Research Paper on Neoliberalism and Human Rights

Research Paper on Neoliberalism and Human Rights

This paper will discuss the connection of export processing zones and socioeconomic inequalities in relation to positive rights inadequacies in Latin America. Export processing zones are consistent with the logic of neoliberal globalization because they favour the export market force rather than the domestic market. This paper will discuss how the growth of these zones has been encouraged by the actions of key governing institutions in the globalization project. Economic growth of a nation does not always lead to socioeconomic equality and positive rights. Instead, neoliberal policies have shown not only to increase poverty, but also destabilize equality and increase human right injustices in Latin America in the labour market. This essay will focus on Latin America and how neoliberal polices is a hindrance to positive human rights advancement in the region. The first part of this essay will highlight the relationship between the debt crisis of the early 1980s and global political institutions. The second part of this paper will address the growth of structural adjustment programs and its effect on the domestic market. Finally, we will examine the growth of export processing zones in Latin America and the friction between positive rights and international free trade market structures.

In the 1960s and early 1970s, pluralism theories had a huge impact on the early developmental stages of neoliberalism. The Pluralists theory was instituted on the premise that diversity of non-state actors has an effect on institutionalized international and domestic market forces. According to Folker, ‘state boundaries were becoming increasingly permeable [and] were no longer possible to understand international relations simply by studying the interactions among governments’. Folker also states that ‘transnational relations’ was a term that was better suited due to the ‘increasingly extensive cross-national interaction that was developing between nation-states.’ This was seen as an obstacle to national governmental autonomy due to the changes of control and unilateral policy conditions. According to Folker, ‘the early neoliberal literature of the 1980s brought about a renewed debate against structural realist argument. Neoliberalism stated that a radical environment of self-interested actors did not hinder nor weakening a realists perspective on cooperation.’

In order to make this work, neoliberals argued that states must combine their industrial development into one common agenda. Nation states have an ideal goal and agenda to protect their national interests in relation to preventing the depletion of environmental resources. Since this is happening at a rapid rate due to nation states continual push toward industrializing their economic development, the consensus was that the solution cannot be confined within the particular national border. Instead, all the nation states have a common interest in finding a solution to the problem, which their collective and overlapping activity has contributed too. This must involve cooperative efforts among the states.

As society continued to modernize with technological and industrial advancements, issues pertaining to human rights concerns took a backseat. The relationship between neoliberal agendas and human rights justice in the domestic labour market was strained due to the nation-states desirable goal for the betterment of the global economy. However, certain economic policies that benefitted the lower to middle class were abolished in capitalist core advanced countries in order to compete. This had a domino effect which swept through much of Latin America.

This domino effect was due to the rise of domestic and globalized neoliberal development in much of the advanced core capitalist countries. Core advanced economies refers to the US, Canada, and Western Europe, and Japan that provided the initial core area of development after 1945. Now with the stagflation in the 1970s, came an erosion of growth and rising inflation. This resulted in a decline of profitability on the behalf of business which initialized a search on the part of business to reduce cost by shifting production of labour intensive operation to off-shore production sites. This was enabled by a shift toward Monetarism which rejected the establishment of Keynesianism ideology, which consisted of increased government spending and running welfare state programs.

The goal of Monetarism was centered on control on inflation with its high level of unemployment. With the erosion of welfare state programs, there was an increasing focus on modernizing state programs. This involved reducing the role of the state in providing benefits and increasing the role of market forces to restore its strength. So with the domestic project of neoliberal politics being developed in many advanced capitalist countries, at the same time, neoliberal globalization develops internationally over the 1970s and 1980s. Globalizations, as an extension of capitalists’ relationships to the whole rest of the world and turning the whole world into one big market, instead of a bunch of independent markets of nation states. The point of global capitalism is that it was not a natural process. It was because of certain political forces, individuals and political institutions that developed it. They made it to bring about a global market that used to be a world divided into multiple markets. It was a political project that was constructed by a bunch of power political people that decided that it would be best to move things in that direction. Governments still have a role to play, however that role has fundamentally changed for a few reasons because the state as a lot to do with human rights. Neoliberal polices are put in place where the government taxes, spends, intervenes, and regulates corporations less. This develops a different kind of relationship between the government and the economy. The government does not totally disappear but does less of the things it used to do.

One way to understand the government’s role is to examine it as an institutional distributor of wealth. One example of this is the ‘trickle-down’ theory of economics where the wealthy people at the top will provide more economic growth through a means of providing more jobs for the rest of the population at the bottom. Therefore, what is ultimately good for the richest of the population is bound to be good for the rest. The argument is that capitalism has this way of re-circulating wealth. The problem is however, is that it does not successfully work that way. This is quite evident throughout all history of capitalism and especially in countries like Brazil. The more the government gets out of the economy, the less it involves itself, the less money is actually trickled down and the more unequal things become.

There is now this new international regime made up of multiple institutions, actors and non-state actors, and intergovernmental organizations that are involved. In Latin America, they had a ‘balance of payments’ problem where one country was borrowing too much from another country and selling too much to somebody else. An example of one country considered in the Global South was Mexico and there banking crisis as well as Argentina which sparked multiple riots because these countries tend to owe so many other countries and they went bankrupt. The International Monetary Fund was instituted to globally assimilate the economic marketplace in which capital could be loaned out and financed in several financial institutions. According to Blanco, around the 1990s the social instability from structural readjustments had been brought into focus by the international arena to find a solution to the resource problem. As societies were pushed to rearrange their economic and financial policies, the policy makers anticipated that appropriate ‘social compensation would ensure a transition that was not overly traumatic so that a new equilibrium of economic well-being would stabilize […] but also that the best social policy is a good economic policy.’ However, these economic benefits did not transition at the same pace so leaders suggested others policies to promote the competence of their market.

This applied a negative effect on the currency in much of Latin America. If countries like Brazil, Argentina, and Venezuela adjusted their economic policies to suit the IMF, they were provided loans on a short term basis to continue their industrialization. However, it would come with a hefty price tag that affected a lot of positive rights such as education, healthcare, and social services. The IMF negotiated particular regulations that would lead to the deduction of the deficit by reducing imports through import quotas. Also, they would implement policies where global markets would compete in the domestic markets of Latin America through privatization agendas and export processing zones sites (EPZs).

McMichael states that (EPZs), sites that specialize in manufacture sector with minimum governmental regulation on custom goods and are exempt from most labour regulations and paying domestic taxes.’ Their primary goal is to attract international capital from other countries to exploit low wage labour in Latin America. McMichael describes these sites having poor working conditions, minimal civil rights, and on short contracts so workers do not have a sense of stability and long-term job security. Also, since these institutions are exempt from most if not all domestic taxes, there is a decline in the push for positive rights. This leads to a decline in real wage increases, poverty rate continues to climb, and social services are diminishing. The decline in these social services leads to social discontent among families and the public.

Export processing zones has had a tremendous effect on the positive rights and inequality of much of Latin America. If we focus on the universal aspects of these rights for everybody because they are human, then neoliberalism is quite clear and makes it less likely for things to be fulfilled. The reason for this is because the market is never really equitable. Markets are not about equality and never have been. Markets are not about everybody their fair share. Markets are about everybody getting what they can afford and we cannot afford the same amount of stuff. Particularly if the ability to go to work or job opportunities is a market as well. If there are some people who buy someone labour and there is someone who sells it, there will always be that inequality there. Capitalism is not designed to make those two sides equal; it is designed to put the private earning of wealth because of private ownership. The capacity to produce wealth comes first and everybody else needs to find a job.

This global design chain has a number of implications for Brazil and its social and economic inequalities. It reinforces domestic neoliberalism because now you have a situation where the goal of nation states is to provide conditions attractive to transnational investors. The emphasis is on creating conditions that are internationally competitive. They accomplish that through keeping their labour costs low and keeping tax rates competitive. However, if you lower tax rates, you increase the deficits which will cause further erosion of the welfare state. The erosion of the welfare leads to a lot of hidden costs.
When it comes to the hidden costs of neoliberalism, we have previously discussed how rising unemployment, and the cuts to social welfare programs led to a decline in wage income, job safety, and positive rights. Although, deregulation and privatizations invites foreign capitalists to invest in countries like Brazil, as stated previous by McMichael, these initiatives undercut social welfare programs that were responsible for steady employment and family support. According to Peterson, “as economic conditions deteriorate, individuals and families are thus ‘pushed’ to engage in informal activities as a strategy for securing income however they can.” Due to high unemployment, low income families in Brazil must resort to finding informal jobs to help with the lack of wage opportunities in the formal market. Sometimes these come into the form of illegal activities, such as prostitution, drugs, etc. Mostly, these types of activities generally involve young women and poor from the urban population. The incomes that they receive from these types of activities barely allow them to survive and save for the long term. However, as Peterson describes, neoliberalism links informalization of the population to gender division of labour and shows the cost of exclusion. Therefore, “informalization takes advantage of, and exacerbates, inequalities based on gender, race, and economic hierarchies. In effect, the majority of global population loses in the game of neoliberalism.”

Capitalism has an inherit tendency towards inequality whereas rich people maintain these financial well-being. To combat this, you want to make sure that the flow does not trickle downwards but is directed downwards by taking money directly from the wealthy people and give it to the poor. This may seem like an odd thing to do, but that is the basic purpose of government to do in the economy. You do not need wealth to be forced up, because that is what corporate profits are and how capitalism works. Private owners do not own stuff for fun but the agenda is for the accumulation of capital and earn profits. The paradox with capitalism in Latin America is that money has to move upwards to survive on the global market. Therefore the government in these regions must balance the tension by redistributing the wealth. This is the whole basis of the social welfare democratic state. If you want increasing equality of wealth, and decreasing inequality of wealth, you need government to step in and re-distribute wealth. If this is not balanced correctly, then you run into serious problems in your labour market.

Latin America is a great example of how an unbalanced government agenda can have a tremendous effect on the labour market. In Brazil and Venezuela it forced domestic workers to compete in the sugar cane market against the large corporations. The government designates land that should benefit the domestic market and hands it over to the transnational corporations. These local domestic markets cannot compete with the corporations and are forced to shut down and compete with each other for minimal wages provided by corporations. This empowers transnational’s to dictate what the wages and benefits will be. The objectives of these corporations are to lower labour costs by minimizing the regulation requirements of the conditions of the workplace. Peterson states that immense challenges face these societies where positive rights take a backseat to corporate profits and family survival is under consent strain which translates into the likelihood of the public to work together is minimal at best
Therefore, when analysing the push for positive rights in Latin America, it is easy to understand the negative forces impeding its progress because of economic market conditions that strip away social progress. We have evaluated some of the hidden costs associated with neoliberal policies in Latin America, and how those policies have hindered socio-economic growth in the region. However, the growth of Brazil over much of the 20th Century has been improving steadily. How then can inequality be an issue in a region that has experienced steady growth for years? According to Paul Cammack, “global capitalism may in the long run reduce inequalities between countries, but on present evidence it sharply increases inequalities between individuals.”

Social democratic policies became more difficult as Latin America had to focus on becoming competitive in the world economy, rather than increased standard of living. The impact on negative rights though is a bit unclear. Classical neoliberals contend that globalization, neoliberalism, and capitalism seem better because negative rights spread and become the fundamental basis. They argue that it is more important that these people get these negative rights, such as the electoral process and freedom of assemble and expression once we get rid of totalitarian government, so things will be better. There is a certain tension between different tendencies in the world economy at this stage. However, just providing and stabilizing negative rights is not enough to build a healthy society.

To illustrate this point, imagine ordering a 100 slice pizza for 100 people using your IMF credit card with extremely high interest. ‘One person’ has gradually paid off your IMF credit card by forcing 99 people to contribute their earnings plus interest to get that point. However, pizza is on its way and for the most part everyone is happy that they will get some food to eat. Once the pizza is on the table, that same ‘One person’ takes 80 slices, leaving the rest to divide the 20 slices of pizza amongst 99 people. Although the 99 people have the right to eat pizza, it does not always keep pace with demand.

What this analogy attempts to explain is that there is a correlation between wealth distribution and socio-economic inequality in Brazil that directly effects the push for positive rights. Although there has been growth in Brazil’s economy of 2.7% between 2001-2005, the Gini coefficient (at 0.59) is extremely high compared to other industrializing countries. This has a tremendous effect on the social well-being of the population of Brazil, with small amounts of ‘slices’ left to spread around to largely poor population. There are hardly any ‘slices’ left for positive rights such as education for the poor, social programs to help young people and women find a stable job. It increases stereotypes of women and adds more stress to families that have to be stretched further apart from each other to make ends meet with informal activities, that involve high hours, low wages, and low working conditions. According to Peter Cammack, even though Brazil’s emerging economy is taking a gradual growing share of capitalists’ foreign investment and world trade through neoliberal integration in the global economy, it has not reduced inequality. This in turn has had a tremendous negative impact on socio-economic relations, which have resulted from neoliberal policies.

As we have seen throughout this essay, the implementation of export processing zones as a tool under neoliberal policies has had a tremendous negative effect in the Latin American region. Economic growth of the region has not led to socioeconomic equality and positive rights. Rather, deregulation has shown to increase the poverty rate, decreased suitable working conditions, civil rights, education, and social well-being. The ‘trickle-down theory’ has not worked with real wage labour in the region decreasing. Governments need to focus on its role to balance the system to counter-act the market forces. Actions such as protecting domestic markets, increasing working conditions, and suitable regulation to attract investors. Only then can positive rights take a foot-hold and produce a healthy social society.

BIBLIOGRAPHY

Blanco, Carlos. “Reform of the State: An Alternative for Change in Latin America”. Annals of the American Academy of Political and Social Science. Vol. 606, Chronicle of a Myth Foretold: The Washington Consensus in Latin America (Jul., 2006): 231-243

Cammack, Paul. “Why Are Some Better Off Than Others?” In Global Politics: A New Introduction, ed. Jenny Edkins and Maja Zehfuss. Routledge, (2009): 294-315

McMichael, Philip. “Globalizing National Economy & Demise of the Third World”. Development and Social Change: A Global Perspective, 4th Edition. Cornell University, (2008): 93-95, 103-105, 136-137

Peterson, V. Spike. “How is the World Organized Economically?” In Global Politics: A New Introduction, ed. Jenny Edkins and Maja Zehfuss. Routledge, (2009): 271-291

Sterling-Folker, Jennifer. “Neoliberalism” In International Relations Theory: Discipline and Diversity, ed. Tim Dunne, Milja Kurki, and Steve Smith. 2.1 Oxford (2007): 116-132