The term ‘democracy’ draws its etymological derivations from Ancient Greek, with ‘demos’ meaning the people and ‘kratos’ signifying power or rule. Thus, democracy supposedly defines a political system in which the people govern themselves, meaning that political equality should be held as integral to democracy’s existence. Adversely, the theory of neoliberalism was only recently established. Its origins can be traced back to Hayek and later Friedman’s respective seminal works, The Road to Serfdom (1944), and Capitalism and Freedom (1962). Hayek’s work focuses largely on the supposed dangers of the ‘collectivist’ Keynesian economic policies of the time, imputing that increasing state control over the means of production would lead to a fascist Nazi-esque totalitarian society. His alternative was total, unfettered market freedom, which he depicted as the only way to secure true freedom. Friedman radicalised this further, advocating complete deregulation of the financial sector and elimination of any present trade barriers.
Neoliberalism is predicated on the idea of competition and the classical economic assumption that firms and people act in their self-interest. This notion is evidenced by the greatest proponent of neoliberalism, the United States (US), whose Supreme Court acknowledged, ‘The heart of our national economic policy long has been faith in the value of competition’. Competition has many virtues, foremost as a driving force for lowering costs and prices for goods and services. These undertakings are inclined to be of better quality, with those whom provide services or products at a higher level of quality being more likely to profit. This means that businesses are pressurised into providing services and producing goods with greater efficiency and productivity, as well as instilling a need to innovate in order to attain profit maximisation. These characteristics of neoliberal economics are beneficial, because, theoretically, they result in greater wealth equality and, in turn, a stronger democracy through the distribution of economic power.
However, self-interest and desire for wealth accumulation can go too far, this is discernible from what Lessig refers to as ‘institutional corruption’. This form of ‘corruption’ suggests that democratic governments no longer fulfil their duty to the people, but instead design policies that attract the most investment and are heavily influenced by formerly apolitical actors, namely wealthy corporations. Contrary to most forms of corruption, ‘institutional corruption’ is highly legalised, with courts adjudicating in leading cases such as the US Supreme Court Citizens United vs FEC (2010) that corporations have a constitutional right to spend unlimited and unregulated amounts of money on political advertising as an exercise of ‘free speech’. This legalisation of politics and corporate personhood was extended further in McCutcheon vs FEC (2014), where the court struck down all restrictions on an individuals right to contribute to parties. It has been suggested that the granting of privilege and power to corporations is illegitimate, and undermines the freedom and authority of citizens, because the ‘will of the people’ (Brown, 2019) cannot compete with the unlimited amplification of money. Candidates are now unlikely to win elections without direct corporate support, placing politicians under pressure to eschew policy positions that might be unpalatable to economic elites, in favour of the attainment of their political and other ideological objectives (Bachrach and Botwinick, 1992).
As a result policies now favour those already with wealth and power to the detriment of the common person. This has undermined a key principle of democracy, most notably procedural democracy, that everyone should have the same potential to influence one’s governments actions. Additionally, as a by-product of political capture, the interests of economic elites in the almost always prevail in government policy decisions even when the vast majority of citizens disagree. In line with this, income inequality in Organisation for Economic Co-operation and Development countries (OECD) is at its highest level for the past half century. The OECD is a global policy forum that promotes policies to ‘improve the economic and social well-being of people around the world’, and is host to 37 of the most influential states, yet, the average income of the ‘richest 10% of the population(’s)’ amounts to ‘nine times that of the poorest 10%’. Figure 1 shows that the growth in
Figure 1
Line graphs showing the adoption of neoliberal policies worldwide. inequality coincides with an increase in the number of nations adopting neoliberal economic policies. This suggests a direct correlation between income inequality and neoliberalism, highlighting neoliberalism’s purportedly undemocratic nature. Income inequality compounds the erosion of democracy by comprising ‘political equality’, which, as Brown stipulates is fundamental to its success. Those at the top of the distribution often enjoy inordinate power and are able to limit the redistribution of wealth, and shape the rules of the game in favour of those with more resources (Stiglitz, 2012). Perhaps the problem lies with the form of democracy rather than neoliberalism itself. Representative democracy may be subject to manipulation by the wealthy, but, direct democracy eliminates the potential for any undue influence, providing all with equal proportions of representation. Direct democracy also ensures full government transparency, more government accountability and greater citizen cooperation, all factors that would support democracy.
A key principle of neoliberalism is the deregulation of capital markets, alongside the lowering of trade barriers and elimination of price controls. This is thought to remove any human error and incompetency at a micro and macro economic level, instead, allowing markets to operate on their own accord and permitting individuals to operate on the basis of their self-interests, is suggested to provide for equality of economic opportunity and economic growth. This concept is predicated on Adam Smith’s “invisible hand” describing the unintended social benefits and public good brought about by individuals acting in their own self-interests, through a system of mutual interdependence (Rothschild, 1994). This has in turn promoted globalisation, with the combination of the two suggested to bring about ‘capitalism without borders’ (Klack, 2000). Globalisation has had many positive impacts, bringing about a more interconnected and interdependent world. The most significant effect being globalisation’s raising of millions out of poverty. According to Harrison, ‘Over the past two decades, the percentage of the world’s population living on less than a dollar a day has been cut in half’, suggesting that the neoliberalism and globalisation based era has helped distribute prosperity. As well as this, a democracy-globalisation nexus has been inferred, with positive feedback from economic and financial globalisation reinforcing political democratisation. This idea derives from the concept, ‘countries more open to international capital flows are also more open to offering political rights and civil liberties to their citizens’(Dailami, 1999). Thus, the exchange of goods and services is suggested to be a conduit for the exchange of ideas, stemming from neoliberal-democracy based states whom encourage political competition and persuasions similar to their own. This correspondence between neoliberalism and the spread of democracy, is highlighted
Figure 2
Bar chart to show global rise of democracy between the years 1946-2017.in figure 2, which suggests that prior to the introduction of neoliberalism, autocratic governments were on the rise, but that following neoliberalism’s implementation post-1970 and 1980, democracy and the political freedom of populations has increased exponentially.
But, globalisation’s removal of international political barriers, via increasing interaction between countries and the endorsement of multinational organisations (United Nations, European Union etc.), has meant that state sovereignty and self-determination are under threat. This outlook is underpinned by the idea that globalisation and external global stage actors have imposed themselves as prepotent forces, illegitimately foisting their will on subjugated populaces. This is because of the emergence of trans-national governing bodies, which although generally beneficial, limit state sovereignty of its members, by placing non-mandated impositions upon people, whom feel that their voice is no longer heard. This notion of the removal of self-government has gained traction and popularity, as seen by recent political events such as BREXIT, in which the majority of the United Kingdom’s (UK) population voted nationalistically in an attempt to re-centralise and reassert power in their country. Similarly, far-right parties have reasserted their prominence across Europe in response to encroachments on sovereignty, as seen in figure 3, which highlights the overall trend of an increase in their popularity, especially following the 2007-2008 financial crisis. However, this resurgence of right-wing, less democracy focused politics is in response to many factors, not just neoliberal supported globalisation. A significant factor for this has been the rise of Marxist social critical theory, born largely out of the Frankfurt school of philosophy. This is because, although established on reviving and advocating equality and democracy, these movements are undermining and impeding on basic human rights, such as those set-out articles 18 and 19 of the Universal Declaration of Human Rights (UDHR). This censorship has the potential to erode democracy to a degree far greater than neoliberalism, suggesting that neoliberalism’s negative impacts on democracy are far less malignant than otherwise considered.
Global interconnectedness remains unequal too, with supra-national institutions having the power to command and advise governments. Conditional loans from the International Monetary Fund (IMF) are an example of this. When a country borrows from the IMF, its government must agree to adjust its economic policies in line with recommendations of the IMF to overcome the problems that led it to seek financial aid. Thus, the IMF plays the role of the government in such situations, enforcing economic policies, without the vote or support of the civilian population, thereby undermining the states autonomy. Yet, the IMF and World Bank require ‘democratic governance’ (Dijkstra, 2007) of borrowers as a condition for loans, consequently strengthening global democracy. But, these institutions responsible for structural adjustment, apportion voting power according to each nation’s share of financial ownership rather than providing for equality, with the hegemonic US being able to veto any motions presented, reinforcing the institutional democratic deficit. In addition, they are governed by delegates of member governments, which means that democratic representation and accountability can be indirect at most (Dahl, 1999). Still, nations willingly joined these institutions, and therefore, are accountable for any encroachment on their sovereignty.
Democracy is dependent on freedom. If one lacks freedom to act and vote as they desire, democracy, at its definition, fails. Freedom and liberty have many different forms, the two most recognised being, positive and negative liberty (Berlin, 1958). Positive liberty is the freedom to act in such a way as to take control of one’s life and realise one’s fundamental purposes. Negative liberty is the absence of obstacles, barriers or constraints. Democracy at its rudimentary core requires political equality and an individual’s capacity for self-determination. Thus, negative liberty that asserts freedom as exemption from external constraints: exemption from interference by others, permits autonomy to the highest degree. Negative liberty prescribes an individual with the power to act without constraints, perceivably endorsing and providing for democracy. This interpretation of liberty is advocated strongly by neoliberalism, therefore, neoliberalism can be seen to champion democracy, promising to induce it in a purer form, unsullied by the tyranny of the state. However, the advocation of negative liberty has resulted in hyper-individualisation, and does not guarantee equality in general, and crucially to democracy, political equality. This is causing a reduction in political citizenship and ‘an unprecedented degree of passivity and political complacency’ (Brown, 2003). Social justice has diminished concomitantly, because of the fact that it is no longer the responsibility of the state, rather there is an emphasis on individual moral responsibility. Neoliberalism has lionised egoism as the underlying code of morality, meaning that the principle of self-service has established itself as the normative interest. Further, privatisation and deregulation has directly decreased the number of areas that are under the control of government, thereby reducing its ability to act and aid citizens, alleviating the body politic from its operation as a ‘body’, instead inducing isolationism and singular ‘entrepreneurs and consumers’(Brown, 2003).
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