The Death of Neoliberalism

In this day and age, capitalism and competition is the norm in society. The modern world sees the free market as the most efficient way to allocate resources and achieve economic growth. Neoliberalism; an ideology centered on free markets, privatization, and minimal government intervention, has dominated global policy since the 1980s, but has simultaneously caused a host of global issues. Now, Neoliberalism is dying, not because it has been defeated by alternative systems, but because its internal logic, endless competition, deregulation, and corruption, have eroded the social foundations it depends on. The very foundations it was built on has become its own downfall.

In countries like South Africa, neoliberal policies have hollowed out public institutions and created conditions ripe for corruption, showing how market-centered governance corrodes state capacity. In theory, trading with developed countries should increase growth, reduce poverty in a country, and have better economic welfare. Take for example South Africa: even though South Africa trades with some of the largest powers in the world such as the USA, China and Germany, and has the largest economy in Africa, 68.1% of South Africa’s population is still currently living in poverty. They also have the highest Gini coefficient of any country, meaning gains are almost exclusively among the elite. Deregulation and privatization allowed for the elite to cut corners and make themselves richer at the cost of the majority. Reducing government rules and oversight of private industries have also allowed private enterprises to bulldoze locals. They have the potential, capital intensive infrastructure, and raw resources to compete globally on a higher level if they used their resources to their full capacity. In addition, reducing poverty would only be beneficial for South Africa’s economy. Unfortunately, those in power have stakes in the privatization of South Africa and profit from deregulation. Unless we address the failings of Neoliberalism, the majority of the South African population will still be in poverty even though trade has increased the country ' s GDP. Similar scenarios can be seen in many other countries around the world. Neoliberal theory assumes markets allocate resources efficiently, yet in healthcare, this logic led to systemic inequity and vulnerability. Privatization has made the quality and quantity of healthcare based on how much you can pay, leaves many with piling debt, and some hesitant to seek medical help in the first place. Furthermore, reducing government spending on social programs reduces the amount of aid low income and disadvantaged populations receive. Due to this, Neoliberal economies such as the US, Brazil, and the UK suffer from weakened health systems and unequal access to healthcare. Decades of privatization left societies without the public health and social infrastructure needed to respond effectively. Federal governments had to intervene massively during the Covid 19 Pandemic, something Neoliberal ideology claims is unneeded, but saved thousands of lives and livelihoods. During this time governments reemerged as protectors of life and stability, not just markets. This proved that what society needs is a more hands on approach than that of Neoliberalism.

A vial of Insulin can cost up to $250-$300 in the US, but only costs $2 to $6 to produce. Without regulations like the U.S. Inflation Reduction Act, that forced a $35 monthly cap on insulin costs for Medicare, the monopolies that produce Insulin could raise prices to their own discretion. These horrendous markups are unnecessary and immoral. Though this is just one of the many consequences created by competition fostered by Neoliberalism. The environmental crisis has revealed that unregulated markets cannot preserve the planet’s life-support systems, further discrediting Neoliberalism’s promise of self-correcting growth. Neoliberalism sees nature as a resource, and in economic terms it is, but we forget that it' s shared and inherited from the last generation. Pushing off the responsibility to the next generation, as done in the past, is not a sustainable practice. Sustainability implies that there is oversight and forethought, and thus cannot exist within a Neoliberalism world. Market based solutions like carbon trading have been made worse by deregulation and are merely shifting the responsibility and subsequent blame to developing countries. Not to mention green deals between countries can only work if countries create the regulations and have a government willing to enforce said regulations; regulation that goes directly against the ideals of Neoliberalism. Countries ripe with corruption or developing countries are more concerned about competing globally than fixing their internal issues. The minimal government intervention of Neoliberalism simply cannot take care of our planet in the long term.

Neoliberalism is dying, because more people are beginning to see that the institutions it is built upon are its own downfall. Deregulation fostered corruption, privatization takes advantage of inequality, and competition erodes the foundations of society. It is not a long term solution for countries nor for the sustainability of the world. What world would you want to live in with no systems in place to regulate and hold people accountable?

About the Author

Maya Souza is a junior and guest writer studying abroad from the University of Rhode Island who is majoring in Economics. She is an American whose love for learning about other cultures brought her to the American University of Rome, where she is actively studying international trade during the most turbulent economic period of the 21 century, thus far. She plays Ultimate Frisbee competitively for URI and is an active member of the Checkmate club at AUR.