GLOBALIZATION AND NEO-LIBERALISM This segment examines the impact of neo-liberal theory on globalization.

Neo- liberal theory, as well as the discourse that emerged as a reaction to it, has significantly influenced economics and politics. It can also be seen as being, in whole or in part, an ideology. Neo-liberal theory emerged in the 1930s as a combination of the liberal commitment to individual liberty and neo-classical economics. The free operation of the market and minimal intervention by the state were the cornerstones of the theory. The end of the Depression era marked the second stage of development of the theory; it entered a phase of embedded liberalism. Under the influence of welfare-state-based Keynesian economics, the market, corporations, and individuals came to be embedded in a regulative environment. The Austrian School, under the leadership of Hayek and von Mises, launched a staunch effort to counter such interventionism. The movement grew stronger, as the University of Chicago became an important center of neo-liberal thinking and a training ground for neoliberals under the tutelage of Milton Friedman. A key mechanism in neo-liberal economics was the administering of a shock doctrine, designed to invigorate the economy through shock tac tics such as privatization of industry, deregulation, and reduction of public spending on social welfare programs. While the initial experiment in Chile proved unsuccessful, modified versions were applied by the Thatcher and Reagan governments in the UK and the US respectively. Later, much of the world was coerced into accepting neo-liberalism, at least in part through the efforts of the IMF and the World Bank, which practiced a particular form of shock therapy known as structural adjustment. In order to qualify for financial loans from these institutions, receiving countries had to restructure their economies in line with neo-liberal policy. The theory was referred to as the Washington Consensus, due to its close association with the US. The structural adjustment approach has been severely criticized for leading to a growth in inequality. It has also faced opposition from alter- globalization movements. The third stage entails a transition of neo-liberalism to neo-conservatism, which has a strong commitment to order and morality and the need to impose it on the rest of the world. A potential fourth stage lies in the development of an organic, left alliance involving workers, and racial, ethnic, and gender minorities all of which are to resist neo-liberal (and neo-conservative) globalization. Under, neo-liberalism, the operation of free markets is considered to be crucial. It emphasizes a commitment to deregulation of the markets. Free markets are also portrayed as being intrinsically linked to a democratic political system that facilitates individual economic well-being. Tax cuts are advocated as a mechanism to stimulate investment in the economy, which consequently demands a reduction of government expenditure, especially in terms of welfare expenditure. Although the theory advocates limited government, it favors state intervention to facilitate the business interests and the reduction of barriers to the free movement of capital across national borders. Rather than rendering the state irrelevant, neo-liberalism has modified the functioning of the state in order to facilitate the functioning of the market. Friedman contends that this removal of barriers has leveled the global playing field. This enables everyone to benefit from a flat world. Polanyis critique of neo-liberalism highlights the fact that the laissez-faire system came into existence through the assistance of the state. Left to itself, that system threatens to destroy society. Free markets induce a natural collective reaction by society. Neo-liberalism has been criticized for its narrow definition of well-being, which is equated with economic well-being. The theory also conceals the vested interests of those who push for such an economic system. Adoption of neo- liberal theory has produced severe financial crisis in various countries, and has led to increasing commodification as well as environmental degradation. Ong emphasizes that neo-liberalism as an exception can be distinguished from exceptions to neo-liberalism. An instance of the former would be special economic zones, wherein markets have the maximum freedom. While formal control of these areas is in the hands of the nation-state, de facto power rests with the MNCs that operate within these zones. Exceptions to neo-liberalism are double-edged. While the state can use exceptions to protect citizens from volatility under neoliberalism, they might also be used to worsen the effects of neo-liberalism. Fukuyama locates the end of history in neo-liberalism. Neo-liberalism is not only seen as a positive development, but also as an inextricable part of the foreseeable future. Neo-liberal theory has evoked implicit as well as explicit criticism from neo- Marxian thinkers. Sklair places emphasis on transnational practices that are able to cut across boundaries through transnational corporations, the transnational capitalist class, and the culture-ideology of capitalism. Transnational corporations utilize the capitalist class to develop and solidify the consumerist ideology that is necessary to meet the demands of the capitalist system. Hardt and Negri critique the neo-liberal form of globalization in terms of imperialism and empire. They locate a postmodern turn in imperialism, leading to a decentering of the imperialist empire and the creation of Empire. However, they accord positive potential to the process of globalization, foreseeing a counter-Empire characterized by nonagential collective action.