The document provides an overview of neoliberalism and its rise as the dominant ideology since the 1970s. It discusses key figures who promoted neoliberal policies like Thatcher, Reagan, Deng and Pinochet. It also summarizes critiques of neoliberalism from scholars like Harvey, Kelsey and analyses of the crisis of the welfare state and neoliberal critiques of state intervention in the economy.

1. What is neoliberalism?
TEPC220-12A (HAM) / PCSS201-12A (HAM)
Social Issues in Aotearoa/New Zealand
Education
Education and New Zealand Society

2. Rationale for this course
There are four main aims for this course:
1. to introduce students to the underlying political and economic
theory behind neoliberal ideology as the main educational policy
paradigm in New Zealand since 1984;
2. to introduce students to an episode of contemporary educational
history in New Zealand since the election of the Fourth Labour
Government in 1984;
3. to introduce students to the notion of ‘policy enactments’;
4. to consider some of the ‘lived effects’ of policy in schools.

3. Restructuring of state education
• The restructuring of state education systems and particularly higher
education in many Western countries during the last two decades
has involved a series of significant shifts:
- away from education as free and secular to private, personalised
and religious;
- away from “equality of opportunity” that historically defined NZ’s
welfare state;
- away from state education to private education;
- away from an emphasis on administration and policy to an emphasis
on management;
• This phenomenon needs to be viewed in the context of the rise of
neoliberalism as the predominant ideology of globalization.

4. A Brief History of Neoliberalism
• Harvey traces the intellectual
roots of neo-liberal thought to
the Austrian political
philosopher Friedrich von
Hayek (author of The
Consititution of Liberty). It is,
Harvey says, a form of
utopianism the dangers of
which were first identified by
Hayek’s contemporary Karl
Polyani back in 1944.

5. Karl Polyani
• “The idea of freedom ‘…degenerates into a mere advocacy of free
enterprise’, which means ‘the fullness of freedom for those whose
income leisure and security need no enhancing, and a mere pittance
of liberty for the people, who may in vain attempt to make use of
their democratic rights to gain shelter from the power of the owners
of property’. But if, as is always the case, ‘no society is possible in
which power and compulsion are absent, nor a world in which force
has no function’, then the only way this liberal utopian vision could
be sustained is by force, violence and authoritarianism. Liberal or
neo-liberal utopianism is doomed, in Polyani’s view to be frustrated
by authoritarianism, or even outright fascism”.

6. Ronald Reagan
• 40th President 1981-89
• Governor of California, 1967–1975
• First term, 1981–1985
• "In this present crisis, government is
not the solution to our problems;
government is the problem.”
• “Reaganomics”: Reagan implemented
policies based on supply-side
economics and advocated a classical
liberal and laissez-fair philosophy,
seeking to stimulate the economy with
large, across-the-board tax cuts.
• Second term, 1985–1989
• End of the Cold War

7. Deng Xiaoping
• As leader of the Communist Party 1978-92),
Deng was a reformer who led China towards
a market economy.
• "To learn knowledge and truth from the West
in order to save China.”
• Gaige Kaifang (lit. Reforms and Openness):
Since 1979, the economic reforms
accelerated the capitalist type, while
maintaining the Communist-style rhetoric.
• advanced the "four modernizations"
(economy, agriculture, scientific and
technological development and national
defense)
• “Socialism with Chinese characteristics”
• “Planning and market forces are not the essential
difference between socialism and capitalism. A
planned economy is not the definition of socialism,
because there is planning under capitalism; the
market economy happens under socialism, too.”

8. Margaret Thatcher
• Longest serving British PM 1979-1990
• Strongly influenced by Hayek and Milton
Friedman
• Agenda of lowering direct and increasing
indirect taxation; attack on labor unions;
privatisation of state assets.
• “I think we have gone through a period when too many
children and people have been given to understand "I
have a problem, it is the Government's job to cope with
it!" or "I have a problem, I will go and get a grant to cope
with it!" "I am homeless, the Government must house
me!" and so they are casting their problems on society
and who is society? There is no such thing! There are
individual men and women and there are families and no
government can do anything except through people and
people look to themselves first. It is our duty to look after
ourselves and then also to help look after our neighbour
and life is a reciprocal business and people have got the
entitlements too much in mind without the obligations”
(1987)

9. Augusto Pinochet, Chile
• President of the Government Junta (1973-
1981), President of the Republic 1974-1990.
• In 1973 led a coup d’etat to depose Allende
of a democratically-elected socialist
government
• Killed, interred and tortured thousands of
political opponents
• Under the influence of the free market-
oriented libertarian “Chicago Boys”
implemented economic reforms including
tariff cutting, opening markets, curbing union
activity, privatising social security, and
privatisation of state assets.
• Transferred power to a democratically
elected President in 1990
• Human rights violations, embezzlement and
tax evasion

10. David Harvey
David Harvey is Distinguished Professor of Anthropology at the City University of New York, well
known for his research and writing on globalisation and social change.
• “Future historians may well look upon the years 1978–80 as a revolutionary turning-
point in the world’s social and economic history. In 1978, Deng Xiaoping took the first
momentous steps towards the liberalization of a communist-ruled economy in a
country that accounted for a fifth of the world’s population. The path that Deng
defined was to transform China in two decades from a closed backwater to an open
centre of capitalist dynamism which sustained growth rates unparalleled in human
history … Margaret Thatcher [was] elected Prime Minister of Britain in May 1979, with
a mandate to curb union power … Then, in 1980, Ronald Reagan was elected
President of the United States and, armed with geniality and personal charisma, set
the US on course to … curb the power of labour, deregulate industry, agriculture and
resource extraction, and liberate the powers of finance both internally and on the
world stage. From these several epicentres, revolutionary impulses seemingly spread
and reverberated to remake the world around us in a totally different image … [These
leaders] plucked from the shadows of relative obscurity a particular doctrine that went
under the name of ‘neoliberalism’ and transformed it into [a] central guiding principle
…
• http://newlearningonline.com/new-learning/chapter-4-learning-civics/david-harvey-a-
brief-history-of-neoliberalism/

11. A Brief History of Neoliberalism
by David Harvey 1/5
http://www.youtube.com/watch?v=PkWWMOzNNrQ
• There are two things to be said. One is, if
you like, the theory of neoliberalism and the
other is its practice. And they are rather
different from each other.
• But the theory takes the view that individual
liberty and freedom are the high point of
civilization and then goes on to argue that
individual liberty and freedom can best be
protected and achieved by an institutional
structure, made up of strong private property
rights, free markets, and free trade: a world
in which individual initiative can
flourish. The implication of that is that the
state should not be involved in the economy
too much, but it should use its power to
preserve private property rights and the
institutions of the market and promote those
on the global stage if necessary.

12. Interview with Harvey – Sasha Lilley
http://mrzine.monthlyreview.org/2006/lilley190606.html
• SL: Did this group see their role as promoters of these ideas in the political
realm?
• DH: They took the view that state interventions and state domination were
something to be feared. And they weren't only talking about fascism and
communism, but they were also talking about the strong welfare state
constructions that were then emerging in Europe in the postwar period and
also talking about any kind of government intervention into how the market
was working. They saw their role as very political, not only against fascism
and communism, but also against the power of the state, and particularly
against the power of the social democratic state in Europe.
• SL: The welfare state was characterized by a compact of sorts between
labor and capital, the idea of a social safety net, a commitment to full
employment -- you call this "embedded liberalism." Up until the 1970s it
was supported by most elites. Why was there a backlash against the
welfare state and the push for a new political economic order in the 1970s
that gave rise to the political implementation of neoliberal thought?

13. The History of Neoliberalism
• Neoliberalism - the doctrine that market exchange is an ethic in itself, capable of
acting as a guide for all human action - has become dominant in both thought and
practice throughout much of the world since 1970 or so. Its spread has depended
upon a reconstitution of state powers such that privatization, finance, and market
processes are emphasized. State interventions in the economy are minimized, while
the obligations of the state to provide for the welfare of its citizens are diminished.
David Harvey, author of 'The New Imperialism' and 'The Condition of Postmodernity',
here tells the political-economic story of where neoliberalization came from and how it
proliferated on the world stage. While Thatcher and Reagan are often cited as
primary authors of this neoliberal turn, Harvey shows how a complex of forces, from
Chile to China and from New York City to Mexico City, have also played their part. In
addition he explores the continuities and contrasts between neoliberalism of the
Clinton sort and the recent turn towards neoconservative imperialism of George W.
Bush. Finally, through critical engagement with this history, Harvey constructs a
framework not only for analyzing the political and economic dangers that now
surround us, but also for assessing the prospects for the more socially just
alternatives being advocated by many oppositional movements.

14. The New Zealand Experiment – Jane Kelsey
http://www.converge.org.nz/pma/apfail.htm
• New Zealand used to claim credit for being the birthplace of the
welfare state, for being the first country to give women the vote, and
for building a harmonious multi-racial society.
• Today, however, it is becoming infamous for what is known as the
"New Zealand experiment." Economic theories which had never
been tried, let alone proved, anywhere else in the world became
New Zealand government policy--first at the hands of a Labour
government from 1984 to 1990, and then continued with equal, if not
greater, fervor by its National government successor.
• The "fundamentals"--market liberalization and free trade, limited
government, a narrow monetarist policy, a deregulated labour
market, and fiscal restraint--were taken as "given," based on
common sense and beyond challenge. These radical policies were
systematically embedded against change.

15. NZ “the perfect field trial”
• Kelsey’s study reviews the political
underpinnings of the early 1980's, and the
full dimensions of the neo-liberal programme
imposed over more than a decade, spanning
two Labour governments followed by two
terms of National Party rule. Kelsey writes in
the full knowledge that New Zealand
became a privileged prototype for neo-liberal
reform, endorsed by international agencies
(IMF), business associations (European
Management Forum) and think tanks
(International Institute for Economics).
• New Zealand was the perfect field trial
for extreme structural reform. It was
small and geographically separate, it
has a single-house parliament
dominated by the executive and it was
dosed up to the eyeballs with all the
toxins that the reformers said were
poisoning capitalism. Import controls,
capital controls, strong trade unions, a
redistributive welfare state, a large
state sector; New Zealand was hooked
on all the bad drugs….
• As a consequence of these reforms,
inequality in New Zealand grew more
rapidly than in any other country. The
government created an underclass
where none had existed before.
• http://www.guardian.co.uk/business/2002/jan/21/comment.deb
t

16. Welfare state regimes
1. Liberal WS – means-tested assistance, modest
universal transfers; severely circumscribed by liberal
work-ethic – limits of welfare; strict entitlement rules;
state encourages market (US, Canada, Australia)
2. Corporatist-state – state bureaucracy replaces
market as provider of welfare but upholds status, with
strong Church backing & preservation of traditional
family values (Austria, France, German, Italy)
3. Social democratic model - Universalist &
decommodification of social rights with aim of
promotion of equality

17. The Historical Development Welfare Models
• In reaction to the dominant individualist philosophy of the
day, political philosophers proclaimed the duty of the
state to secure the common good of all its members,
typically defined in terms of morality, social cohesion and
equity.
• The improvement of public and private morals was
perhaps the least contentious of the aims, since it was
widely agreed that ignorance, disease, fecklessness,
drunkenness, criminality and squalor were associated
with extreme poverty.
• social cohesion could not be achieved without equity, or
justice in distribution, denied by the system of market
rewards.

18. Education as welfare
• Education is seen as fundamental to the
welfare state – for citizenship, political
participation and democracy, and
determining of employment and life
chances
• Also fundamental means for the
distribution of social goods and a way of
achieving a fair, equal and decent society
that is cohesive

19. The Crisis of the Welfare
State
1. Anti-state critiques - ‘individualism vs
community’ (Peters & Marshall, 1996)
2. Left-wing critiques e.g., Ivan Illich’s
‘deinstitutionalization’ and ‘deschooling’
3. New-right – attacks on ‘big bureaucracy’;
decentralization, deregulation, devolution;
growth of welfare dependency
4. Fiscal crisis of the state – oil shock of 1970s,
aging populations & the inexorable rise in
welfare costs

20. Anti-State critiques
• From the late 1970s, a combination of anti-statist critiques and
public sector deficits created a climate of fiscal retrenchment. The
New Right (neoliberals) argued that the constant enlargement of
social welfare undermined economic growth, political legitimacy and
traditional community and family values. Left-wing critiques
emphasised the fiscal and legitimacy crisis.
• older economics literature emphasised the inexorable growth in the
demand for welfare, based on the simple proposition that welfare
was a ‘superior’ good (demand increases more than proportionally
as income increases). (Endogenous)
• sociological explanations emphasise the exogenous growth in the
demand for welfare. The welfare crisis is said to arise from the
emergence of new categories of objective need – an ageing
population, family breakdown, feminisation of the labour force, wage
dispersion and unemployment – so that the crisis of welfare is
essentially a crisis of adaptation.

21. Neoliberal critique of the WS
• Neoliberals are united by the belief that state intervention to promote
egalitarian social goals has been responsible for economic decline,
and has represented a violation of individual rights, self reliance and
initiative.
• Neoliberals believe that equality and freedom are incompatible and
that freedom construed in individual and negative terms (i.e.,
freedom from intervention) is indispensable for economic vitality and
individual well-being.
• The theoretical underpinnings for this view are to be found, in part,
in a contemporary rejuvenation of neoclassical liberal economic
theory which privileges both the market as an institution above all
others, and market values over all other values.

22. Neoliberal analysis (1)
• Neoliberals have focused their attention increasingly on the rising
and apparently irreversible tide of welfare expectations, arguing that
the welfare state has evaded both investment and work incentives.
• In their eyes, the welfare state has directly contributed to the
economic recession suffered by Western countries since the mid-
1970s.
• The combined effects of social policies -- including guaranteed
minimum wages, superannuation, and the exponential growth of
health and education sectors -- have strengthened organised labour
vis-a-vis capital, augmented wages as against capital goods, and
increased state borrowing's from itself, leading to a decline of
profitability and capital shortage.

23. Neoliberal analysis (2)
• Neoliberals argue that the so-called perverse effects lead to greater
state interventionism in both social and economic terms. But the
more the state helps, they argue, the more it will have to help and at
diminishing levels of effectiveness.
• Increasing levels of intervention, while leading to the current crisis of
an imbalance between state receipts and expenditure, tends in the
long term to rob economic liberalism of its vitality. "It sounds the
death knell of the market economy, of competition -- in a word, of
private enterprise".
• At bottom, the perverse effects of economic and social intervention
represents to neoliberals a fundamental threat to individual political
and democratic freedom. The policy solution is both simple and
straightforward -- a revival of the classical articles of faith of
economic liberalism; a return to the principles of a so-called free-
market economy; a re-privatisation of the public sphere aimed at
capital accumulation.

24. Welfare Dependency and the
New Moral Ideal
• Neoliberalism has emerged as the dominant paradigm of
public policy.
• Citizens have been redefined as individual consumers of
newly competitive public services.
• The public sector itself has undergone considerable
downsizing.
• Management has been delegated or devolved while
executive power has been concentrated even more at
the center.
• Nowhere is this shift more evident than in social welfare.
There has been a clear shift away from universality to a
“modest safety net”.
• The old goals of participation and belonging have been
abolished. User-charges for social services have been
introduced across the board.

25. Cuts to Social Welfare
• There have been substantial cuts in benefits and other forms of
income support.
• Eligibility criteria have been tightened up. Targeting of social
assistance has become the new social philosophy and there is a
greater policing of the welfare state aimed at reducing benefit fraud.
• Neoliberals want to free people from the dependence on state
welfare. The old welfare policies discouraged effort and self-
reliance. Neoliberals hold that the welfare state was responsible for
producing young illiterates, juvenile delinquents, alcoholics,
substance abusers, and drug addicts.
• Government and state monopolies in the delivery of social welfare
services has encouraged the growth of “dysfunctional families”. The
common problem with health and education is that they are
monopoly services run by the public sector. These services need the
discipline of market forces. Neoliberals argue that the welfare
problem as one that delivers benefits as of right which has led to a
loss of personal responsibility.

26. New Welfare Rhetoric
• The main impetus behind welfare reform, the New Right maintain, is not
fiscal, but moral.
• The welfare state has robbed dependents of their status as moral beings.
Therefore, any state policy of assisting the poor ought not to be based upon
the concept of welfare rights for the demand for rights removes the
relationship between giver and the receiver from the moral domain.
• Sole parents stand out as the most disadvantaged of the disadvantaged.
Poverty has a gendered and ethnic face and when we talk poverty we must
talk not about individuals but families, specifically sole female parent
families.
• The new welfare rhetoric of individual self-reliance, competition and
enterprise advanced as a blanket and universal solution to the problem of
welfare dependency simply does not respect the facts. To argue that the
welfare state has caused dependency is simplistic and wrong-headed.
• To want to moralise and to pathologise the state of welfare dependency, is
to hold the poor and disadvantaged responsible for being poor and
disadvantaged.

27. Welfare, families & women
“What some writers are calling ‘the coming welfare wars’
will be largely wars about, even against, women.
Because women constitute the overwhelming majority of
social-welfare program recipients and employees,
women and women’s needs will be the principal stakes
in the battles over social spending likely to dominate
national politics in the coming period. Moreover, the
welfare wars will . . . be protracted, both in time and
space. . . ‘the fiscal crisis of the state’ is a long-term,
structural phenomenon of international proportions. . .
And the fiscal crisis of the welfare state coincides
everywhere with a second long-term, structural
tendency: the feminization of poverty.”
Nancy Fraser, ‘Women, Welfare, and the Politics of Need Interpretation’. In: Unruly Practices: Power, Discourse
and Gender in Contemporary Social Theory, Cambridge, Polity Press, 1989, p. 144.

28. The moral construction of poverty
• Policy constructions of the poor and the moral dictates
involving work, marriage and the domestic code.
• welfare policy occurs around the questions of who is
morally excused from work, constructions of the
domestic code, and who is excused from childbearing
and child rearing outside of marriage.
• naming the problems of poor, solo-mother families as
dependency tends to make them appear to be individual
problems, as much moral or psychological as economic.

29. Some Useful Weblinks
1. What is
neoliberalism?http://www.socialistproject.ca/leftstreamed/ls
1.php
2. “The essence of neoliberalism”, Pierre Bourdieu
http://mondediplo.com/1998/12/08bourdieu
3. “Theorising Neoliberalism”, Chris Harman
http://www.isj.org.uk/index.php4?id=399&issue=117
4. A Primer on Neoliberalism
http://www.globalissues.org/article/39/a-primer-on-
neoliberalism