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Neoliberalism And The Rise of Upper Class Power

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The years of 1978-1980 as a revolutionary change in the global’s social, political and economic history. In that era “Neoliberalism” emerged a theory of political economic practices that come up with that human success could be advanced through liberating individual entrepreneurial freedoms and skills within an institutional setup attributed by strong private property rights, free markets, and free trade. It finds to bring all human practice into the domain of the market. The role of state has to protect these practices. And for that purpose state would stimulate the police, military and other legal institutions to ensure the safety of private property rights and free trade.

The primary try with neoliberal state origination happened in Chile after Pinochet’s coup in1973. The coup, in opposition to the democratically elected government of Salvador Allende, was supported by domestic trade elites endangered by Allende’s drive towards communism. It was sponsored by US corporations and US Secretary of State Henry Kissinger. It suppressed all the social movements and political organizations of the left. A bunch of economic specialists known as ‘the Chicago boys’ since of their connection to the neoliberal speculations of Milton Friedman, then teaching at the University of Chicago, was called to help reproduce the Chilean economy.  The US had supported preparing of Chilean economists at the University of Chicago since the 1950s as part of a Cold War program to prevent  left-wing propensities in Latin America. Chicago-trained economic specialists came to overwhelm at the private Catholic University in Santiago. Amid the early 1970s, trade elites formed their resistance to Allende through a bunch called ‘the Monday Club’ and created a working connection with these economic specialists, subsidizing their work through research institutes.

Pinochet took these economists into the government, where their first work was to arrange loans with the International Monetary Fund. It was not the US, moreover, that compelled Margaret Thatcher to require the spearheading neoliberal way she took in 1979.

Embedded liberalism is a term for the worldwide financial framework and the related worldwide political introduction as they existed from the conclusion of World War II to the 1970s. The framework was set up to bolster a combination of free trade with the opportunity for states to upgrade their arrangement of welfare and to control their economies to decrease unemployment. In that system, the state would have ownership on health, education, coal, steel and automobiles industries. Embedded liberalism conveyed high rates of financial growth in the progressed capitalist nations amid the 1950s and 1960s.  Labour unions and political parties of the left had a really genuine impact inside the state apparatus. By the conclusion of the 1960s embedded liberalism started to break down, both globally and inside domestic economies. Signs of a genuine emergency of capital accumulation were all over apparent. Unemployment and expansion were both flowing everywhere,  Financial emergencies of different states (Britain, for example, had to be safeguarded out by the IMF in 1975–6) come about as tax incomes plunged and social expenditures taken off. Keynesian policies were not working.  The Bretton Woods framework of fixed trade rates sponsored by gold saves had fallen into disorganized. But when growth fallen down within the 1970s, when real interest rates went negative, then upper classes all over felt undermined. The coup in Chile and the military takeover in Argentina, supported internally by the dominant classes with US bolster, provided one kind of solution. Overall, neoliberalization was from the start  a project to gain the restoration of class power.

The IMF and the World Bank from there on became centres for the proliferation and requirement of ‘free market fundamentalism’ and neoliberal universality. In return for debt rescheduling, obligated nations were required to implement institutional changes, such as cuts in welfare consumptions, more flexible work market laws, and privatization. Hence was ‘structural adjustment’ designed.

Margaret Thatcher, for example, assaulted a few of the settled in shapes of class control in Britain. She went against the aristocratic convention that dominated in the military, the judiciary, and the financial elite within the city of London and numerous sections of industry, and sided with the  entrepreneurs and the dominant riches. She backed, and was usually backed by, this new class of business visionaries (such as Richard Branson, Master Hanson, and George Soros). How neoliberalism penetrated ‘common-sense’ understandings. The impact in many parts of the globe has progressively been to see it as a  needed, even entirely ‘natural’, way for the social arrange to be regulated. Any political development that holds person liberty to be respected is defenseless to joining into the neoliberal fold. The around the world political changes of 1968, for case, were strongly arched with the crave for more prominent individual freedoms. This was certainly genuine for students, such as those enlivened by the Berkeley ‘free speech’ development of the 1960s or who took to the streets in Paris, Berlin, and Bangkok and were so savagely shot down in Mexico City shortly before the 1968 Olympic Games. They requested of the freedoms from parental, corporate, bureaucratic, and state limitations. But the 1968 development too had social justice as a essential political objective. Many political thinkers said that left movements failed to recognize or stand up to, let alone rise above, the inherent tension between the quest for individual freedoms and social justice.

This thought by comparing the neoliberal turns within the US and Britain in the crises a long time of the 1970s. This summed to a overthrow by the financial institutions against the democratically chosen government of Modern New York City, and it was every bit as successful as the military overthrow that had prior occurred in Chile. Riches was redistributed to the upper classes within the midst of a financial crises.

For instance, that Felix Rohatyn, the merchant banker who brokered the bargain between the city, the state, and the financial institutions, had the restoration of class power. The only way he could ‘save’ the city was by fulfilling the venture investors while degrading the standard of living of most Modern Yorkers. But the restoration of class control was nearly certainly what investment bankers like Walter Wriston had in mind. In the interim the venture financiers reconstructed the city economy around monetary activities,

Working-class and ethnic-immigrant New York was pushed back into the shadows, to be ruined by racism. In arrange to realize this objective, businesses required a political class instrument and a well known base. They in this manner effectively looked for to capture the Republican Party as their claim instrument. The Prominent universities such as Stanford and Harvard, liberally financed by corporation, got to be centers of neoliberal project.

In England, the Thatcher phenomenon would without a doubt not have emerged, let alone succeeded, in case it had not been for the serious crises of capital accumulation amid the 1970s.

In that financial crises, Labor government did not turn to IMF, but choose cutbacks in welfare state expenditures. Aftermath, the Labour government fell, and within the election that taken after Margaret Thatcher won a critical majority with a clear mandate from her middle-class supporters. Overall, neoliberal project consequences during Thatcher’s government brought inflation, unemployment and public institutions, nationalized industries were privatized. On other side, the Asian crisis of 1997– 8, for instance, was to bring developmental states more in line with framework of neoliberal practices. States like Taiwan and China that had not liberated up their capital markets exploited far less within the financial crisis of 1997–8. Brazil, Chile, Argentina, Mexico all faced financial crises under neoliberal policies.

Worldwide growth rates stood at 3.5 percent or so within the 1960s and even amid the crises of 1970s down-turned as it were to 2.4 percent. But that scarcely touches 1 per cent since 2000 demonstrate that neoliberalization has openly unable to support worldwide growth. As we can see the net worth of the 358 wealthiest individuals in 1996 was ‘equal to the combined income of the poorest 45 per cent of the world’s population 2.3 billion people’. In 2017 A Oxfam international revealed that eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity. In last neoliberal project cannot solve masses socioeconomic and political issues  rather than it supports war economy projects in third world countries. It supports capitalism which destroying natural resources, animal species and which sucking poor labor’s blood.

Muhammed Ashfaq. pursuing PhD in Culture And Social Anthropology from university of Milano-Bicocca Italy.

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Economy

Future Economy: Micro-Manufacturing & Micro-Exports

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Recovery now forces economies to emerge as dynamic entrepreneurial landscapes; today, the massively displaced working citizenry of the world may not return to old jobs, but with little help slowly shifting towards entrepreneurial startups as new frontiers to create economic independence and increased local grassroots prosperity. Today, the latest global influences of trendy entrepreneurialism optimizing available options like high quality “Micro-Manufacturing” and high value added “Micro-Exporting” now common discussions on the main streets of the world.  Although, this is not an easy task, but still very doable for so many and promises local uplifts. Smart nations are awakening to such bold notions and entrepreneurial driven agencies mandated to foster local economies are using virtual events to rise up with global rhythm and rich contents.

 Therefore, the blueprints and new models of today on upskilling SME exporters and reskilling for better-designed manufacturing, nation-by-nation and city-by-city are mobilization ready ideas to optimize abandoned talents. Nevertheless, such upskilling and reskilling of masses demands already skilled leadership of most of the gatekeepers of local economic development venues. 

Furthermore, global competitiveness has raised the bar and now only high quality value added goods and services traded for the wide-open world. The conveyer belts of technology and zoomerang culture of virtual connectivity flourishes platform economies. Missing are the advanced skills, complex problem solving and most importantly national mobilization of entrepreneurialism on digital platforms of upskilling to foster innovative excellence and exportability. SME and Startups must advance on global thinking, optimize access, and maximize image and quality superiority to reach the farthest markets with deeper pockets.

This is not an easy task. Methodical progressions needed. Study how Pentiana Project tabled advanced thinking on such trends during the last decade. Export Promotion Agencies, Chambers of Commerce, Trade Associations and most SME and midsize economic developments bodies all called for bold and open debates. For fast track results, follow the trail of silence and help thought leadership to engage in bold and open debates and give them guidance to overcome their fears of transformation.

Small enterprises must now open to new world of 200 nations and 10,000 cites

Micro-Exporters: Upskilling Startups to think like global exporters; the pandemic recoveries across the world coping with a billion displaced all have now critical needs of both upskilling and reskilling. Upskilling is the process of learning new skills to achieve new thinking. Reskilling is the process of learning new skills to achieve new performances. What is exporting, how to start at micro-levels and how to expand globally with technology are new challenges and promising options.

Micro-Manufacturers: Reskilling Startups to think like smart manufacturers; the real goals for startups to enlarge and base thinking on reskilling for “real value creation” becomes mandatory. How to start by thinking better, design quality with creative global age strategies and advance?  Advanced Manufacturing Clusters in various nations will greatly help, but understanding of global-age expansion of value offerings with fine production is a new art and commercialization to 200 nations a new science.

The future of economies, The arrival of Virtual leadership and Zoomerang culture is a gift from pandemic recovery, although at infancy, the sector will not only grow but also alter global commerce for good. Once successful the traditional advertising and marketing models dying, direct access live interaction is now far superior to mass-mailing and social media screaming.  The zoomerang impact of global thought leadership now forcing institutions to become armchair Keynote speakers and Panelists to deliberate wisdom from the comfort of their homes round the clock events has arrived.

The Difficult Questions: Nation-by-nation,when 50% of frontline teams need ‘upskilling’ often 50% of the back-up teams need ‘reskilling’ so how do you open discussions leading to workable and productive programs? Each stage challenges competency levels and each stage offers options to up-skill for better performances. Talent gaps need fast track closing and global-age skills need widening. New flat hierarchical models provide wide-open career paths and higher performance rewards in post pandemic recovery phases. When executed properly such exercises match new skills and talents with the right targeted challenges of the business models and market conditions. The ultimate objective of “extreme value creation” in any enterprise must eliminate the practices of ‘extreme value manipulations”.

First Three Steps:  In order to mobilize a startups revolution along with a small medium business economy, start by identifying 1000 to 10,000 high enterprises anxious to grow for national global markets. To quadruple exportability, select a small leadership team, from local trade Associations, Economic Development Bodies and Chambers of Commerce responsive to calls of upskilling and reskilling as critical steps. Suggest roundtable discussions to reach local, national or global audiences to spread the message. Explore such superior level debates to mobilize local businesses.  Most importantly, such mobilizations are not new funding dependent they are deployment hungry and execution starved. Futurism is workless, uplifting mental powers towards better value-added production of goods and services will save economies.  Optimize zoomerang culture and use virtual events to raise the bar on thought leadership. The world is moving fast and best to join the pace.

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Portugal’s crisis management: “Economic patriotism” should not be tied to ideological beliefs

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The economic policy of the Hungarian government has provoked fierce criticism in the last decade, as it deviated from the neoliberal mainstream and followed a patriotic path, putting Hungarian interests in the foreground. While many link this style of political economy to the conservative position of the Orbán-government, in Portugal, a left-wing administration followed a similarly patriotic line to overcome the symptoms of the Eurozone crisis, showcasing that economic patriotism is not tied to ideologies, but is merely responsible thinking.

The catastrophic path of austerity

According to the theory of austerity, the government by implying austerity measures, “puts its finances in order”, hence the state does not become indebted and consequently investors’ confidence in the economy returns. However, if we think about what we really mean by austerity (tax increases, wage cuts, budget constraints, etc.), even the theory itself sounds counterproductive. Not surprisingly, this theoretical counter productivity has been demonstrated in practice in several cases.

One of the best examples is the case of Portugal, which along with Greece and other Southern-European nations was probably hit the hardest by the financial crunch. While all of the “GIPS” (Greece, Italy, Portugal, Spain) entered a steer recession, Portugal somehow managed to overcome it more successfully than its regional peers, but before that, it felt the bitter taste of neoliberal structural reforms.

Although the case of Portugal was not as traumatic as the ones of its Southern-European counterparts, in order to keep its debt under control, stabilize its banks and introduce “growth-friendly” reforms, Lisbon negotiated a € 78 billion bailout package in 2011, in exchange for a rigid austerity program aimed at the 2011-2014 period, orchestrated by the European Commission (EC), the International Monetary Fund (IMF) and the European Central Bank (ECB), the infamous “Troika”.

The neoliberal recipe did not differ much from that of Greece, and the then ruling Passos Coelho conservative government faithfully followed the structural reforms demanded by the “group of three”: working hours increased, number of bank holidays fell, holiday bonuses were abolished, wages and pensions have also been cut by 20 per cent, while public spending on health and education was drastically cut, and due to escalating privatizations, public assets have also been sold off quickly.

Despite the fact that by 2014 the country’s budget deficit as a share of the GDP had fallen to 4.5 per cent from the staggering11.2 per cent recorded in 2011 and the current account showed a surplus – as domestic demand fell apart, forcing companies to export –Portugal was still on the brink of social and economic collapse.

Public debt soared to more than 130 per cent of the GDP, tens of thousands of businesses went bankrupt, unemployment rose to 17 per cent and skyrocketed to 40 per cent amongst the youth. As a result, many talented Portuguese fled abroad, with an estimated 150,000 nationals emigrating in a single year.

The post-2015 turnaround

Things only began to change in 2015, when the Portuguese elected Anotnio Costa as Prime Minister, who was the mayor of Lisbon under the years of the crunch. Shortly after his election, Merkel encouraged the center-left politician to follow the neoliberal prescription proposed by the “Troika”, while her Finance Minister, Wolfgang Schäuble, underlined that Portugal would make a “serious mistake” if it decided not to follow the neoliberal doctrine and would eventually be forced to negotiate another rescue package.

Not being intimidated by such “threats”, Costa ditched austerity without hesitation, restored working hours, cut taxes and raised the minimum wage by 20 percent in the course of just two years. Obviously, his unpopular position made him crush with Brussels, as his government allowed the budget deficit to reach 4.4 per cent, compared to the agreed 2.7 per cent target. However, in May 2016, the Commission granted Costa another year to comply, and since then Portugal has consistently exceeded its deficit targets.

Tourism also largely assisted the post-15 recovery, to which the government placed great emphasis, so that in 2017 the number of visitors rose to a record high, reaching 12.7 million. Concurrently, Portugal has significantly improved the international reputation of its businesses and products, which contributed to increasing the country’s export revenues and attracting foreign investment.

Furthermore, Costa has raised social spending and at the same time planned to invest state revenues in transport, environmental infrastructure and energy, initiatives that could be extremely beneficial, as they would not only significantly improve the country’s sustainability, but also boost job creation, something that yet again indicates how important public investment is to an economy.

Additionally, Portugal has become an undervalued tech-hub, with plenty of start-ups offering good employment opportunities in addition to fostering innovation. The government with several initiatives, seeks to create a business-friendly ecosystem for them, under which they can thrive and boost the economy to the largest extent. It is thus not surprising, that Portugal has been the fastest growing country in Europe when it comes to the number of programmers.

Finally, one of the Costa’s top priorities, has been to lure back emigrated Portuguese who moved abroad during the crisis. To this end, tax cuts are offered to Portuguese citizens who choose to return home.

In a sum, since Costa stepped into office, Portugal has undergone a rapid recovery: economic growth has returned, unemployment has fallen radically, the public debt was also set on a downgrading path, while the budget remained well-balanced despite the increased spending, with Costa himself explaining that “sound public accounts are compatible with social cohesion”. Even Schäuble acknowledged Portugal’scrisis management, by actually calling Mário Centeno – the finance minister of the Costa government – the “Cristiano Ronaldo” of finance ministers.

Of course, not everything is bright and wonderful, as the country has emerged from a large crisis, the effects of which cannot be eliminated in just a few years. Public debt is still amongst the highest in the EU and several other challenges lie ahead for the South-European nation, especially by taking into consideration that the world economy just entered yet another crisis.

Furthermore, according to many, it was not Costa who led the recovery, but Portugal passively benefited from a strong recovery in Europe, falling oil prices, an explosion in tourism and a sharp drop in debt repayment costs. Indeed, it has to be taken into account that Portugal entered the recession in a relatively better position than many of its spatial counterparts and the relatively high quality of its domestic institutional infrastructure and policy-adaptation capacity aided the previous government to efficiently complete the memorandum of understanding (MoU) as early as 2015. Nevertheless, this is not a sufficient reason to discredit the post-2015 government’s efforts and justify the harsh austerity measures implied by the Troika. Taking into account that austerity never really provided decent results, it becomes evident that Costa’s policies were quite effective.

Economic patriotism should not be connected to ideologies

While in the case of Hungary and Poland “economic patriotism” has been fiercely criticized despite its prosperous results, this spite tendency has been an outcome of strong politicization in economic policy analysis. Even though the political context is verily important, it is also crucial to interpret economic policy independently, in order to take away valuable lessons and identify mistakes. Political bias is not a fortunate thing, as it is absolute and nullifies debate and hence development.

The case of Portugal is a perfect example, as it provides sound evidence, that a patriotic economic policy can be exercised by governments from all across the political spectrum and that the notion should not be connected to political and ideological beliefs. The left-wing Costa-government with its policy-making demonstrated that a solution always exists and that requires a brave, strong and decisive government, that pursues its own plan in the interests of the ‘patrie’, regardless of its positioning.

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The Question Of Prosperity

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Galloping economic woes, prejudice, injustice, poverty, low literacy rate, gender disparity and women rights, deteriorating health system, corruption, nepotism, terrorism, political instability, insecure property rights, looming energy crisis and various other similar hindrances constrain any state or country to be retrograded. Here questions arise that how do these obstacles take place? How do they affect the prosperity of any country? No history, geography, or culture spawns them. Simply the answer is institutions that a country possesses.

Institutions ramify into two types: inclusive and extractive. Inclusive political institutions make power broadly distributed in country or state and constrain its arbitrary exercise. Such political institutions also make it harder for others to usurp rights and undermine the cornerstone of inclusive institutions, which create inclusive economic institutions that feature secure property rights, an unbiased system of law, and a provision of public services that provide a level playing field in which people can exchange and contract; it also permits the entry of new businesses and allow people to choose their career. On the contrary, extractive political institutions accord clout in hands of few narrow elite and they have few constrains to exert their clout and engineer extractive economic institutions that can specifically benefit few people of the ruling elite or few people in the country.

Inclusive institutions are proportional to the prosperity and social and economic development. Multifarious countries in the world are great examples of this. Taking North and South Korea; both countries garnered their sovereignty in same year 1945, but they adopted different ways to govern the countries. North Korea under the stewardship of Kim Il-sung established dictatorship by 1947, and rolled out a rigid form of centrally planned economy as part of the so-called Juche system; private property was outlawed, markets were banned, and freedoms were curtailed not only in marketplace but also in every sphere of North Korea’s lives- besides those who used to be part of the very small ruling elite around Kim Il-sung and later his son and his successor Kim Jong-Il. Contrariwise, South Korea was led and its preliminary politico-economic institutions were orchestrated by the Harvard and Princeton-educated. Staunchly anticommunist Rhee and his successor General Park Chung-Hee secured their places in history as authoritarian presidents, but both governed a market economy where private property was recognised. After 1961, Park effectively taken measures that caused the state behind rapid economic growth; he established inclusive institutions which encouraged investment and trade. South Korean politicians prioritised to invest in most crucial segment of advancement that is education. South Korean companies were quick to take advantage of educated population; the policies encouraged investment and industrialisation, exports and the transfer of technology. South Korea quickly became a “Miracle Economy” and one of the most rapidly growing nations of the world. Just in fifty years there was conspicuous distinction between both countries not because of their culture, geography, or history but only due to institutions both countries had adopted.

Moreover, another model to gauge role of institutions in prosperity is comparison of Nogales of US and Mexico. US Nogales earn handsome annual income; they are highly educated; they possess up to the mark health system with high life expectancy by global standards; they are facilitated with better infrastructure, low crime rate, privilege to vote and safety of life. By contrast, the Mexican Nogales earn one-third of annual income of US Nogales; they have low literacy rate, high rate of infant mortality; they have roads in bad condition, law and order in worse condition, high crime rate and corruption. Here also the institutions formed by the Nogales of both countries are main reason for the differences in economic prosperity on the two sides of the border.

Similarly, Pakistan tackles with issues of institutions. Mostly, pro-colonial countries are predominantly inheritors of unco extractive politico-economic institutions, and colonialism is perhaps germane to Pakistan’s tailoring of institutions. Regretfully, Pakistan is inherited with colossally extractive institutions at birth. The new elite, comprising civilian-military complex and handful aristocrats, has managed to prolong colonial-era institutional legacy, which has led Pakistan to political instability, consequently, political instability begot inadequacy of incentives which are proportional to retro gradation of the country.

Additionally, a recent research of Economic Freedom of the World (WEF) by Fraser Institute depicts that the countries with inclusive institutions and most economic freedom are more developed and prosperous than the least economic free countries; countries were divided into four groups. Comparing most free quartile and least free quartile of the countries, the research portrayed that most free quartile earns even nine times more than least free quartile; most free quartile has two times more political and civil rights than least free quartile; most free quartile owes three times less gender disparity than least free quartile; life expectancy tops at 79. 40 years in most free quartile, whereas number stands at 65.20 in least free quartile. To conclude this, the economic freedom is sine quo non for any country to be prosperous, and economic freedom comes from inclusive institutions. Unfortunately, Pakistan has managed to get place in least free quartile.

In a nutshell, the institutions play pivotal role in prosperity and advancement, and are game changer for any country. Thereby, our current government should focus on institutions rather than other issues, so that Pakistan can shine among the world’s better economies. For accomplishing this highly necessary task government should take conducive measures right now.

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