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  3. 3. WHAT IS NEOLIBERALISM? NEOLIBERAL THEORY A largely unregulated capitalist system not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. “The state is assigned a very limited economic role:
  4. 4. WHAT IS NEOLIBERALISM? It is essentially about making trade between nations easier. It is about freer movement of goods, resources and enterprises to maximize profits and efficiency.
  5. 5. CRITICAL ANALYSIS DISPARITY BETWEEN THE THEORY OF NEOLIBERALISM AND THE PRAGMATICS OF NEOLIBERALISM   Principles of neoclassical economics vs political commitment to individual freedom Distrust of state power vs the need for an authority to defend rights of private property, individual liberties and entrepreneurial freedom.
  6. 6. CRITICAL ANALYSIS RESTORATION OF POWER  Gerard Dumenil and Dominique Levy have concluded that neoliberalization was, from the very beginning, a project to achieve the restoration of class power.   1970‟s capital accumulation crisis: There were clear political and economic threats to elites and ruling classes everywhere. They had to move decisively to protect themselves from political and economic annihilation. After the implementation of neoliberal policies in the late 1970‟s, extraordinary surges in income inequalities and wealth occurred in the US, Britain, Russia, China and Mexico.
  7. 7. CRITICAL ANALYSIS RESTORATION OF POWER  The rich and powerful of the world have formed somewhat of an informal alliance with one another in order to protect their mutual interests and maintain their dominance. They “posses a certain accordance of interests that generally recognizes the advantages to be derived from neoliberalization.”  We can even go as far as to say that a political consensus has been reached; that governments throughout the world have fully embraced the neoliberal policy agenda.
  8. 8. CRITICAL ANALYSIS POVERTY, OVERPRODUCTION AND LOCAL DISINTEGRATION   Harsh economic measures have resulted in the gradual disintegration of the Welfare State. Because of the large accumulation of public debts in western countries, the financial elites have been given the power to dictate government economic and social policy.
  9. 9. CRITICAL ANALYSIS POVERTY, OVERPRODUCTION AND LOCAL DISINTEGRATION  This economic restructuring has made the divide between different social and ethnic groups even deeper. Moreover, it has increased the potential capacity of the economic system and expanded levels of production without reducing poverty significantly.    Micro-Efficiency = Macro-Insufficiency: Global oversupply of commodities: a result of the unlimited capacity to produce and the limited capacity to consume. In developing countries, entire branches of industry producing for the internal market are driven into bankruptcy on the orders of the WB and IMF
  10. 10. CRITICAL ANALYSIS DIARMING THE NEW ORDER   “The New World Order is based on the „false consensus‟ of Washington and Wall Street, which ordains the „free market system‟ as the only possible choice on the fated road to a „global prosperity‟.” In order to disarm this world order, we must democratize the economic system and its management and ownership structures. We must redistribute income and wealth, restore the rights of direct producers and rebuild the Welfare State.
  12. 12. PHILIPPINE CONTEXT Payne-Aldrich Act of 1909    Allowed unlimited quantities of all kinds of U.S. Goods to enter the Philippines freely Importing U.S. goods became an obligation for the Philippines Philippine exports to the U.S. were given particular quota restrictions
  13. 13. PHILIPPINE CONTEXT 1946 Bell Trade Act 1954 Laurel-Langley Agreement   Provisions of this act tied the Philippine economy to the economy of the United States. Despite the nominal independence of the Philippines at that time, these established free trade with the U.S., so neocolonial patterns were sustained.
  14. 14. PHILIPPINE CONTEXT THE MARCOS DICTATORSHIP   Authorized a series of investment incentives laws which maintained the neocolonial preferential treatment for foreign investors and allowed the neocolonial trade patterns to continue In general, foreign investors benefitted.
  15. 15. PHILIPPINE CONEXT AGRICULTURE Background Information    1/3 of the land area of the Philippines is fertile and can be used for agriculture The Philippine economy is predominantly agrarian Agriculture, fishery, and forestry contributed to almost 20% to the GDP[Gross Domestic Product]
  16. 16. PHILIPPINE CONTEXT HOW TRADE LIBERALIZATION UNDER THE WTO HAS AFFECTED IT    Although the government attributes the weak growth of agriculture to factors such as seasonal weather conditions, the fact that there is no sustained growth points to the conclusion that the crisis besetting the agricultural sector is structural in nature: low level of technology, small economies of scale, rampant landlessness, and concentration of land ownership among a relatively small elite. Thus, the local agriculture industry is extremely weak and uncompetitive and puts small producers at a disadvantage in the trade liberalization implemented by the government as dictated by the WTO. The Ramos, Estrada and Arroyo administrations all embraced WTO policies (trade liberalization), implementing privatization and deregulation in the local agriculture industry. This devastated the farmers‟ livelihood and the rural economy, because the domestic market was flooded with imports while local farmers‟ produce were still unable to penetrate the markets of developed countries.
  17. 17. PHILIPPINE CONTEXT INDUSTRY Background Information: In 2004, 33% of the Philippines‟ GDP came from the industry sector How Trade Liberalization under the WTO has affected it  The government‟s policy of attracting foreign investments increased foreign dominance in Philippine industries.  Footwear, apparel, rubber, textile, glass, tires, paper, wood, cement, and steel manufacturers in the country all suffered from imports and low tariffs.  Many local companies were forced to downsize/close because of the foreign competition.  Many workers were laid off or force to go on rotation  45.1% of workers in January to March 2004 were displaced because of reorganization, downsizing, and change in management (merger). 8 establishments reduced their number of workers or closed down every day, and 196 workers were displaced daily.  In July 2004, approximately 2,688 Filipinos left the country everyday.
  18. 18. PHILIPPINE CONTEXT SERVICES Background Information: Roughly 44% of the Philippines‟ GDP is from the Service Sector How Trade Liberalization under the WTO has affected it  The Philippines has committed under the GATS to bind all restrictions on market access and has applied national treatment on foreign investors and suppliers in financial services  The Privatization and Commercialization of social services is a burden to average Filipinos.  Rates for vital utilities increase, making them less accessible.  Many families could not pay for healthcare in Public Hospitals.  Education became so costly because of the privatization of state colleges and universities.  Local service providers are marginalized because of the liberalization under GATS.  Capital has become concentrated on foreigners, through TNC‟s.