The human being is merely what education makes of him . . .
– Immanuel Kant1
Introduction: The origins of neoliberalism
When it is not possible to find a precise definition for a philosophical system, doctrine, or movement, it is necessary to invent a label. Such is the case of neoliberalism, a term used to describe a complicated set of economic practices that govern transactions within the free market.
Neoliberalism is an evolution of the liberalism that dawned in the 16th century with the “end of barbarism” and began to take a systemic form in the 18th century with the Enlightenment and its elevation of reason over religious faith. Liberalism continued to develop through the 19th century, until the First World War (1914–1918), the 1918 influenza pandemic, and the Great Depression of 1929 struck the whole of humanity. Some believe that neoliberalism was born in 1938*, conceived by the German economist Alexander Rüstow on the eve of the Second World War (1939–1945).
After the devastating trauma caused by this conflict, several intellectuals, philosophers, and academics, concerned about the threat that socialist ideas and the growing expansion of communism posed to the values of Western culture and the future of civilization, agreed to found the Mont Pelerin Society (MPS) near Montreux, Switzerland, in 1947. Its founders included the Austrian economist Friedrich von Hayek and the American economist Milton Friedman. The central objectives of the MPS were the defense of freedom of thought and expression, respect for the dignity of people, and the defense of the rule of law, private property, and free markets.
By the 1980s, the Thatcher Administration in the United Kingdom and the Regan Administration in the United States had adopted neoliberal economic policy measures inspired by the principles of the MPS. In 1989, the so-called Washington Consensus established, in 10 precepts, what can now be understood as the neoliberal agenda.
The Washington Consensus
The decade of the 1980s came to be known in some quarters as the “lost decade.” It was characterized by a particularly critical stagnation of economic growth in Latin America and the Caribbean (LAC), as well as an alarming growth of foreign debt within developing countries.
With a view to preventing a crisis within the LAC region, two multilateral organizations, the World Bank (WB) and the International Monetary Fund (IMF), met in 1989 with the US Department of the Treasury. From that meeting the Washington Consensus emerged, along with 10 precepts whose fulfillment, they felt, would create the necessary conditions to reactivate the economy, reduce poverty, inequality, and misery, and alleviate the oppressive external debt. These 10 precepts can be summarized as: 1) fiscal discipline; 2) reprioritization of public spending; 3) tax reform; 4) liberalization of interest rates; 5) competitive exchange rates; 6) liberalization of trade; 7) elimination of barriers to foreign investment; 8) privatization; 9) deregulation; and 10) enforcement of property rights.2
It is reasonable to think that the measures adopted at that meeting had the LAC region as their primary focus. However, due to the effects of globalization and the attraction of the principles established by the MPS, the emerging trade practices of the Consensus gave rise to several multilateral trade agreements between LAC and North America, Asia, and Europe, and to a globalized neoliberal system.
Some authors have suggested that the purpose of the meeting that occasioned the Consensus was simply to ratify proposals made by Latin American politicians and technocrats rather than to generate a new series of policies.3 Different interpretations of the 10 precepts resulted in “adjustment policies” promoted mainly by the WB and the IMF as uniform prescriptions, leveraged by conditions included in the loan contracts. These were essentially supported by loans to Latin American countries that came with conditions, such as forced privatization of industry, elimination of barriers, and liberalization of foreign investment.
The adjustment policies had a disastrous effect on the LAC region. The overall number of poor increased, including the number living under the extreme poverty threshold; the wealth inequality gap grew; and the privatization of pension, education, and healthcare systems led to mismanagement, an overall decline in the accessibility and quality of services offered, and entered the domain of corruption. Government institutions were downsized or dismantled entirely, so there was no means of overseeing efficiently commercial and financial activities. The push to make companies attractive to private investment at all costs resulted in massive layoffs, depressed wages, and the substitution of permanent contracts for temporary ones, as well as the abolishment of fundamental benefits for workers such as health insurance, holidays, sick leave or retirement pensions. Many times, this required that companies took out loans to refurbish their facilities, which further increased the public debt.
In the labor field, policies grouped under the euphemism “labor flexibility” were implemented, abolishing fundamental benefits for employees and workers and asymmetrically favoring the business sector. As a result of these policies, the controversial hiring practices commonly referred to as “outsourcing” were adopted, by means of which contracting companies would lower their costs of personnel at the expense of employees’ job and financial security, ability to contract personal loans, and sense of loyalty and belonging to the company.
The adjustment policies had also secondary effects, ethical as well as material. They created a widespread mercantile mentality4 in which short-term profits were sought at all costs to the detriment of long-term planning. This troubled and agitated system was a breeding ground for the social scourge of corruption. It is also telling that the 10 precepts of the Washington Consensus omitted any mention of two fundamental issues: equality and the environment5. It is not without reason that many scholars, intellectuals, and critics have described the neoliberal system as “savage capitalism,” “voracious capitalism,” or “predatory capitalism.” A change to the socioeconomic model thus emerges as a moral obligation.
The civilizational crisis
The term “civilizational crisis” is intended to name in a simple way the situation of extreme complexity that surrounds the political, social, economic, ethical, moral, and environmental chaos in which the whole of humanity finds itself at the beginning of the 21st century. It is not easy to assign a date to the beginning of our civilizational crisis. The truth is that it has been generating for quite some time. However, it is possible to identify some of the symptoms or features that characterize the crisis. These include:
- the cult of individualism, which opposes the sense of solidarity and concern for the other and the care and administration of the common good, spreading the virus of selfishness;
- the desire for quick, immediate profit in the short term and by any means;
- the trivialization and acceptance of corruption;
- the feeling that “having” is more important than that of “being,” and that the possession of material goods is an unequivocal sign of success, respect, and power;
- the privileging of economic over political concerns, and allowing the economy to dictate the terms and conditions of social structures (this may be the original sin of the neoliberal agenda, incompatible with the proper functioning of a society);
- unease, disenchantment, and frustration towards political institutions;
- the exacerbated degradation of the environment and the loss of biodiversity, mainly due to deforestation, changes in land use, and uncontrolled, highly polluting extractivist practices
What all of these features have in common is the way they conflict with commonly held ethical and moral values. If we hope to reform the socioeconomic and political system to offset the civilizational crisis, it is necessary that we begin by framing a proper hierarchy of values. These values are crucial to the formation of the next generation. Indeed, academic programs at all levels, built on the norms of neoliberal thought, have penetrated deeply—one would dare say almost to the level of the collective unconscious—into the mentality and behavior of people, and change can only take place on a generational time scale. This is to say that the mentality of society cannot be expected to change overnight: it will be necessary to redesign teaching programs at all educational levels, implement them, and monitor them. The fundamental issue is to give students the tools to integrate ethical and moral values and principles into their daily lives, particularly in the sphere of decision making6; in other words, to cultivate within them a habitus of ethical and humanistic behavior.
The hierarchy of values
Human actions generally fall into one of three camps: moral, ethical, or legal. The boundaries between these three fields are subtle. Although all three refer to principles of conduct that must be respected for the proper functioning of a society, it is possible to establish certain differences between them. The field of morality is usually associated with the customs and principles of a specific community in a given frame of time or epoch. The field of ethics includes principles of a universal nature that are, in a certain way, immutable, inherent to our human nature; they are based on respect for the rights of others, for oneself, and for the common good and a shared sense of justice. The legal field codifies certain principles, the transgression of which can result in state-sanctioned punishment.
In everyday life, people are often aware of their movements within the legal field but pay less attention to their actions within the ethical or moral fields. This can be considered another characteristic symptom of our civilizational crisis. In the ethical field, for example, a recurring predicament is how we choose to evaluate the effects of our decisions on others or the ways in which we resolve conflicts.7 The best case for the well-being of the individual—and of the community—is for the subject to learn, through a process of discernment, what is the right action in a given situation. Ideally this would become almost second nature, a reflexive consideration of the needs of others when making a decision.
A premise that must be adopted as a sine qua non in the design of new socioeconomic and political model is the assumption that the end goal of human existence is the material and spiritual well-being of all individuals. It is imperative to uproot the toxic concept of material wealth as the main criterion of a “good” life. Understanding and internalizing the concepts of solidarity and the common good has particular relevance in the formation of people called to become leaders, and for others as well.
Corruption and political disenchantment
Corruption is an ethical and moral pandemic, a social scourge; its effects are only exacerbated when we begin to consider it as something “normal,” quotidian, banal, and begin to look at it with cynicism and indifference. There are many forms of corruption. Some are very subtle: it is not only giving or receiving bribes, but also influence peddling, exchanging favors, “looking the other way” when someone commits an ethical, moral, or legal transgression, nepotism, patronage, and taking advantage of legal or contractual loopholes (such as tax-evasion schemes) that increase private wealth while laying tremendous financial burdens on the public.
With the exception of a few issues, such as the relative stability of exchange rates, there is an emerging consensus in the LAC that the neoliberal agenda has not only been a failure in the socioeconomic field, but has also contributed to a growing sense of malaise throughout the region. This has manifested itself in the form of cynicism and disenchantment with political institutions. Many citizens are disappointed, disillusioned, and frustrated with their leaders and the ongoing crises of political violence, election fraud, bribery, and the politicization and manipulation of justice. There is also the ongoing threat of the return of authoritarian regimes that were believed to be consigned to history. All of this has negatively impacted the stability of democracy and civic life.
The perfect storm
The civilizational crisis, widespread political disenchantment, and the arrival of the coronavirus pandemic in the beginning of 2020 created a “perfect storm” to upend 40 years of neoliberal thinking. The world found itself unprepared to deal with a health emergency of such magnitude: many countries lacked the proper healthcare infrastructure, including access to equipment and specialized personnel, to mount an effective response. The pharmaceutical industry, despite alleged warnings from the medical community, did not immediately show interest in investing in research and development of a vaccine, likely considering it unprofitable. Only a few governments (Germany, New Zealand, Taiwan, among others) adequately assessed the seriousness of the situation8 and managed to contain the spread of the virus. Other countries found themselves preoccupied with internal political problems, embroiled in electoral struggles, or trying to solve longstanding social and economic crises.
It is still too early to develop a well-founded analysis of the successes and failures of various administrations in facing the pandemic, especially since we are still at the beginning the vaccination process. However, not everything is apocalyptic. The pandemic might be seen as a prophetic message that has brought to light—admittedly in a harsh and brutal way—the consequences of our civilizational crisis. Those who have eyes to see will find many examples: poverty, obscene inequality, environmental degradation, migration, the weaknesses and defects of public administration, the enormous waste of time and public money expended on internal politics, corruption and the elevation of personal interests ahead of the common good—in short, all the perverse effects and inefficiencies of the neoliberal system.
The last global crisis of similar magnitude could be considered that of 1968: the student uprisings in Paris, the Prague Spring, the protests of the Olympic Games in Mexico and the Tlatelolco massacre, and numerous other movements for personal and political liberation. Many of these movements were “resolved” with brutal and bloody repression. The 2008 financial crisis was caused by a combination of greed, gross negligence, and a lack of oversight of the banking industry; it was resolved with a massive injection of public money into some banks to prevent their collapse. Unsurprisingly, the most vulnerable had to bear the consequences of the greed of the financial sector.
Humanity has too often failed to learn the lessons that history, the “master of life,” offers it. We must not waste the opportunity to learn from the current crisis, to make a deep examination of conscience and begin to rectify our course.
Metanoia and conversion
The questions are starkly before us: Do we want to continue with the neoliberal agenda? Are we content to tinker around the edges of reform but leave the root causes of inequality and suffering unattended? Will we continue to race headlong into reckless individualism, environmental catastrophe, economic immiseration, and the crisis of migration? Is this the world we really want to perpetuate? Is it time to make an act of mea culpa, mea maxima culpa for the little care we have shown toward Mother Earth and for consciously contributing to her destruction? Could it be that more attention should be paid to the relationships between human beings and nature and to understand, once and for all, that “everything is connected”9?
Humanity is at a crossroads, a turning point, a decisive moment in which it has to choose a new direction. It would be foolish to presume that in a post-pandemic world we could go back to “business as usual,” following the same rules and practices of the neoliberal agenda with some slight tweaks here and there. We require what the early church termed a metanoia, from the Greek μεταυοια, literally “beyond mind.” In theological terms, it is used to signify a profound change in behavior from within, a form of repentance or conversion that brings about a revision in one’s way of thinking, acting, and being in the world.10
Toward a new socioeconomic and political model
Eminent intellectuals, philosophers, theologians, academics, economists, anthropologists, sociologists, and environmentalists have all advanced ideas that can spur us toward this metanoia and amendment of our socioeconomic and political model. The following points should be considered as the basis for the development of any new such models:
- The main consideration of all actions of society is the welfare of individuals, not wealth
- Political institutions must dictate the norms of social and economic activity, not the economy
- Academic programs should include a strong foundation in the humanities, with a special emphasis on civic life, ethics, and discernment in decision making; likewise, academic programs should advance the concepts of justice, solidarity, the common good, and the duties and responsibilities of citizenship. (It should be noted that any new educational or training curricula will not be sufficient without accompanying measures to satisfy the basic material needs vulnerable communities)
- Policy decisions must consider environmental impacts, sustainability, and care for nature and biodiversity
- Alternative options must be explored to stop the proliferation of large “development hubs” and discourage migration to large cities, abandonment of the countryside, and emptying of rural areas
In the short term, as these new models are being designed and implemented, we might propose a few urgent measures for reactivation of a fair and equitable economy in the aftermath of the pandemic:
- The design and adoption of progressive tax systems
- The implementation of a regional or universal wage-scale system with the goal of putting an end to labor abuses and predatory competition in the workforce; this measure could contribute to mitigating the crisis of migration and act as an incentive to strengthen people’s roots within their homeland or country of origin
- The design of a temporary system of subsidies for small- and medium-sized businesses, with a view to providing urgent financial assistance to the most vulnerable groups, reactivating economic activities devastated by the pandemic, and relaunching smaller-scale economies via an “anthill effect”
Finally, we might consider some long-term strategies and guidelines in the design and implementation of new socioeconomic and political models. Some are specific to the LAC region, but all have global significance:
- Study and propose new production systems that allow people to remain in their local communities, thus avoiding migration to urban “development hubs” where mediocre jobs often threaten human dignity
- Stimulate food production and self-sufficiency through small- and medium-scale agriculture, such as family gardens and farms, urban gardens, and land trusts, in order to mitigate the damage caused by industrial agriculture, large monocultures, and deforestation
- Restore, rehabilitate, and stimulate cooperative systems of production, savings, and credit, as well as infrastructure for utilities such as drinking water and sewage, rural electrification, internet and broadband, and transportation
- Incorporate, promote, and empower the voices of indigenous peoples in the management of their territories
- Discourage excessive consumption, particularly of superfluous goods and luxury items; design campaigns to encourage the conservation of water and other natural resources
- Study ideas proposed by scientists and intellectuals that can help us solve our civilizational crisis, such as the Buen Vivir (“good living”) principles of the Andean peoples enshrined in the Ecuadorian and Bolivian constitutions11
With the development and articulation of these ideas and others which will undoubtedly emerge, it is feasible to foster a worldwide consensus in how we conduct our social and economic activities. To carry out these ideas, it will be necessary to identify an institution with global (or at least regional) outreach, capable of convening discussions and facilitating collaboration. If we are guided by a humanistic vision, do not allow economic concerns to dominate our political will, and proceed with respect for the dignity of others and for our host planet as our “common home,” we might find a way through our civilizational crisis and leave a better world in its wake.
Feliciano López Peralta was born in Chihuahua, Mexico. He obtained the Diploma of Civil Engineering at the Technological Institute of Monterrey, Mexico, and did postgraduate studies at the Engineering Institute of UNAM, Mexico, the University of Toulouse, France, and the Pontificia Universidad Católica del Perú, Lima. Additionally, he attended courses of the Faculty of Theology of the Catholic Institute of Toulouse, France. He served for 20 years at the Inter-American Development Bank until his retirement. He currently resides in Maryland. A version of this essay in Spanish will appear on the site Httfeloper.com.