[afro-nets] In preparation of People's Health Assembly II - part 37

[Claudio Schuftan <claudio@hcmc.netnam.vn>]

In preparation of People's Health Assembly II - part 37
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Neoliberalism

Much of the period in the West after WWII was influenced by what
some call 'Keynesian economics'. Keynesian economics promoted an
active role for governments within the market, most notably in
pursuit of the goal of full employment. In the 1970s, government
intervention in the economy came under attack by a 'new liberal-
ism', which became known as neoliberalism. Neoliberalism has its
roots in the theories of classical economic liberalism, which
essentially promote a system of free enterprise in the economy.

The US and UK governments were at the heart of the emergence of
neoliberalism, which was then propagated globally by institu-
tions such as the IMF and World Bank. Its emergence also coin-
cided with a time when socialism and government intervention
were associated with the failed centralised economies of the So-
viet Union.

Key tenets of neoliberalism

Neoliberalism promotes the freedom of markets to operate with
minimal regulatory interference, including rules that may pro-
tect the environment and public health, or govern wage and price
controls. It believes that this will lead to greater efficiency,
as markets become less distorted by government intervention,
which in turn will lead to increased economic growth and social
welfare.

While neoliberalism was initially associated with promoting the
maximum freedom of movement for finance capital, goods and ser-
vices in the commercial sector, it now embraces the promotion of
a market economy in the social sectors, which used to be consid-
ered the responsibility of the state. These include sectors that
provide essential services and public goods such as health care,
education, social security, policing and prison services.

This has meant a greater emphasis on private financing for such
services in the form of 'user fees' or private insurance, and
the privatisation of public assets or the out-sourcing of func-
tions and responsibilities to the private sector. In addition,
neoliberalism has promoted the introduction of markets and com-
petition into the public sector itself.

Problems with neoliberalism

According to classical economy theory, competitive markets lead
to increased efficiency and social welfare if:
* there is a large number of providers who compete with each in
order to hold prices down;

* information on prices, quality and the likely benefit of prod-
uct or service utilisation are widely available and understand-
able to consumers;

* there are no externalities (in other words, all the gains or
losses associated with a product or service are reflected in the
price paid for by the consumer).

However, many services and goods, including health care, fail to
meet these criteria. Such markets need to be regulated in order
to avoid tendencies towards the exploitation of 'consumers' and
monopolisation, and to ensure that equity, human rights and the
environment can be adequately protected. To many, neoliberalism
hasn't so much liberated human and economic activity from the
strangle-hold of government red-tape and interference, as it has
liberated the freedom to accumulate profits, exploit labour and
shift the costs of negative externalities (such as environmental
pollution) onto the public.

Under neoliberalism, social security is limited to the provision
of a minimum service for the poor, with better services avail-
able to those who can access them through the market. Core ten-
ets of social solidarity such as redistribution and cross-
subsidisation have been sacrificed, in favour of an emphasis on
individual freedom and rights.
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 From Global Health Watch. (forthcoming)