The rise and fall? of neoliberal globalization: an overview of the debates

Globalization has been interpreted in diverse ways by commentators and analysts alike. Similarly, there are different understandings and interpretations of what neoliberal globalization means in different geographical settings and political context (see, for example, Giddens 1999; Sopa 2002; Scholte 2002). However, despite differing interpretations and opinions regarding the merits and demerits of globalization, its ubiquity

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is well understood and accepted (Bhagwati 2005; Held and McGrew 2007). Equally well recognised is the idea that the powerful dynamics of globalization cannot be reversed (Bhagwati 2005; Stiglitz 2006). This is not to say that globalization cannot be managed. In fact, scholars like William Tabb (2001) have countered the idea regarding the helplessness of the state in the wake of globalization.

The debate on globalization cuts across social sciences, generating an extensive literature in the fields of political science in general and its subfields such as international relations and political economy, development studies and cultural studies in particular. The proliferation of literature combined with disagreements among commentators on the meaning, effects and impacts of globalization, poses a major intellectual challenge in conceptualizing and theorizing the vast range of changes that have ushered in following the advent and strengthening of the process of globalization. Nevertheless, the impacts of neoliberal globalization specifically, have remained hotly debated, controversial and contested issue in many countries throughout the world (Steger 2003; Strand, Mueller and Mcarthur 2005; Gupta and Sharma 2006). This is particularly so in the context of postcolonial states like India.

It is generally agreed that neoliberal globalization followed the break-down of the so- called ‗Keynesian consensus‘ in the early to mid-1970s. A key moment in the shift to neoliberal globalization was the breakdown of the Bretton Wood System of monetary regulation (Birch and Mykheneko 2010). However, the ideological force of neoliberalism reached its peak in the early 1980s, during the Presidency of Ronald Regan in the USA and the premiership of Margaret Thatcher in the UK. The end of the Cold War and the collapse of the Soviet Union in 1989 only further consolidated the force and the resultant sweep of

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neoliberal ideology across the world. The end of communism lent added force to the widely peddled view that there was ‗no alternative‘ to neoliberalism (see Fukuyama 1992). I will revisit these developments in the Indian context later in the thesis.

Whilst neoliberal ideology has its origin in the West, the harshest impacts of neoliberal globalization have been felt in the developing world. The debt crisis in the early 1980s - a crisis that followed from the global recession in the early 1970s, is a significant factor in explaining the expansion of neoliberalism. Ever since then, more and more heavily indebted developing countries have turned to the International Monetary Fund (IMF) for assistance. This ‗assistance‘ however, came with strings attached. The IMF (and the World Bank too) attached conditionalities to loans that impelled developing countries to adopt neoliberal policies. These conditionalities can be best summed up in Susan George‘s phrase - ‗earn more, spend less‘ (1977).

Post-debt crises, most states in the global South have seen an increased role for IMF and World Bank in managing their economies often compelling them to adopt structural adjustment policies. These policies in turn, force them to open up their economies to foreign direct investment (FDI), markets forces, free and open trade. It has been argued that such compliances have been achieved by varying degrees of ‗political pressure, diplomacy, economic pressure and in some cases military might‘ (Cypher 2014). The advent of neoliberal globalization the global South as such has been seen to be brought about at the behest of political pressure from international organizations or treaty devices such as the WTO. It has been very much a ‗top-down‘ imposition.

During the period of the Washington Consensus (circa 1989-1995) developing states accepted, often reluctantly, the idea that prosperity is best achieved though integration into a

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‗deregulated‘ free market system (Aguirree 2008). This idea was fostered and reinforced in policies initiated by the IMF and World Bank. Whilst such developments on one hand resulted in the endorsement and acceptance of ideas such as deregulation, privatization and the ‗roll back‘ in many of the state‘s functions across the developing world. On the other hand, acceptance of globalization also in a way resulted in the widening of the influence area of International Financial Institutions such as the IMF, and World Bank and captivation of state controlled financial institutions under their ambit (see, Khor 2000, Cagatay 2003).

It is not surprising therefore to find critics advancing the argument that neoliberal ideas end up diluting and weakening the social-welfare role of the state. They argue that acceptance of neoliberal prescriptions by the state implies a complete abdication of its conventional social responsibilities in areas like education, health, water, and social services (Bresser-Periera 2009). This is important to the argument I develop in my thesis because it is well accepted fact that women across societies require social security measures of the state and as a logical corollary, any downturn on account of the adoption of neoliberal prescriptions would perceptibly be massively detrimental to their interests (Bergeron 2001; Rao & Kelleher 2005; Steans 2013).

I will elaborate below on the gendered impacts of structural adjustment and state roll-back in the global South. At this stage, suffice is to say that, as the twentieth century winded-up, development models based on the unfettered forces of globalization attracted growing criticism. Unsurprisingly, a growing number of critics of neoliberalism in theory and practice came from developing nations. A prominent example is Venezuela - cited ostensibly as an IMF ‗success story‘. Critics have argued that during the regime of Yugo

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Chavez in Venezuela (2002-2013) domestic political and economic institutions had been undermined by exposure to the forces of free trade and rapid flows of capital. Detractors have also noted the hypocrisy in the neoliberal agenda promoted by the West dominated International Economic Organizations (IEOs) and their dualistic prescription. These prescriptions for example, demand that the developing states liberalize their markets for manufactured goods, the domestic agricultural markets are sought to be protected with continued subsidies. It is such hypocrisies that ultimately have led to a crisis in legitimacy in IEOs, particularly the WTO (Wallerstein 1989: Bhattacharjea and Marjit 2004; Bagchi 2008; Amin 2014; Hayashi 2010).

The anti-globalization movement, which saw neoliberal globalization as a ‗race to the bottom‘, was at the forefront of protests. However, criticism also came from unexpected quarters. Former World Bank economist Joseph Stiglitz (2002) produced a bestselling book on ‗globalization and its discontents‘ in which he argued that the IMF had forced neoliberalism and Washington consensus policy goals on developing countries at times when it was not appropriate. This had resulted in catastrophic failures. Robert Hunter- Wade‘s (2004) work mapped the growing levels of poverty and increased inequalities in wealth- and hence power- that attended neoliberal globalization. Throughout the 1990s, the argument that the ‗cookie cutter‘ approach to globalization did not work and created moral hazard, gained ground (Stiglitz 2002; Bigman 2007). I will not rehearse the shift from the Washington Consensus to post-Washington Consensus at length here. Suffice is to say, that from the mid-1990s onwards, the neoliberal orthodoxy came under attack from many and varied quarters and this re-invigorated debates on the role and function of the state.

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2.3.1. A Note on complex interdependence, new institutionalism and the

state

It is worthwhile here to provide a brief reference to the literature on ‗complex interdependence‘ and ‗new institutionalism‘. I include this brief discussion here because it is pertinent to my discussion on the place of state, specifically, of the Indian state. Both complex interdependence and new institutionalism acknowledge the role of state in responding to and negotiating the realities of a changed world. It has long been noted that globalization has engendered complex social, political and cultural changes which have combined to usher in a world that is much different from a century ago. This is not a ‗borderless‘ world, but rather one characterized by complex interdependence (see, for example, Held 1999; Dicken 2003). Growing trade in goods and services has deepened relationships between states, but there remain significant differences in terms of the trajectory of economic developments in specific countries. Moreover, globalization is a differentiated process that generates new forms of inequality. Globalization has brought about ‗a reconfiguration of power at all levels‘ and has generated a changed role for the state, as I alluded to above (Bernard 2000: 153). As such, the state-specifically, the national governments, must now look upwards to international networks associations, and downwards to native civil associations. Additionally, the need is also to look up to the market forces like the transnational and multinational corporations.

Proponents of the new-institutionalists globalization thesis (Garrett 1998; Hall and Soskice 2001; Weiss 2003), accept that globalization is a driving force for change. However, they contend that the ways in which states respond and the outcomes they achieve are different since responses are driven by different cultural and institutional contexts.

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According to Weiss ‗domestic institutions, depending on their characteristics, can hinder or enable states to respond to new challenges and accomplish new tasks, thus softening, neutralizing, or exaggerating the potentially constraining effects of global market‘ (Weiss 2003: 27-8). It is left to the national governments then to design their institutions and make them work in ways that can help them achieve better results and outcomes for their respective populations.