Neoliberalism is not Only Producing a New Social Order but Its Own Geography as Well - Essay Example

It has been asserted that Neoliberalism, whilst capable of producing a new social order, creates its own geography. However, what is neoliberalism? It is a theory which promotes economic liberalisation, free market ideologies, and advocates free trade. Neoliberalism emerged as a label which would control the historical economic problems of capitalism which, when unrestrained, creates unequal distribution of wealth that was a significant driver of the Great Depression (Allgoewer 2002). The emergence of the neoliberalist perspective was that competition is what serves as a catalyst for achieving economic prosperity, however neoliberals asserted that maintaining a rather laissez-faire system tended to devour those with fewer economic resources and the development of corporate monopolies served as an impediment for successful competition. Neoliberalism is not only considerate of economics, the theory is about perfecting the structural inter-dependencies of a state which impede national prosperity. Such policies in neoliberalist ideology include limiting welfare programs, encouraging privatisation in public education, and promoting deregulation of corporate businesses. However, Harvey (2005) argues that neoliberalist philosophy is foundationally a construction that favours the elite and actually serves to reinforce the establishment of class divisions and class power. The author offers a compelling argument that neoliberalism imposes sanctions on the poor, whilst servicing the interests of the privileged, in an effort to support free market ideologies (Harvey). Hence, neoliberalism not only creates a new type of social order, it creates its own geography as well. In an effort to promote free trade and secure the interests of markets, the structural systems that make up a state must be given consideration. For instance, the privatisation of education would ideally, under neoliberalist theory, encourage less public funding from government to make education more practical and productive. However, as a result of this new educational foundation, only those with ample resources would be able to obtain the education necessary to be productive and competitive in the free market economy. Neoliberalism in the educational sector has led to increasing emphasis on promoting consumerism and capitalism in the classroom environment, growth in managerialism as a curriculum ideology (Deem 2001) and commercialisation of research and even athletics (Bok 2003). Hence, neoliberalism creates its own geography by developing or deconstructing the structural components necessary to guide a free market economy (such as education) and, hence, becomes a full-fledged economic order by which society must comply. With increasing influence from globalisation, neoliberalist geographies transcend the domestic state and are constructed by other global actors in a worldwide free trade system which guides foreign economic and social policies in an effort to support a capitalist ideology. This essay focuses on the many different components of neoliberalist theory to illustrate how the philosophy creates its own geography. The essay focuses on neoliberalism in politics, describes the theory’s impact on social systems, discusses developments in corporate business, and neoliberalism’s influence on consumers. With the ideology invariably inter-dependent on multiple systems in order to sustain a free market model, to understand how neoliberalism creates its own geography, research must be considerate of more than simply economics. Neoliberalism creates its own geography by changing social attitudes, altering the focus of relevant educational curriculum, and building many disparate systems which have become fundamental in promoting a capitalistic economy. Neoliberalism in education Neoliberalism has created its own geography by making significant transformations in academia. In order to ensure that citizens of a state are equipped with the talents and knowledge necessary to operate a successful free market system, the neoliberalist movement has changed the focus of academic management and course content delivery. Where university education once focused on the humanities and social sciences, today these domains have been devalued as they are not seen as viable studies which can successfully attract tuition expenditures. Instead, science, medicine, business management and technology are considered paramount educational objectives. This has led to, according to Vaira (2004), a new form of academic consumerism that has altered the relationships between students (as clients) and learning institutions. Additionally, whereas in the early 20th Century students were afforded a plethora of different curriculum, under neoliberalism students are limited to consumerist-related education and must comply with these structures even if the learning output does not meet with student demand. Neoliberalism has created the situation where academics are exposed to stratification (Gamson 1997). With neoliberalists asserting that limiting public welfare programs are beneficial to economic prosperity, it is necessary to obtain a quality higher education in order to be considered marketable in a free market economy with considerable emphasis on supporting corporatism. Hence, the restructuring of education that has occurred as an outcome of neoliberalist theory creates its own geography by controlling academic output and asserting to students that they are consumers and must abide by consumerist ideology or face the potential consequences of being economically impoverished for rejecting a new academic consumerism. Under the neoliberal model of economics, higher education is considered to be integral in a system of production, thus the production of higher education knowledge becomes consolidated toward economic functions (Morrow 2006). This is how neoliberalism creates its own geography: through the management of academic content and curriculum development which mandates compliance in order to be considered a relevant contributor to the economic system of the state. Neoliberalism is not only influential in changing economic policy, it creates a culture of advocacy for capitalism that radically changes attitudes and values of corporate administrators, educators, government representatives and students within a cohesive culture that must support free market capitalism. Lemke (2001) refers to a redefinition of the individual that occurs as a result of neoliberalist policy. Consumers are considered to be relevant or irrelevant as determined by cost/benefit analyses rather than being defined by non-economic evaluations. Hence, rather than being concerned about the quality and diversity of education output, how an individual will be able to perform to support a capitalistic system becomes the social sphere. Whereas in a socialist system, as one relevant example, individuals are considered to be equal in society, neoliberalism defines citizen viability through the fulfilment of stratified higher education that can provide significant sustenance toward the economic system. In a nation that is supportive of democracy, individuals should be free to pursue their own interests, education and careers. Neoliberalism, however, teaches that individuals must tolerate the financial costs for this freedom (Fitzsimons 2002). This limits autonomy that is an ideological principle in a democratic state and limits choice in the education sector. Even though the main objectives of neoliberalism are fulfilled by being equipped with academic knowledge that is designed to support a capitalistic system, neoliberalist ideology has created a geography where the main social ethos determines human value based on skills capable of sustaining capitalism. Neoliberalism in the corporate environment Neoliberalism seeks to advance the sovereign rights of businesses (Brenner 2006; Boas and Gans-Morse 2005). Neoliberalist statesmen desire to gain freedom and autonomy for the economic benefit of sustaining corporate assets and building business wealth. Neoliberalists are advocates for the Invisible Hand theory by Adam Smith for securing, first and foremost, the interests of the corporation whilst experiencing a variety of trickle-down effects that contribute to the social welfare order. In terms of economic policy, neoliberalism calls for tax reforms that provide better business incentives and innovation production and the liberalisation of trade in the form of reduced or otherwise uniform tariffs that support better international trade relationships (Chomsky 1998). These policies and objectives geared toward sustaining the corporation are influential in what drives corporate governance activities at the corporate level. Businesses that operate in capitalistic economies have well-defined corporate codes of conduct which ensure that corporate leaders are considerate of securing the financial interests of shareholders. Board members and top management of corporations, in a neoliberalist state, are considered to be fiduciary agents for investors, which is defined as a legally-supported relationship between two parties where one party maintains obligation for administration and control over the financial matters relevant for another entity (Conaglen 2005). There are penalties imposed on corporate leadership and clearly defined consequences for breach of this duty and ensuring that corporate leaders provide investors with accurate financial reporting. How, though, does this relate to the neoliberalist ideology? The governance model adopted by UK businesses is founded on the Anglo-American model of governance developed in the United States; two capitalistic nations. To ensure that investor rights and fiduciary duty is sustained by corporate leaders, the House of Lords has established compliance codes referred to as the neighbour principle through which negligence consequences have been established in the interests of protecting shareholder wealth (Elliott and Quinn 2013). Tort law in England now specifies that CFOs, Board members and CEOS publicly guarantee the accuracy of their financial data. This is important in a corporate context due to the fact that capital becomes available through the securities market which is utilised as a means of improving or expanding a corporate business. The securities market is volatile and it is common for corporate stock value to decrease as a result of diminishing confidence in corporate activities or when there is questionable financial reporting occurring. As a result, neoliberalism supports the relationship between investors and the corporate environment and applauds governance models that are primarily concerned with securing the fiduciary duty to important shareholders that contribute to corporate financial strength. The models of governance utilised in today’s companies that operate in capitalistic states was developed on the heels of neoliberalist ideology. In socialist nations, as one example, there is more emphasis on corporate governance that considers the needs of a broader group of stakeholders (e.g. society and consumers) which drives top management activity and strategy developments. With increasing globalisation, major corporations have begun developing trade relationships with foreign business partners and customers which has spread the ideology of capitalism to other nations. Neoliberalism, with its objective of fostering more effective and incentivised free trade, has managed to change global business practices to have more governance emphasis on securing the financial wealth of shareholders as a result. From a corporate perspective, this is how neoliberalism manages to create its own geography. As international companies come to witness the many economic benefits of increased trade relationships, they observe the importance of shareholder-centric corporate governance, using the Anglo-American governance model to alter senior management strategy and activity. Hence, companies operating in a neoliberalist environment serve as a benchmark for liberalising autonomous foreign businesses. Transforming a socialist-type organisation into a capitalistic organisation that favours shareholders to secure more productive corporate wealth illustrates how neoliberalism spreads its ideology and transforms the corporate environment in the process. For instance, there is a growing wealth of literature which discusses the phenomenon of organisational culture within a corporate context. Organisational culture is defined as a set of shared norms, beliefs and values that exists holistically throughout the business where all organisational members work toward the same goal and align their job role practices to achieve corporate wealth. Culture, in this context, is a variety of shared cognitive assumptions that create cohesiveness and unity in a professional and social perspective among managers and subordinates of the organisation (Ravasi and Schultz 2006). Traditional and bureaucratic organisations have typically utilised a command-and-control management ideology whereby employees are controlled through reward versus punishment systems and where there is considerable power distance between managers and lower-level employees. In the Anglo model of business forged in neoliberal states, businesses are becoming more considerate of establishment of a cohesive organisational culture and decentralising control to include more consultation with employees. The neoliberalist corporate perspective has spread from the West into other countries that have management systems where there has traditionally been power distance at the top of the management hierarchy. Strategic alliances and joint ventures with foreign businesses has introduced this decentralisation methodology to the foreign business partner, illustrating the benefits of building human capital and creating an organisational culture with a similar set of shared values and attitudes. In order to sustain these relationships with partners, the traditional command-and-control business leaders begin restructuring their emphasis on human resources in an effort to gain the same competitive advantages achieved by their foreign partner as a result of better employee engagement. In an ideal neoliberalist state, the mental activities of human labourers become packaged as services, which provide a framework commoditising human capital and making these services available for any and all bidders (Caffentzis 2002). As a result of strategic alliances or joint ventures between two foreign business partners, companies witness the cohesion of the organisational culture in the Western firm and begin viewing worker mental activities and human behavioural tendencies as suddenly being vital for improving corporate goal attainment and financial growth. Rather than using traditional management ideology which views employees as simply resources by which to obtain a desired goal, employees are now seen as being very important contributors that can assist in wealth increases for the corporation. The neoliberalist perspective has made it viable to essentially sell human activities and behaviours as an exploitable commodity in the corporation where once employees were considered to be virtually irrelevant and only a small component to the operational model. Successful businesses that were developed within a professional and social state that discovered human beings could be deemed a valuable commodity for ensuring financial strength now spread this ideology to other businesses that wanted to model the same successes of having a unified organisational culture and packaging human capital as a viable commodity. This neoliberalist perspective, therefore, not only transforms foreign business strategies and managerial hierarchy, but alters a society to be dedicated toward procurement of corporate wealth, ensuring a stable securities market that contributes to corporate profitability, and changing organisational commitment levels at the management and employee levels. Without neoliberalism and its focus on providing autonomy and support for businesses, human capital as a contributing factor of competitive advantage would be non-existent in many international states. Neoliberalism and politics Neoliberalism maintains a stern commitment to laissez-faire government, believing that free markets are self-regulating and are more efficient than having a centralised government control over markets (Olssen and Peters 2005). Neoliberals have a very potent level of mistrust for government power and authority and desire to limit the ability of states to perform a high level of control over corporations and the market in which these businesses operate. Government is seen under neoliberalism to be a destructive force for building a competitive market by restricting the production of innovations and attempting to control the use of capital within the corporation. In some nations not operating under a neoliberal ideology, sharing of political power is considered provocative and distasteful. This type of government attempts to maintain holistic control of higher education in an effort to control the production and distribution of knowledge. This situation was evident in Finland where the government was eliciting un-democratic reforms in the educational sectors (Fotopoulos 2008). These reforms included the development of the Helsinki University of Technology, the Helsinki School of Economics and the University of Art and Design. The goal of this objective was to establish very intimate relationships with the business world and for government to regulate the variety of curriculum necessary for the control of knowledge. In Finland, the arts and humanities domains, as a result of political regulation and control over education, now have new priorities that are aligned with marketing, advertising and business economics. Even the context of research studies are controlled by government which are rewarded when studying the concepts of competitiveness in a business perspective. The government attempted to restructure education to ensure that it curriculum was aligned with capitalistic ideologies and preparing citizens to be economic contributors dedicated to its sustenance. This is how neoliberalism creates its own geography. Forcing government to remove itself from the influence of curriculum regulation does not allow knowledge to be repressed in a society. With increasing globalisation and the presence of international media via a variety of mediums, citizens in society are becoming informed of political reforms and successful democratic ideologies across the world. Neoliberalist statespersons in Western countries publicise their attitudes and concerns about having a political system that is allowed to regulate both education and curriculum. These ideals spread across the global communications technology networks which creates unrest from citizens that find their own governments to be restrictive and autocratic. As a result, neoliberalism ideologies change the social condition which, in turn, demands government deregulation in a variety of national matters. These efforts to curb political power in repressive nations was observable in the Tiananmen Square riots in China in which Chinese students resorted to violent protests in an effort to limit political authority (Cunningham 2010). Neoliberal ideals as it pertains to limiting government interference in free markets were imparted to Chinese citizens via international journalism, causing citizens in the country to realise their political systems required sweeping, democratic-centric reforms. The results of the neoliberalism ideology in China led to government being coerced to deregulate businesses. In this country, it was common for many large conglomerates to be wholly-owned and controlled by the government. It was standard practice to assign governance Board members hailing from the Communist party to manage the organisation, even imparting government mandates into corporate codes of conduct that demand support for the Communist Party (Huang and Orr 2007). With financial capital injections provided by the government, its wholly-owned organisations were able to drive out competition from emerging competitors (a detestable situation in neoliberal ideology). Many of these government owned business groups operated in large oligopolies where high prices on products are established and reducing the diversity of product outputs available to consumers. China had become a command economy as a result of political regulation and influence on business, where the central government dictates factors of supply, demand and price-setting (Myant and Drahokoupil 2010). Neoliberalism fuelled the proverbial fire for radical change in citizen sentiment about the viability of their existing restrictive government. As a result, a new geography of liberalisation was created that was a potent influence in driving massive government withdrawal from businesses, thus opening new competitive markets. Neoliberalist values pertaining to the restriction of political control over the economy and business substantially altered the role of government in the market and created a new social demand for egalitarianism versus dictatorship and autocratic government. Furthermore, using China as the relevant example, the country had a very under-developed and immature capital market. As a result of corporations being controlled and owned directly by the government, the limited presence of competing organisations did not foster a strong and diverse capital market. By 2008, after government’s pledge to begin withdrawing its regulatory power from business and markets (accomplished through domestic and international coercion), the capital market sustained over 500 private businesses that were now listed on the Shenzhen Stock Exchange. Government withdrawal had caused the capital market to grow exponentially (800 percent) between 1990 and 2008 (Liang and Useem 2009). Prior to the 21st Century, the government had been the primary provider of funding for corporations. With less government influence came a better private lending industry that improved loan generation in the country for businesses and establishment of credit opportunities. Neoliberalism ideologies, therefore, gave companies opportunities to be financially independent of government and seek multiple alternative capital procurement opportunities. Even though the government was highly resistant to removing its centralised control from business, neoliberalism education of Chinese businesspersons and citizens emphasised the absolutely necessity to have government withdraw its authority and influence in this capacity. Furthermore, smaller businesses that were now able to procure capital through an established securities market that was not being heavily regulated by Chinese government created a new geography of neoliberalism. Chinese government now maintained even high financial resources as a result of the taxation structures in the country which were applied to building a superior infrastructure and developing a new distribution network that provided both urban and rural citizens with product output that had once been challenged with government regulation and influence in the market. Neoliberalism taught Chinese businesspersons and general society that establishing an anti-regulation government maintained significant welfare consequences for citizens and ensured more autonomy in business practices that are critical for competitive growth and capital procurement. Neoliberalism not only coerced government change, but forced more emphasis on securing human welfare in the country whilst allowing private businesses to operate with more freedoms that are generally provided in democratic, capitalistic nations. Hence, neoliberalism did not only produce a new social order, but a new geography of liberalisation that had once been restricted in a country that values significant power distance between government, business and society. Communism had been a long-standing government ideology in China for decades with little emphasis on ensuring the fair and equal distribution of resources among disparate members of society and where government ensured its own vitality and survival as a primary administrative function. As a result, neoliberalism created a new geography that was aligned with the socialist values now driving much of government’s objectives and altering business practices to ensure these fair and equal outcomes for all members of society. By forcing government to pull its influence out of managing business affairs and market conditions (e.g. supply and demand), it radically altered social values, political relevancy in the country, and opened the doors for more international free trade that had once been dominated by a repressive governmental regime. Conclusion As illustrated by the research, neoliberalism can certainly create new social orders, but create its own geography as well. The educational sector has seen a radical transformation and a new type of stratification that mandates curriculum content in an effort to prepare students as future contributors to support the capitalistic economic system. By focusing on business and economics curriculum as desirable outcomes of higher education, it established a new social order in which individuals consider the relevancy of social actors on the ability to procure a university education in business and economics. Even when the outcomes of gaining this type of education is not congruent with actual student demand, status comparisons are made which reinforce new generations that compliance to new curriculum options was the only viable methodology to be considered viable as a member of a capitalistic society. The essay also studied how neoliberal principles, when communicated and distributed nationally as a result of globalisation and mass journalism, can radically change how a society views the role of government as a regulative force. Neoliberalism when communicated in this fashion can create, as shown by the China example, angst and revolt in an effort to remove political influence from being a central controlling component of the market. This situation created a geography of democracy which has now permeated the old-world command economy that has significantly restricted China’s competitiveness and economic strength. This essay has illustrated how neoliberalism creates its own geography. The action of giving businesses more autonomy ultimately brings more economic prosperity for the state and the ability to be a relevant player in the global trade industry. Such changes lead to other changes, including social, professional and political, which radically alters human behaviours or defies existing norms to create a new holistic national culture with a dedication and commitment to sustaining a free market economy. Clearly, neoliberalism can absolutely create new geographies in a capacity that transcends creation of a new social order. References Allgoewer, E. (2002). Underconsumption theories and Keynesian Economics: interpretations of the Great Depression, University of St. Gallen. [online] Available at: http://www1.vwa.unisg.ch/RePEc/usg/dp2002/dp0214allgoewer_ganz.pdf (accessed 1 April 2014). Boas, T.C. and Gans-Morse, J. (2005). Neoliberalism: from new liberal philosophy to anti-liberal slogan, Studies in Comparative International Development, 44(2), pp.137-161. 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