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What is the neo-Marxist assessment of neo-liberal policies and to

what extent do you agree with this assessment?

Neo-Marxism is a school of economic thought which applies Marxist ideas to the present global economic conditions. It became prevalent during the
1960s and 1970s as neo-Marxist scholars demonstrated how capitalist policies hindered development and increased the inequality between the Global
North and South. Henceforth, neo-Marxists produced the dependency and modern world system theories as clear illustrations as to how neo-liberal
capitalism has brought increased inequality to the global economy. Therefore, in order to examine neo-Marxist assessments of neo-liberal policies, it is
firstly important to consider different neo-Marxist perspectives in detail and analyse the elements which are contested and by whom. It is also important
to evaluate the arguments for and against the doctrine, which would help to gauge to what extent the neo-Marxist assessments are credible. Thus it will
be argued that neo-Marxist theories provide an accurate analysis of how neo-liberal capitalism has created an increase in political and economic
subordination of the South to the North and further, its critical examination of the New International Economic Order.
The argument which supports the development problem analysis stems from neo-liberal economics. The theoretical basis is that, rather than
protecting national markets and production, neo-liberal theory promotes openness and allows more efficient use of resources, exchange of technology
and greater opportunities for economic growth. This approach has been influential in modernisation theory, which asserts that, once states implement
neo-liberal restructuring measures and entrepreneurs accumulate sufficient capital, the benefits of growth and efficiency would trickle down to the
poor. Neo-liberals argue that underdeveloped societies, should learn from the development experiences of the already developed or pioneer
countries, striving to become more like existing developed societies. In the early 1990s, the IMF and World Bank in conjunction with the US Treasury
Department arrived at a consensus that neo-liberal policies were needed in less developed and emerging market economies. These policies included
the strengthening of the free market, supporting private enterprise and increasing deregulation allowing entrepreneurial initiative. The Washington
Consensus had several key policies for the Global South to increase development and these were said to be market-led. These included the issuing of
loans so long as Southern governments followed strict policy conditions, state-led development was replaced with market-led development and to use
foreign exchange from export-led growth to pay off debts and promote development. However, neo-Marxists criticise these policies and have lead them
to introduce theories which address the level of underdevelopment caused by neo-liberalism and the Washington Consensus.
The neo-Marxist theories of Dependency and World System Theories both share the idea that the Global North and South are in a structural
relationship with one another. The former theory originated in the South, and its subject area is explicitly geared towards the problems and interests of
the South and is seen as, bottom up, approach to international political economy, which prioritises the conditions faced by the poor and the
oppressed. Furthermore, having emerged from the development economics studies of the 1960s, dependency theory simultaneously links
underdevelopment and capitalist exploitation to trade and monetary relations, and the role of corporate actors and economic institutions. The theory
claims that the impoverishment of the South is a direct outcome of their exploitation by the advanced countries in the age of imperialism, which led to
the superior development of the North. While the countries in the North accumulate sizeable capital, the countries in the South are further plunged into
underdevelopment. The dependency theory further claims that a new form of imperialism is now dominant, in which an economic imperialism
continues the exploitation of the South, without the direct political rule of colonialism.
When analysing neo-Marxist assessments of neo-liberalism it is important to consider where neo-liberalism has been implemented in both developed
and underdeveloped nations. When taking the example of how neo-liberalism was embedded in Latin America; there were several distinct policies that
lead the transition into neo-liberal economics. A specific policy was the exchange-rate overvaluation which, artificially reduces the local price of
imports, however lead to a, devastating impact on the balance of payments and employment. Other policies such as domestic financial liberalisation
and liberalisation of capital account of the fiscal reforms lead to investment and savings rates declining and public debt levels increasing sharply due to
high interest rate levels respectably. Neo-liberal economic policies were implemented by Thatchers government of 1979-1990. However, she left
behind the highest inflation and interest rates among advanced economies, including large scale bankruptcies, high and rising unemployment and the
largest current account deficit in history. The UKs economic downturn highlights and emphasises the weakness within the doctrine of neo-liberalism.
Critical analysts, including those associated with World Systems Theory, neo-Marxism and postcolonial theory; suggest that underdevelopment is
actually a problem of dependency, arising within a world system operating as a whole. Underdeveloped societies are not in the position they are in due
to internal inadequacies, but because of an ongoing history of dependency, economic exploitation, political subordination and military violence.
Whereas the mainstream analysis suggests that any and all underdeveloped societies can in principle catch up with the West through the adoption of
development-led, typically neo-liberal policies, critical theorists suggest that such a catch-up cannot happen in a world dominated by the developed
societies. Any improvement in the status of underdeveloped societies would require a radical transformation of the entire world system, including the
position within it of the developed societies. It could not take the form of a catch-up but only of a general structural transformation. This is because the
position of developed countries is itself a product of the world system and requires the continued existence of underdevelopment to sustain it.
Despite significant differences, critical approaches share the view that, there exists a world structure in which dominant interests located in the
advanced industrial world dominate and exploit the rest of the world using economic, political and military means. Andre Gunder Frank argues that,
the global system is a whole chain of metropolis-satellite relations. Each metropolis dominates, exploits and draws wealth from its satellite or
satellites. This chain, with northern societies at the top, keeps societies in Africa, Asia and Latin America at the bottom of a global system. Frank sees
surplus exported upwards and outwards from the bottom of the chain to the top. For Frank, development is not possible without a complete break from
the system. Once a state has become a satellite, it can only develop when its ties with the metropolis are broken or weakened, for example in times of
war or recession. In this view development is always dependent development and a catch-up is ruled out. Any context in which development occurred
would involve the construction of a new international economic order which, far from conforming underdeveloped societies to models set in the north,
would alter economic relations in a manner which would transform developed as well as underdeveloped societies.
However, Dependency theory is weak in its analysis of capitalist relations as being inherently negative and based purely on exploitation. Although
underdevelopment and poverty are vital problems of a global scale, they are not sole features of the international economy. Development has occurred
in peripheral areas, and not all relations between the North and South are about exploitation; indeed, not all international relations involve interrelation
between underdeveloped and developed as Dependency focuses, but relationships between advanced states must too be studied. Therefore, the
extent to which one believes the issue of underdevelopment is salient in the international political economy can dictate how much one believes
dependency theory enables an understanding of these economic relations to a degree, however this approach is inherently limited because
International Political Economy must also be studied by looking at a system of wealth production and not just monopolistic exploitation of wealth.
Similarly, the even faster growth of development in less industrialised states over the industrialised in examples of Taiwan and Singapore indicate that
Dependency theories do not encapsulate fully the potential nature of economic relations through ignoring any possibility of cooperation and mutual
advantage through capitalism.
Additionally, in the Dependency theorys analysis of underdevelopment itself, flaws are also found. The fact that the development of the
underdevelopment. is still as crucial an issue today as it was when Gunder Frank wrote his piece in 1969 is proof that dependency does not offer a
real understanding of underdevelopment, despite highlighting it, because it cannot offer a solution to it. Its analysis in explaining the reasons why
certain countries are underdeveloped is singular and base because it is using dependence alone as justification, and so is not able to offer structural
adjustment programmes to actually change the economic position of the underdeveloped in the international economy. The fact that underdevelopment
is always equated with capitalism also adds to a tendency for Dependency to criticise capitalism rather than explain the reasons why
underdevelopment is not solved and analyse the causes of poverty.
When placing primary emphasis on the level of economic development, with political or ideological differences, this approach yields the North-South
divide. Though there are some anomalies, such as South Africa and Australia, the world is seen as divided essentially between the wealthy and
powerful countries of the Northern Hemisphere and the poor, less-developed countries of the Southern Hemisphere. However, the North-South
dichotomy, though useful in debate, is inaccurate and misleading. A more precise economic model of the world system distinguishes among the
superpowers, solely the United States at the end of the 20th century; other developed countries, such as Japan, Germany, and Britain; and the
underdeveloped countries, such as China and Bolivia. We then have First, Second, and Third Worlds.
A further refinement of the economic model looks past the level of three worlds of development to a single underlying and developing world system.
Based on a historical perspective, this view, advanced especially by the American theorist Immanuel Wallerstein, argues that there is but a single world
economy, the capitalist world economy, which has been expanding since the 17th century. Wallersteins World Systems Theory, developed in 1974,
utilised many features found in the Dependency Model, such as viewing development in global conditions rather than focussing on economic
development in individual countries. However, there are differences between the two theories and Wallerstein, moves beyond the static dualism of the
dependency modelsrather than viewing the world in terms of core and periphery. There are core countries, such as the United States and Japan;
semi-peripheral countries, such as Brazil, most eastern European states, and China; and peripheral countries, such as Cuba and most of the poor
countries of Africa and Asia. Depending on economic fortunes and fluctuations, as well as the logic of the developing system itself, countries can move
in and out of these categories. This is in stark contrast to the Dependency Theory which advocates that periphery nations would permanently be in a
state of exploitation, some countries of the world were experiencing economics development in terms of industrialisationincluding the Asian Tigers
of South Korea, Hong Kong, Singapore and Taiwan, as well as Latin American nations such as Brazil.
In order to move a countrys status from the periphery to the core, Wallerstein proposes import substitution as a solution. Import substitution is a
phenomenon that responds to external disruption of trade by domestically producing substitutes for those goods previously imported. This is a policy
that the governments in less developed countries may use to undertake industrialisation and structural changes. Wallerstein supports the core and
periphery to create globalization. Wallersteins theory helps globalization in the international context. He believes that the rich creates the poor. Unless
the poor country eventually changes it economy and accumulates its own capital, it will continue to stay in the periphery.
The plausibility and appeal of this model lie in its recognition of the growing internationalisation of the industrial economy. Nation-states, whether
capitalist or communist, are becoming increasingly subordinate to world economic developments. Decisions about capital investment and growth are
made in a world context and on a global scale. The giant multinational corporations are the most significant new actors on the world stage and have
been establishing a new international division of labour. From their point of view, it makes more sense to manufacture goods in South Korea or Taiwan,
where labour is still cheap and governments compliant, than in the United States or Britain, where labour is expensive and regulation stringent. Such
high-level functions as central planning and research and development can be retained in their Western homelands, where there are the necessary
reserves of highly trained professional and scientific personnel. Profits can be declared in those countries where taxes are lowest. In such a way do the
multinationals illustrate, even embody, the interdependence of core and periphery nations. In order to move a countrys status from the periphery to the
core, Wallerstein proposes import substitution as a solution. Import substitution is a phenomenon that responds to external disruption of trade by
domestically producing substitutes for those goods previously imported. This is a policy that governments in less developed countries may use to
undertake industrialisation and structural changes.
However, there are criticisms of Wallersteins theory with regards to the semi-periphery. They describe it being an improvised, invention to deal with
those cases that do not fit neatly into the core-periphery framework. Critics deduce this because the majority of development economic theory in
recent years has centred upon, the elaboration of dependent development in the countries of the semi-periphery. Furthermore, other criticisms include
the fact that the theory is, too deterministic both economically and in terms of the constraining effects of the global capitalist system.
Therefore, it is arguable that the neo-Marxist assessments of an increased inequality and subordination between the Global South and North which has
been constructed through neo-liberal policies are valid and well-founded. The development of critical theories such as the Dependency and Modern
World System have accurately criticised neo-liberal policies of market-led reforms and how underlying capitalism will lead to the core being
concentrated in areas of the North. However, there are flaws in the Dependency Theory, as mentioned, including the need to address the solutions of
development in peripheral countries. Furthermore, Wallersteins World Systems Theory has successfully been able to incorporate not only core and
periphery states but that of the semi-periphery, which include emerging market economies such of India, Brazil and China. These states act as a buffer
between the core and periphery countries. Despite these flaws both theories present an excellent assessment of neo-liberal policies.