Neoliberalism and Globalisation - Coursework Example

NЕОLIBЕRАLISM АND GLОBАLISАTIОN Student’s Name Course Professor Date NEOLIBERALISM AND GLOBALISATION As an economic and political program, neo-liberalism promises that everyone will be able to gain from the benefits of globalization but in practice there is clearly great disparity. This paper explores this sentiment while focusing on the coal seam gas of Australia with reference to the advantages and disadvantages of neo-liberalism and globalization. This paper positions that neo-liberalism has had its share of effects on the society and economics. It has only benefited a few individuals while the majorities have remained poor. The paper concludes that government intervention can help in solving the problems which have been caused by neo-liberalist policies. Neo-liberalism is an ideological conviction that greatly emphasizes on freedom. Its proponent maintains that economic and social development goals can be best achieved through less government presence or interference. The ideology supports maximization of the economic freedom and a reduction of the state intervention to the minimum. It advocates for the elimination of restrictions especially those imposed by the government regarding the movements of capital, people and goods from one country, region or continent to the other(Jodi 2008). These are aspects that are considered as important to globalization. Neo-liberalism is ideology emphasis on the promotion of a free economy where the state plays a minimal role, with this the proponent of this theory argue that there will be promotion of human welfare , improvement of economy efficiency and personal development. Neo-liberalism entails reduction of trade barriers, where country are able to trade freely , allowing free movement of labour and capital among other policies which are aimed at encouraging trade among nations. Individual liberty is maximized through allowing freedom of choice; the state on the other hand assumes a minimal and purely regulatory role and refrains in engaging in most form of intervention even when the market environment is headed towards inefficiency (Jodi 2008). Coal seam gas industry in Australia There has been a boom in the coal seam gas industry in Australia in the last few years. The industry has grown dramatically given the reserves that are predicted to exist in different regions of the country more in the eastern and southern states. This is expected to last for some time given the demand has been rising and is expected to continue rising both in the domestic and international markets (Mercerand Dressler, 2014). Export value of the coal seam gas has grown fourfold in the last ten years accounting for more than 11 billion. With this development, there has been a need for developing regulatory framework which ensures that there is a balance framework where the issues of development and conservation are equally addressed. The mining process of coal seam gas is very disruptive to the environment. It leads to water and air pollution leaving the locals with depleted water sources as a result of contamination as well as moving the water aquifers(Mercerand Dressler, 2014). Advantages of neo-liberalism Neo-liberalism discourages the government from interfering with the market; it ought to allow the rules of demand and supply play out. With such it will be possible to ensure there is efficiency in the economy. The energy industry has seen the demand increase twofold, households, industries and other consumers of energy are grappling with the increased prices of the commodity. When the market is liberalized, the producers are likely to enjoy high profits, some of which will be ploughed back to ensure more production (Jodi 2008) Gas exploration and extraction is a capital intensive activity. When there are regulations from the authorities the investors profits are limited. With that they are not in a position to recoup the cost. This in return discourages more players, denying the Australian economy more foreign direct investments. With a market that is free, the producers have the freedom to make choices and in return they will earn higher revenues, these profits will help them recoup the costs, giving them a chance to increase their investments. Mining is a labour intensive activity; it requires huge force to execute some of the activities. The multinational would like to lower the cost of production and they depend on the migrant populations to provide labour. Globalization and neo- liberalism as ideologies have played a great role in aiding movement of labour. Australia has received migrant from different parts of the world, with majority coming from Asia. These people have been very instrumental in providing cheap labor for majority of the labor intensive economic activities such as agriculture and mining. Coal seam gas mining has been one of the beneficiaries of this development. With the cheap migrant labour the industry is able to keep its production cost as low as possible. This in return allows the investors to make some good returns, most of which is repatriated to their mother companies (Baviskar,2013). Disadvantages of neo-liberalism and globalization Neo-liberalism has been associated with the problems that most of the economies across the globe have been experiencing today. It is to blames for the increasing gaps between the rich and the poor in modern times. A mere one percent of the world population controls a massive part of the economies estimated at about fifty percent while the rest of the population share out the remaining tiny portion. The system encourages stiff competition among the players, this leaves the strong while the poor have no option other than to succumb to the whims of the rich. They are exploited to an extent where fundamental rights are denied (Jodi 2008). When competition is allowed and the government does not play the referee role, the disadvantage population is bound to suffer. In coal gas mining regions the multinationals seem to have been given a leeway to do as they please. They have the capacity to silence the dissenting voices either through buying them out or offering them some incentives in exchange of their silence. The coal and gas exploration companies continue with their activities unabated, this leads to further destruction of the environment with the impacts of this problem affecting the poor in the society more than any other group (Talukdar,2016). As an economic policy, neo-liberalism has only benefited one percent of the population, it has continued to favor the multinationals and those involved in the coal gas extraction while sending many local residents into poverty. The system has been forced on the majority, but has been chosen and embraced by a few , the capitalists who have taken advantage of its flaws to control the economy and gain at the expense of the masses as well as environment. It promises a win –win situation to everyone but what it delivers is exactly opposite, the few rich persons continue to get richer while the majority impoverished households and individual continue to swim in poverty(Bello, 2008). Although the social economic ideology has some benefits, such as increasing efficiency in a market economy, this only benefits the few rich individuals and multinationals, the poor, mostly the indigenous communities continue to be impoverished by the policies which are made to advance the system. Government hands needs to be felt especially in ensuring that majority are provided with means of livelihood. The market failures need to be addressed and this according to Keynesian economists would require government interventions especially in form of welfare systems. Neo liberalism and globalization do not address this; they subject the masses to exploitation, where they open their economies for the strong western players. This kills the local initiatives as they do not have means to support themselves. The multinationals involved in coal gas exploration and mining repatriate the profits while hoodwinking the locals with corporate social responsibility. The proportion of what is given through such initiatives is a drop in the oceans considering the amount of resources they obtain in these areas and the environment degradation that they have left out of their activities (Andrews, 2008). Free market has witnessed chaos in several economies; one case in point that poses a similar situation is the liberalization of the coffee market. International Coffee Agreement (ICA) had provided a framework where the global south countries would benefit from high coffee prices but upon the withdrawal of support by the proponents of neo-liberalism, the gains went down the drain. Thirty years since the end of ICA there has been widespread crisis in the economies that were supposed to be supported by the agreement. The coffee industry has witnessed massive layoffs, poor prices, bankruptcy, migration as farmers and laborers move away from the farms in search for better prospects. ICA was a successful model for ensuring development (Fridell,2009). The opening up and expansion of the coal seam gas reserves in the eastern and southern regions of Australia has met stiff competition from the locals and environmental conservation activists. It has been heavily criticized for its environmental and social effects , which will not only be felt by the current generation but also to those who will come. It has been described as an activity which will blow up the carbon emission levels, lead to contamination and depletion of the ground water as well as destroy nature and vegetation not forgetting the effects it will have on the indigenous communities residing in these areas(Stiglitz,2004) (Butler, 2010). Most of these problems have been blamed on neo liberalism and globalization. With freeing up of the markets, investors are moving into new frontiers in search for resources. They are taking advantage of the free economies to increase their production and in return add on their profits. Movement of people has also been enhance by globalization, migrants from less developing countries are finding their way into Australian mining regions where they are providing cheap labour in this industry. Neo liberalism dn globalization have made mobility of labour easy. People are moving from areas where high rates of unemployment are prevalent to places where their skills are needed. The mining zones and more so the coal mines, are some of the regions where migrant labour is highly sought. They are helping the multinationals, another product of neo-liberalism and globalization cut on the operation and production cost(Beder, 2006). Neo-liberalism and globalization may have helped the government, multinationals and migrants workers but it has had a big impact on the locals. The government has earned revenue from the licenses and fees which the miners are supposed to pay to be allowed to operate in the country. The multinationals may have increased their production capacity and ultimate profits margin due to vast coal seam gas resources in the country. The migrant workers and locals may have gained from employment in the mines but the biggest losers have been the local communities and the environment. The local communities have lost their lands, dignity and freedom. They are also bound to suffer due to degradation of the environment. Neo- liberalism may have brought some benefits to the few but the majority and the most crucial segment of the population will remain impoverished due to the actions of the investors who have found their way into the vast resources zones courtesy of policies which are supposed to free up the Australian economy. To solve this problem, there should be some level of government interventions in the economies so as to safeguard the interests of the majority and at the same time tame the excesses which might have been as a result of multinationals penetrating in the coal seam gas mines. References Andrews, T.G. 2008. Killing for coal: America's deadliest labor war. Cambridge: Harvard University Press Baviskar, A.2013. For a cultural politics of natural resources. Economic and Political Weekly 78(498):5076-5095. Beder, S. (2006) Free Market Missionaries: The Corporate Manipulation of Community Values. London: Sterling. Bello, W (2008) De-globalization: Ideas for a New World Economy. London: Zed Books Butler, J. 2010. Conversations with Judith Butler IV. In B. Davies (ed.) Judith Butler in conversation: analyzing the text and talk of everyday life, New York: Routledge. Dean Jodi (2008) Enjoying Neo- liberalism, Cultural Politics Duke University Press London UK; Volume4 Issue 1 p 27 -72 Fridell,G (2009) Fair Trade Coffee: The Prospects and Pitfalls of Market Driven Social Justice, University of Toronto Press Mercer, R and Dressler (2014) Coal seam gas and neoliberalism in regional Australia, Journal of Political Ecology, Volume 21 Stiglitz Joseph (2004) Globalization and its Discontents. New York: WW Norton Talukdar, R(2016). Hiding neoliberal coal behind the Indian poor, The Journal of Australian Political Economy; Sydney 78 (Summer 2016/2017): 132-158. Read More