 4% resulting in a net inflow
from the poor to the rich.
Defaulters are
forgiven part of the loan in return for neo-lib reforms. Trade unions and
social institutions (Greater London Council) have to be suppressed. The State
withdraws welfare and social support; people are impoverished. General outcome
is lower wages, insecurity and loss of benefits and heavy dependence upon cheap
labor in China, India, Indonesia and Bangladesh (7-61).
Under Margaret
Thatcher corporations got a stronger role in writing legislations of Public
Policy and Regulation. Dick Cheney refused to release the names of consultants
who formulated Bush’s energy policy (11-62).
The state assumes
risk; profits go to private corporations. Out of job workers who protest
against the core belief on non-intervention, are imprisioned by the state.
Boundary between corporations and state are all but removed. Judiciary is
extremely expensive, so poor people have to give in. Class bias works too (12-63). NGOs and GROs
(Grass Roots Organizations) take over the role of reform-funded by corporations
(13-64).
The
real contradiction is between the aim of well being of all and restoration of
class power.
Deregulation
promotes behavior scandals that require re-regulation. Competition in reality
creates oligopoly-soft drinks, Coke and Pepsi, Energy and Media corporations.
It becomes
difficult to control anomie and leads to anti-social behavior, revival of
interest in religion, fascism, racism and amounts to a back lash against
economic globalization. Mood is one of helplessness and anxiety… in new brand of
populist politician…easily turn into revolt (18-67).
Neoliberalization
in authoritarian states (China and Singapore) is converging with increasing
authoritarianism in the USA and the UK. But they veer away from neo-lib in
their concern for order.
Unbridled
individualism, life style, sexual habits and self expression result in social
anarchy-nihilism and make states ungovernable. Neo-cons emphasize
militarization; highlight threats, real or imaginative-Thatcher against Europe
and Falklands War (21-66.
Post cold War Islam
and China were branded as threats. Waco, Oklahoma bombing and race riots
following the beating of Rodney King gave internal excuses. 9/11 crystallized
the war on terror 22-67.
Neo-lib are a
coalition of the elite and moral majoritarianism, white working class cultural
nationalism, Christian evangelism, right to life, anti-feminism, gay,
affirmative action and environmentalism.
In principle
neo-lib theory does not favor the concept of the nation, though it needs a
strong state. In the Neo-lib reform of 1990s in Mexico, unity of state and
nation fell apart. Rise of right wing fascist parties in Europe is a reaction
to neo-liberalism.
Neo-lib appeals to
national sentiment in China, SK, and Japan and was the major factor in the
success in pushing neo-lib policies and the rise of the BJP in India.
Development
Hampered
Contextual
conditions:
South Africa,
emerging out of the collapse of Apartheid and desperate to be accepted in
global economy was coerced by IMF and WB to embrace neo-lib (40-68). Perhaps Mandela
did not understand economics/or class conflict.
Demobilizing
organized labor by subversion or violently (Britain, the US and Sweden, violent
in Chili) is a necessary precondition for neoliberalism. It has faced problems
where labor has managed to acquire power (SK). Capital, in the end, acquires
control over state power (the USA) via financial institutions and buying
elections (the USA) and academia and media.
Neoliberalism
arises out of internal and external forces. In Chili the upper class asked for
US support in the coup. In Sweden employers sought integration into Europe to
consolidate neoliberal agenda.
IMF can not impose
with out collaborators on the ground. Argentina successfully challenged it, as
did Malaysia and Taiwan. Through collapse (USSR and Eastern Europe) civil wars
(Senegal and Nicaragua) degenerate ruling cliques (Philippines, Indonesia,
Pakistan, India), external power gets the opportunity to orchestrate neoliberal
restructuring. Neoliberal policies produce social unrest and political
instability (China, Indonesia and Argentina). It can be said that it repels
investment (8-69) Vulture capital is devastating. Neoliberal policies frequently attract
just that.
Civil wars and less
disturbing events are fomented to bring a country to its knees (9-70).
Neoliberalism has a
universal tendency to social inequality, concentration of wealth which has been
unequalled since 1920s.
The genius pf
neoliberal theory is to …provide …mask of words like…freedom, liberty, choice
and the right to hide grim realities of the restoration …of naked class power (71-Harvey p 119).
Chinese Style
of Neoliberalism:
Mao died in
12/1976. In 12/1978, Deng Xiaoping announced a program of economic reforms.
They coincided with neoliberal trends in the USA and Britain. China developed
centrally controlled market economy establishing the intimate relationship
between two as in other countries.
Egalitarianism was
not given up, but individual and group initiative was unleashed and consequent
inequality was tolerated. Deng promised pursuit of four
modernizations-agriculture, industry, education and science/defense.
Competition was allowed between the state owned and private enterprises.
Political and economic powers were rapidly devolved to regions but
confrontation with the power centers in Beijing was avoided. The country was
opened up to foreign trade and investment under strict state control. With
emphasis on joint ventures, technology transfer and foreign reserves, it was
concentrated initially in Guandong, next door to Hong Kong (1-72).
The emergence of
neoliberal policies of 1980s opened up a space of China’s entry into the world
market, not possible under Bretton woods system.
China, by not
acceding to shock therapy administered to Russia and central Europe in 1990s,
avoided their disasters and developed state manipulated market economy with
stunning growth rates averaging 10% a year and rise in standards over twenty
years but also suffered from eco-degradation, increased social inequality and
capitalist class power under the aegis of the C.P. (3-73).
It kept the
capitalist class off shore, making it easier to control. Finance capital had to
deal with state owned banks. Rather than compromise with state ownership, only
managerial autonomy was granted. The state, though, had to deal with the
Chinese Diaspora. Hong Kong was absorbed in 1997. It was allowed
into the WTO in 2001.
Worker protest
started in 1986. Student protest ended up in Tiananmen Square massacre…
Simultaneously Wang, “monetary policy became a prime means of control...
Shanghai-Pudong development zone fully opened up and development zones…on track
5-74). In 1992 the whole country was opened up under close supervision of
the Communist Party and democracy of consumption was promoted in urban areas.
In 1978, nearly
every thing was under state owned enterprises. They were efficient and offered
job security and social welfare. Agriculture worked under the communist system,
but productivity was low. Village residents were less privileged and were kept
separate from urban population with a system of residency permits which held
back mass migration. Each sector in regional state plan was assigned targets.
Banks deposit savings provided money for investment. The system gave a social
safety net. Open market was first created by dissolving communes. Town and
village enterprises were created out of assets of communes. Wholly private
sector was permitted only on small scale product/trade and gradually expanded
with limits on employment of wage labor.
In 1990s, FDI came
in and were initially limited to joint ventures. Banks expanded and substituted
for the state to finance investments and line of credit (14-75) .
By the end of
1980s, communes were dissolved. Peasants did not own land, but could lease or
rent it, hire labor and sell produce at market prices. In 1978 to 1984 rural
incomes went up 14%, but stagnated later and fell by 1998. Disparity between
rural and urban incomes increased; urban income per year was $80 in 1985 went
up to 1000 in 2004, while rural fell from $50 to 300. In addition they had to
pay for health and school (76).
Bibliography/References:
1. P.Treanor, P.,
“Neoliberalism: Origins, Theory, Definition,” http://web.inter.nl.net/users/Paul
Treanor/neoliberalism.html. 2.
2. Klien, N., “Of
Course White house Fears Free Elections in Iraq,” Guardian,
January 24, 2004, 18.
3. find ref on Geneva
and Hague conventions.
4. Crampton, J., “Iraqi
Official Urges Caution on Imposing Free Market,” New York Times,
October 14, 2003, C5.
5. Valdez, G.,
“Pinochet’s Economists: The Chicago School in Chili (New York: Cambridge
University Press, 1995).
6. Ibid.
7 .Ibid.
8. Dahl, R and C.
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13. Ref on Washington
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55. Stiglitz, “Roaring
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