In one of my first essays in this series on neo-liberalism, I referenced an excellent article titled What is Neoliberalism? This article was written by Elizabeth Martinez and Arnoldo Garcia and published by Corp Watch. This article provided an excellent definition of neo-liberalism as well as a listing of the five characteristics of neo-liberalism. Among the five characteristics of neo-liberalism is the concept of the rule of the market.

THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." It's like Reagan's "supply-side" and "trickle-down" economics -- but somehow the wealth didn't trickle down very much.

Because neo-liberalism is basically an economic ideology, the concept of the "rule of the market" is a strong underpinning to that ideology. For neo-liberals, the markets must be protected and allowed to grow, regardless of the costs to society. The markets should be allowed to flourish without any restraints whatsoever. This idea puts the primacy of capital over people. Thus the "rule of the market" leads to businesses seeking the greatest profits while incurring the lowest costs.

So let's break down the concept of the "rule of the markets" as it pertains to the neo-liberal ideology. It appears to encompass three basic tenets, some of which will be expanded upon in future essays.

(1) Reduce wages. Reduction of wages can occur using a number of strategies, prime among which is de-unionization of the work force. Union membership has fallen from a high of 35% of the workforce to a little over 1/3 of that today, leaving more and more workers vulnerable to the caprice of management. Other means of reducing wages have been to cut the workforce, thus relying upon fewer people to do the same job as previously. Converting a full time work force into part time workforce. Out sourcing of technical and skilled labor jobs overseas where lower paying workers live. The bottom line is that for the past forty years, real wages for US workers have stagnated.

According to the Economic Policy Institute, wage stagnation in the United States has been a direct result of policy decisions favoring those at the top of the economic spectrum.

Wage stagnation for the vast majority was not created by abstract economic trends. Rather, wages were suppressed by policy choices made on behalf of those with the most income, wealth, and power. In the past few decades, the American economy generated lots of income and wealth that would have allowed substantial living standards gains for every family. The same is true looking forward: Overall income and wealth will continue to grow. The key economic policy question is whether we will adopt policies that enable everyone to participate in a shared prosperity, or whether the growth of income and wealth will continue to accrue excessively and disproportionately to the best-off 1 percent.

(2) Eliminate Price Controls - Price controls can happen either as a minimum regulated price floor such was the minimum wage or price supports for agricultural products. Price controls can also be where a maximum price ceiling is set for such goods or services, an example of which would be rent controls in some of the major cities such as New York City. There are also examples of where the government enacts temporary price controls during emergencies such as hurricanes or other natural disasters to prevent price gouging. With the exception of the federal minimum wage and agricultural supports, price controls are used fairly sparingly in the United States.

(3) Free the Markets - In the neo-liberal ideology, freedom of the markets is the top priority. By free markets, neo-liberals want the unimpeded movement of capital and goods. This means the removal of tariffs and other barriers to such movement. In recent times of globalization, it has resulted in trade agreements that supercede governmental powers to protect resources, the environment, and the people. In its constant need to expand the free markets, neo-liberalism becomes an economic colonialism.

However, as elites and corporations saw their profits diminish with this equalizing effect, economic liberalism was revived, hence the term “neoliberalism”. Except, that this new form was not just limited to national boundaries, but instead was to apply to international economics as well. Starting from the University of Chicago with the philosopher-economist Friedrich von Hayek and his students such as Milton Friedman, the ideology of neoliberalism was pushed very thoroughly around the world.

Even before this though, there were indications that the world economic order was headed this way: the majority of wars throughout history have had economics, trade and resources at their core. The want for access to cheap resources to continue creating vast wealth and power allowed the imperial empires to justify military action, imperialism and colonialism in the name of “national interests”, “national security”, “humanitarian” intervention and so on.

And so the neo-liberal ideology of the supremacy of the markets has gone global. We have seen its effects in organizations such as the World Trade Organization, the International Monetary Fund, and the World Bank, all creations under the neo-liberal ideology. We have also see its implementation through so called free trade agreements as NAFTA, CAFTA, and now the TPP and TTIP, among others. These "trade" agreements address far more than just trade and create an autonomy for transnational corporations that has supremacy over any national government.

The maximization of profit itself must occur within the shortest possible time; this means, preferably, through speculation and “shareholder value”. It must meet as few obstacles as possible. Today, global economic interests outweigh not only extra-economic concerns but also national economic considerations since corporations today see themselves beyond both community and nation. A “level playing field” is created that offers the global players the best possible conditions. This playing field knows of no legal, social, ecological, cultural or national “barriers”. As a result, economic competition plays out on a market that is free of all non-market, extra-economic or protectionist influences – unless they serve the interests of the big players (the corporations), of course. The corporations’ interests – their maximal growth and progress – take on complete priority. This is rationalized by alleging that their well-being means the well-being of small enterprises and workshops as well.

This is just a skeletal overview of what free markets means in the neo-liberal parlance. As always, this is an Open Thread so feel free to post whatever is on your mind this morning.

For those who may be interested, below are links to the previous essays in the neo-liberalism.

Week 1 - The Curse of Neo-liberalism
Week 2 - Neo-liberalism Part 2
Week 3 - The Neo-liberal Myth of Meritocracy
Week 4 - Characteristics of Neo-liberalism
Week 5 - Neo-liberalism - Obama and the Clintons
Week 6 - Neo-liberalism - The Legacy of Bill Clinton
Week 7 - Neo-liberalism - Lack of Empathy
Week 8 - Overview of the Impacts of Privatization