Monday May 29, 2023

The neoliberal mantra

May 06, 2022

Pakistan is going through a serious economic crisis and neoliberals assert that the solution lies in implementing neoliberal policies. They believe that since the market was not allowed to function properly, the country continued facing economic problems. It is their firm belief that had everything been left at the mercy of the market, things would have been much better and the economy would have been functioning in an excellent way.

This is not only the mantra of Pakistani neoliberals; pro-market economists all over the world come up with the same recipe whenever an economic crisis hits any country. The solution first emerged during the decade of the 1970s and was popularized by former British prime minister Margaret Thatcher and American president Ronald Reagan. The two heads of the governments were ardent supporters of this market-oriented cure that turned out to be a recipe for disaster for many countries, especially those in the western hemisphere where ruthless market reforms were carried out, pushing millions of people below the poverty line.

According to Dawisson Belem Lopes, a professor of international and comparative politics, "In the late 1980s and early 1990s, Brazil (under Fernando Collor de Mello), Argentina (under Carlos Menem), Mexico (under Carlos Salinas), Venezuela (under Carlos Perez), and Peru (under Alberto Fujimori) were all being governed by right-wing presidents who adopted the so-called 'Washington Consensus' – a neoliberal formula coined by the World Bank and seen by enthusiasts as a ticket to glory – as if it were the wave of the future. However, the results of Washington Consensus policies in Latin America were tragic: GDP stalled, social policies shrank, income concentration and poverty rose, unemployment and labour precariousness surged, violence skyrocketed. In some of these countries, not even inflation was tamed."

Despite following some of the most liberal economic policies in the world, the region still houses more than 86 million poor people. In 2020, the prevalence of hunger in Latin America and the Caribbean (LAC) reached 9.1 percent, the highest in the last 15 years. According to Unicef and WHO, "Some 3 in 10 people worldwide, or 2.1 billion, lack access to safe, readily available water at home, and 6 in 10, or 4.5 billion, lack safely managed sanitation." Millions of such people live in the western hemisphere as well, which was a haven for Western companies and multinational corporations during the decades of 1980s and 1990s. So, it is clear that these market-oriented reforms did not benefit people at all; they might have enriched Western capitalists and their local collaborators in the region though.

It was this ruthlessness of market-oriented policies that created unrest in several parts of the Western hemisphere bringing several left-leaning politicians into power. Some of these politicians tried to extend help and succour to their people but unfortunately these left-wing leaders could not succeed. Crippling Western sanctions are said to be one of the factors leading to their failures. Unfortunately, the leaders of this Spanish and Portuguese speaking belt are once again turning towards a market-oriented solution that is going to be as disastrous as it turned out to be in the past.

Pakistan also witnessed the structural adjustment programme during the decade of the 1980s. It was introduced on the pretext that it would attract foreign investments, industrialize the country, create wealth and eliminate poverty. But despite selling out more than 167 state-run entities, the country still houses millions of jobless youths who have no hope of a better future. More than 60 million people are living below the poverty line while the majority of the people do not have access to clean drinking water. Millions of people are forced to live in semi-human conditions. Literacy instead of rising has declined over the years while economic growth is not as impressive as it was expected at the time of the introduction of these market-oriented reforms.

Millions of workers have been rendered jobless in the process of privatization while a number of state concerns that were privatized to boost industrialization and business activities were either closed down or turned into housing colonies. It was believed that if there were more companies to run businesses then consumer goods would be cheaper and accessible to people. Though non-essential consumer goods may have witnessed a reduction in prices, essential commodities, especially food items, have skyrocketed over the years making it extremely difficult for the poor to purchase them.

Consequently, a number of food items are beyond the reach of the majority of Pakistanis, creating a crisis of malnourishment. Government statistics claim that more than 44 percent Pakistani children may have stunted growth. Millions of women are also undernourished and one of the reasons for malnourishment is the extreme poverty that has turned their lives into a hell.

The abolition of price control under the neoliberal agenda has especially affected the health and education sectors. There is no doubt that the country houses some of the best private hospitals in the region but the majority of people cannot even imagine that they could be treated there because they cannot afford the exorbitant fees of these health facilities that have witnessed a mushroom growth over the last four decades. Similarly, despite having some of the best private schools in the country more than 25 million children are out of school.

This liberalization of prices also made it impossible for a common citizen to own his own house. If one wants to name a single sector that has witnessed a phenomenal growth over the last four decades it would be real estate. Lack of price control in the sector has made housing unaffordable for people belonging to the bottom layers of social stratification. Even people from the middle and lower middle classes are finding it hard to own a house.

Given this all, it is important that instead of following the neoliberal agenda, the state should come up its own plan to revitalize state-run industries and commercial entities, install water filter plants to make clean water accessible to people, introduce housing schemes for low-income people and ensure free and quality education for all Pakistanis up to the university level. In addition to that, the government should also exercise control over the health sector, establishing new basic health units, dispensaries and hospitals providing free and quality treatment to the majority of the Pakistanis who live on less than a dollar a day. To achieve these targets, the state will have to get rid of the idea that the government is not supposed to run businesses. The state should run its own industries and commercial entities, diverting profits toward the welfare of the people.

The writer is a freelance journalist who can be reached at: