the 1970’s and 1980’s, capitalists came to the realization that labor unions, big government, and other regulations of businesses hinder the profitability of their companies. This sparked a political and ideological “war” in which American businessmen would make every effort to combat these elements in order to restore corporate solvency. Once the lobbying and campaigning for these economic parameters reached congress, it was only a matter of time until it was accepted by liberals as well as conservatives; hence, the movement was dubbed “Neoliberalism”.
Neoliberalism is marked by several characteristics: It demands that the market remain open to facilitate movement of all capital, calls for the privatization of public enterprise (seeing as how the government can be very inefficient), makes it more difficult for the poor to receive assistance from the government while simultaneously making it easier to get grants and loans for business, cuts taxes for businesses and capital gains (seeing as how if the rich make investments, everyone else will be OK), tries to eliminate worker unions since unions encourage less work effort, and finally see’s inflation as a plague and as such demands it to be dealt with through monetary policies via the FED.
The politics and policies of Neoliberalism came into full effect under the presidential administration of Ronald Reagan starting in the early 1980’s (continuing on its own until 2008). President Reagan did seemingly everything in his power to install the Neoliberalism way in America including the firing of air traffic controllers to show that the government will not stand in employers ways when it comes to fighting unions and workers. Over its twenty-eight year history, this has been accompanied by anti-labor trade agreements, deregulation of industries, privatizations, lack of regulation of new entities (such as hedge funds) and complex financial instruments, and the disappearance of the social safety net.
Workers bore the greatest brunt of this movement for several reasons. Since one of the greatest influences of Neoliberalism was the increased competitiveness of companies, efficiency was on the mind of all companies and workers were directly affected. The new political and economic climate that Reagan established, combined with the increased competition in business, made more acceptable than ever to “press” workers by working harder for less. Employers also had more power than ever to break up worker unions and union membership fell drastically from 1970 to 2008. This decreased labor costs and of course raised profits.
This was just the beginning, however, as corporations soon began to understand just how much power they held over the working class. Looking for ever more ways to cut costs and corners at the expense of their workers, employers learned that they can cut health care as well as worker pensions and replace them with the much more ambiguous “defined contribution plan”. It grew to the point where new employees did not get health or pension plans at all, and the average wage stopped rising. To put this into perspective, economists compared the average workers salary from the Neoliberalism era to that of the Depression.
This was all part of the new management philosophy called “Management by stress” with the slogan, “Do more with less”. The benefits of the worker’s work all went to the higher management while the workers themselves received virtually none.
Workers found themselves in a no-way-out situation where even the system in which they worked was designed against them. They had nowhere else to turn to so as a last resort, working families began to default on their credit cards for almost everything including housing and health. In doing so, these families sank further and further into debt, which in turn added onto the national debt. As it turns out, although Neoliberalism may have looked appealing to businesses because of its perceived ability to increase productivity, all it really did was decrease the morale of an entire generation of working class, and damage an already volatile economy.
Works Cited Magdoff, Fred, and Michael Yates. The ABC's of the Economic Crisis: What Working People Need to Know. New York: Monthly Review, 2009. Print.
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