Academic Debates in Neoliberalism

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Introduction

Critical management studies (CMS) is a research field that applies critical theory to management to provide critiques of how managers and businesses operate. Per Dehler and Welsh (2016), it has four primary roles: a form of analysis, a debate catalyst, a tool to promote social change and emancipation, and an anti-positivist bias vessel. In its first purpose, it challenges conventional assumptions about management and attempts to reduce the inequality and authoritarian tendencies present in them. The debate it promotes is one about management being a pervasive and oppressive institution rather than a function that can be improved. To address these perceived issues, CMS scholars attempt to create radical solutions that change the situation to reduce the prevalence of management (Dehler and Welsh, 2016). With that said, some scholars such as Parker and Parker (2017) have voiced concerns about this deliberate antagonism and called for a more cooperative approach to change. Finally, CMS challenges positivist perspectives that call for objective evidence to support claims, declaring that all knowledge is biased and political and de-emphasizing practical proofs. This article examines the definitions of Neoliberalism from the viewpoints of different scholars, addresses the relationship between Neoliberalism and Critical Management Studies, and discusses the opposing standpoints on Neoliberalism.

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CMS expressly acknowledges its political nature and is generally considered left-wing, with occasional Marxist associations. It is a school of thought that promotes “liberalization, deregulation, privatization, recommodification, internationalization, reductions in direct taxation, and decriminalization of predatory economic activities” (Jessop, 2018, p. 1278). As a result, it promotes freedom of action for large businesses and a minimum of government intervention, expecting market forces to result in overall societal improvement that centrally directed systems mandated by economists such as Keynes cannot match. With that said, over time, the approach has had mixed results, driving large volumes of criticism from many political movements.

Literature Review: The Case for Neoliberalism

The link between CMS and Neoliberalism is the viewpoint under which the governments’ role in the regulation of activities should be minimized. The core proposition of neoliberalism is the reduction of the government’s role in the provision and regulation of services. It is in part informed by the historic issues various governments have had in balancing the cost and quality of the services that it provides. As Barilleaux et al. (2017) show, for many people, the US social security program is an example of this problem, as its costs are continuously increasing as the population ages without being accompanied by corresponding economic growth. Tanzi (2020) also describes fiscal churning, in which governments often collect taxes from social groups but then spend them on those groups again. There are many causes for this issue, the most prominent of which, according to neoliberal theorists, is the lack of competition. Without the pressure to innovate and improve and with limited accountability, government programs are subject to lasting inefficiencies and failures. Instead of driving down costs, agencies are motivated to request higher budget allocations and take more money from citizens without achieving substantial improvements.

The neoliberal solution to this issue involves the replacement of government welfare with market forces that are expected to accomplish the goal of raising the stations of the lower socioeconomic classes. When examining the topic of Neoliberalism, it is important to consider the different authors’ viewpoints on this concept and its applicability in the field of Critical Management Studies. For example, the general approach to managing welfare and social programs targeted towards the public’s wellbeing under Neoliberalism requires a market-focused approach, where the costs have to be lowered to produce efficient services. According to Ramazzotti (2019), governments should abandon the practice of providing social security payments to underprivileged communities and instead encourage them to explore the labor market and apply for jobs that will allow them to make a living on their own. However, in opposition to this, Barrilleaux et al. (2017) note that the business would be granted immense power considering the loose labor market conditions where there are many workers and not enough job positions. Hence, businesses would be prone to exploiting these market conditions and creating work environments that are not adequate without any regulation or intervention from the governments.

Moreover, although Ramazzotti (2019) and other neoliberal theorists argue that this approach can help address the pressing issues in fields such as healthcare, where for the United States, the aging population and government regulation created an immense problem with the cost of care, worsened by the lack of proportionate economic growth, Schiavo-Campo (2017) does not agree. A good example of how neoliberal ideas do not always result in fair market conditions that are beneficial for both consumers and businesses is the deregulation of the pharmaceuticals market in the United States. According to Per Schiavo-Campo (2017), this deregulation has led to a 5,000% increase in drug prices without repercussions. Hence, the example of the United States drug market shows that the neoliberal ideas, when applied in practice, do not always result in a mutual benefit for the general public and the businesses. In some cases, this deregulation causes a crisis that can be addressed only through a government-led intervention.

Notably, there is also a significant difference in the way the founders of Neoliberalism approached this concept and the current approach to it. According to Garrett (2019), Neoliberalism should involve the minimal introduction of any type of government forces. However, in practice, this approach has proven to be difficult to implement and adhere to as attempts to minimize regulation were not successful. In opposition to the traditional neoliberal approach, Garrett (2019) argues that it is currently unclear where the attempts of the neoliberals to minimize the influence of the state will come. Primary, despite the attempts of many neoliberals to promote their political views, they have faced a plethora of opposition from different social groups. Hence, although the theory of Neoliberalism offers an efficient way of managing the public processes that were previously managed by the government, in practice, neoliberals still have to prove that their ideas are viable and can be sustained under real-life conditions.

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Relationship between Neoliberalism and CMS

Neoliberalism and management have been closely associated throughout the latter half of the 20th century. The reason for this relationship is that, though they developed independently, both of these disciplines have developed similar solutions to issues at the same time (Hanlon, 2018). Where neoliberals expected businesses, directed by influential leaders, to take precedence in social development over democratically elected and ineffective politicians, management proponents aimed to develop the same type of director expected by their contemporaries. Both also emphasized competition as a key driver of growth that makes issues apparent and draws attention to solutions. As a result, management was influenced by neoliberal theory, while the political ramifications of the thought school were moderated by developments in managerial ideas.

Over time, the relationship between the two concepts strengthened, and representatives of the two fields began working more closely. A significant effect of neoliberalism on management studies has been the emphasis on the quantification and rationalization of customer satisfaction, which has been decided upon as a primary metric of business success (Eagleton-Pierce, 2016). In their push to create leaders who would actively plan the future of their sectors and, by extension, society as a whole, neoliberal advisors created specific targets toward which senior managers could work. The public sector was also involved in the change, as military planning techniques were incorporated in both the government and private companies with the purpose of improving performance (Knafo, 2020). In the end, both the public and the private sector transitioned to the new model that was driven by data and forecasting that was used to develop highly specific plans.

Neoliberalism and Globalization

Globalization is a natural market phenomenon that has resulted from increased abilities to communicate and transport goods and money worldwide. Companies seek the most efficient options available, and if there are exploitable benefits or synergies in engaging with international trade, they will make use of those advantages. However, neoliberalism has been associated with globalization in a negative context in recent decades. The reason, per Kentikelenis and Babb (2019), is that many organizations with worldwide reach, such as the International Monetary Fund, are promoting the neoliberal version of globalization. The cause, per Tomas (2020), is that this version of the phenomenon involves weaker nations opening up their markets to be exploited by more powerful foreign companies and countries. As a result, instead of creating the expected effect of improving the economic conditions of the nation that engages in it, globalization drains that state’s money away and concentrates it in the wealthiest nations.

In addition to the introduction of opportunities for foreign exploitation of developing nations, neoliberal globalization can also introduce issues internally. Oddsson (2016) examines the case of Iceland, which moved from a relatively egalitarian society to one with a strongly pronounced class divide over two decades of adopting neoliberal policies. On the one hand, per the neoliberal paradigm, wealth was concentrated in the wealthiest social classes. On the other, the open borders promoted by neoliberal thinkers enabled the influx of low-skilled foreign workers that took lower wages than the native population, creating a distinct bottom class while also forcing the former lower earners to reduce their requested wages or become jobless. Notably, despite Iceland’s history of relative classlessness, this paradigm has firmly established itself, and attempts to challenge it have met substantial public and political resistance (Oddsson, 2016). In this way, neoliberalism subverted what could be seen as a positive societal development, and situations such as this one may contribute to the poor reception of globalization by some segments of society.

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With that said, it should be noted that, despite the association of globalization with neoliberalism and its negative connotations, the former can be separated from the latter. The neoliberal case for globalization rests on the existence of countries that have been able to secure a substantial economic advantage by adopting it, such as Japan and China. However, as Every nation can benefit from globalization, but to do so, it needs to find an approach that suits its unique situation and needs. The neoliberal one-size-fits-all model has proven largely ineffective and unpopular over time.

Neoliberalism vs. The Great Money Trick

Another important concept that should be addressed when discussing Neoliberalism and views in opposition to it is “The Great Money Trick,” which is a socialist view on the concept of money and financial relationships within a nation. Ó’Donghaile (2018) finds some parallels between the neoliberal views and those of socialists since the author claims that in both cases, the “The Great Money Trick” and Neoliberalism result in the concentration of wealth in the hands of the upper class. However, as Barrilleaux et al. (2017) discuss in their definition of Neoliberalism, the central idea of this philosophy is not linked to money or the distribution of wealth, but rather it concerns the regulation that governments impose over people and businesses. Moreover, the socialists’ views are linked to the strong government regulation and control over the majority of the social life.

Regardless, researchers such as Watson (2019) criticize Neoliberalism for it strengthening the inequality between nations, especially due to globalization and the increasing interdependency of the nations. Again, the opponents of this view may point to the central ideas surrounding the concept of Neoliberalism, which are government regulation and loosening the control over businesses, to allow them to address the major public issues, including healthcare and welfare. Moreover, the neoliberal approach advocates for the people’s ability to earn their living by themselves, which ultimately means that the “The Great Money Trick” and the inequalities it creates would be considered a norm for neoliberals (Barrilleaux et al., 2017). Hence, Neoliberalism does not offer a valid solution or explanation for how the existing inequalities and the unequal distribution of wealth within the society should be addressed since this approach focuses mainly on deregulation. Still, the current trends, such as the supply chain relationships between developing and developed nations and the exploitation of human labor resulting from it, only deepen the inequalities and wealth gaps.

Neoliberalism and Inequality

The primary criticism of Neoliberalism is linked to it creating a more disproportionate distribution of income and inequalities between nations. Hence, on the one hand, the proponents of Neoliberalism argue that it will help solve the issues that the government is incapable of solving through regulation and control, but on the other hand, the opponents of Neoliberalism argue that it will create more inequality and exploitation of the developing nations by the developed states. For example, Watson (2016) states that in Australia between 1982 and 2012, the use of neoliberal practices resulted in the stagnation of the bottom-end wages, while those at the top of the wage curve received substantially larger profits over this period. Moreover, Watson (2016) notes that industries such as finance and business, which are typically the proponents of Neoliberalism, have benefited substantially over these years, growing their profits, while other industries did not experience the benefits of liberalization. Hence, an apparent criticism arising from these examples is Neoliberalism resolving the issues only for some industries and social classes while deepening the inequality for others.

The relationship between neoliberalism and other types of inequality, such as gender and racial disparities, is more complicated. Outwardly, it supports the empowerment of the underprivileged categories, as everyone is a valuable contributor to the economy. However, as Radhakrishnan and Solari (2015) note, this perspective emphasizes the economic empowerment of women to the exception of the other aspects, which it pointedly ignores as they do not overtly contribute to business success. Moreover, in political terms, specifically, neoliberalism attempts to disenfranchise everyone but the elite. McAfee (2017) claims that it deliberately creates the illusion that one’s choices do not matter before the lobbying power held by private interests. With that said, neoliberalism has not subverted democratic systems entirely to its interest, as the public backlash that led to Donald Trump’s 2016 election and Brexit signifies. Hence, the critics of Neoliberalism point to its racist and sexist agendas, which ignore the contribution to the social wellbeing of the nations made by people who are not engaged in the development of business and making profits.

On the other hand, the proponents of neoliberalism claim that inequality is not the purpose of the paradigm but rather the unfortunate side effect of some of its policies. Specifically, Ostry et al. (2016) state that these problematic methods are the removal of capital movement restrictions and fiscal consolidation. The former is an inevitable aspect of a liberal approach, as doing the opposite would involve direct state intervention into businesses. With that said, research is ongoing into how the adverse effects of these two policies may be mitigated. Thus, it appears that neoliberals recognize the social issues that this philosophy creates, yet some choose to ignore it as an unsubstantial element of the debate, while others point to the need for more research and discussion on the topic of how Neoliberalism can be used to level the inequalities.

Conclusion

As an approach to continued economic growth and the development of humanity, neoliberalism leaves substantial room for criticism. It attempts to solve the issue of government inefficiency, and while it partially achieves this goal, it incurs a substantial cost in doing so and reinforces some of its aspects. It expressly contributes to inequality within nations, promoting the creation of a wealthy upper class and the importation of cheap foreign labor. Its approach to globalization also contributes to the exploitation of less economically developed nations by more advanced ones. The advancement of positivist management approaches can also be seen as concerning, as it emphasizes impersonal measurable metrics over the well-being of the workers. As a result, substantial population categories are disenfranchised both economically and politically, which has resulted in a mounting backlash against the paradigm.

Ultimately, neoliberalism is a collection of benevolent ideas that have not been well-implemented in practice. As the examples of nations such as the USA show, government inefficiency is a problem that cannot be solved by introducing more money into the system. Deregulation can also help promote innovation and improve the conditions of communities by directing resources to companies that develop superior methods for addressing particular issues. Lastly, globalization is both an inevitable phenomenon and one that is beneficial for rapid economic and technological development. However, neoliberalism has failed to implement any of these three items to substantial effect and has also introduced substantial shortcomings to each one. Hence, the criticisms directed at it are valid, though a solution to the current predicament is still unclear.

References

Barrilleaux, C., Reenock, C. and Souva, M. (2017) Democratic policymaking: an analytic approach. Cambridge: Cambridge University Press.

Dehler, G. E. and Welsh, M. A. (2016) ‘Galumphing and critical management studies: perspective and paradox from the United States.’ In Grey, C., Huault, I., Perret, V. and Taskin, L. (eds.) Critical management studies: global voices, local accents. New York, NY: Taylor & Francis.

Eagleton-Pierce, M. (2016) Neoliberalism: the key concepts. New York, NY: Taylor & Francis.

Garrett, P. M. (2019) ‘What are we talking about when we talk about ‘Neoliberalism’?’, European Journal of Social Work, 22(2), pp. 188-200.

Hanlon, G. (2018) ‘The first neo-liberal science: management and neo-liberalism’, Sociology, 52(2), pp. 298-315.

Jessop, B. (2018) ‘Neoliberalization, uneven development, and Brexit: further reflections on the organic crisis of the British state and society’, European Planning Studies, 26(9), pp. 1728-1746.

Kentikelenis, A. E. and Babb, S. (2019) ‘The making of neoliberal globalization: Norm substitution and the politics of clandestine institutional change’, American Journal of Sociology, 124(6), pp. 1720-1762.

Knafo, S. (2020) ‘Neoliberalism and the origins of public management’, Review of International Political Economy, 27(4), pp. 780-801.

McAfee, N. (2017) ‘Neo-liberalism and other political imaginaries’, Philosophy & Social Criticism, 43(9), pp. 911-931.

Ó Donghaile, D. (2018) ‘Modernism, class and colonialism in Robert Noonan’s The Ragged Trousered Philanthropists’, Irish Studies Review, 26(3), pp. 374-389.

Oddsson, G. (2016) ‘Neoliberal globalization and heightened perceptions of class division in Iceland’, The Sociological Quarterly, 57(3), pp. 462-490.

Ostry, J. D., Loungani, P. and Furceri, D. (2016) ‘Neoliberalism: oversold? – Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion’, Finance & Development, 53(2). Web.

Parker, S. and Parker, M., (2017) ‘Antagonism, accommodation and agonism in Critical Management Studies: Alternative organizations as allies’, Human Relations, 70(11), pp.1366-1387.

Radhakrishnan, S., & Solari, C. (2015) ‘Empowered women, failed patriarchs: Neoliberalism and global gender anxieties’, Sociology Compass, 9(9), pp. 784-802.

Ramazzotti, P. (2019) ‘Homo Oeconomicus returns: neoliberalism, socio-political uncertainty and economic policy’, Journal of Economic Issues, 53(2), pp. 456-462.

Schiavo-Campo, S. (2017) Government budgeting and expenditure management: principles and international practice. New York, NY: Taylor & Francis.

Tanzi, V. (2020) The economics of government: complexity and the practice of public finance. Oxford: Oxford University Press.

Tomas, R. (2020) ‘The Limits of neoliberal globalization’, Montenegrin Journal of Economics, 16(4), pp. 157-170.

Watson, I. (2016) ‘Wage inequality and neoliberalism: the Australian experience’, Journal of Industrial Relations, 58(1), pp. 131-149.

Watson, J. (2019) ‘On the postcapitalist nature of learning spaces’, Capitalism Nature Socialism, 30(1), pp. 108-119.

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DemoEssays. 2022. "Academic Debates in Neoliberalism." October 31, 2022. https://demoessays.com/academic-debates-in-neoliberalism/.

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DemoEssays. "Academic Debates in Neoliberalism." October 31, 2022. https://demoessays.com/academic-debates-in-neoliberalism/.