The Effects Of Neoliberalism Ideology

This paper explores the effects of neoliberalism ideology with the help of globalization on the growth and dominance of multinational and transnational corporations over governments. The case of nike etc in what country In particular, the discussion on multinational and transnational corporations that are growing in power and becoming more powerful that the governments.

Neoliberalism is a philosophy which views market exchange as a guide for all human action. Neoliberalism tries to redefine social and ethical life in accordance with economic criteria and expectations. Neoliberalism believes that human freedom is best acquired through the operation of markets (JODI DEAN). Neoliberalism holds dear the view of supporting foreign direct

investments, removing government’s control over labor and financial markets, and limiting government funds, will resulted in a more efficient and fair social order (POLLIN). Neoliberals are certain that the only dominant role for government is to provide an institutional groundwork for the markets or making markets in a sphere where markets may not have existed yet. Thus, neoliberalism regards the government as an entity that could help in securing markets and in making the rules and conditions for markets. However, it does not believe that the government should be involved in markets’ activities (JODI DEAN). It believes that the purpose of a government is to create accountable subjects whose moral should be based on the fact that they estimate the costs and profits of a certain act as opposed to any other acts (LEMKE). Moreover, neoliberalism does not believe on the existing rules and conditions, it strives to reformat social and political life in conjunction of its ideality for competitions within markets (Jodi dean).
Friedrich von Hayek and his group of economists created the main fundamentals of neoliberalism.

In the recent years, neoliberals have gradually gain support from financial and political elites. Friedrich von Hayek received a Nobel Prize in Economics in 1974. Furthermore, Milton Friedman, a key member of von Hayek’s group won the prize as well (Jodi dean). It is known that here is a shift in microeconomic thinking and actual policy from World War II and the late 1970s, and the late 1970s to the present time. This shift is regarded as a movement from the Keynesian-Fordist policies to free-market policies (Harvey 2005). It is fundamental to know that this shift is ideological and this ideology of free market capitalism is the main cause and force behind globalization. Correlate with the shift from the golden age of capitalism to the neoliberal era is the elections of Margaret Thatcher in the United Kingdom in 1979 and Ronald Reagan in the United States in 1980. Followed by the fall of Soviet Union, Europe’s political and economic changes, and the fall of the Berlin Wall, neoliberal ideology managed to dominate economic policy (Jodi

dean).
Quiggin (1999) argued that since 1970, globalization is the international manifestation of the change towards neoliberal policies of market-oriented reform that has taken place all around the world. Several important new patterns in global economic activity have emerged as the result of the dominance of neoliberal globalization. One of these new patterns is the increase in manufacturing productive capacity in less developed countries. This progress would not have been possible without the aid of present advances in communications and transportation technology (Pollin). Then again, the advantage of globalization is that the cost of transport does not matter anymore and the advancement of the current information systems allows a corporation to produce globally without time delay. Globalization, neoliberalism, and the increase of manufacturing productive capacity in developing countries have become the most debated economic questions. This accelerates the spreading of sweatshop labor conditions in the developing countries.
Multinational and transnational corporations in the present days are proving that they are becoming too powerful for governments to control. Notably, a transnational corporation and superbrands such as Nike. Nike has been defined as one of the main mediums of globalization and as a symbol of global economy (LOCKE 2010). Nike is a transnational corporation with a brand value of $13.18 billion in 2009. Phil Knight and Bill Bowerman founded Nike in 1964. Knight developed his business model of manufacturing the footwear with cheap labors in developing countries while designing and marketing the footwear at a developed home country (Locke 2010).
Even though Nike is mostly known as a footwear company, Nike’s other products such as apparel and sports equipment have broaden their sales beyond the United States to Asia, Latin America, and Europe.

By 2004, all of Nike’s products were manufactured by 830 suppliers. Nike in total employs over 600,000 workers all over 51 countries. However, Nike’s direct employees totaled to only 24,291 people, with majority working in its home country, United States (Nike, 2005, 3-4). Nike has been criticized in regards to underpaying workers in Indonesia and China, child labor in Pakistan, sexual abuse in Vietnam, and particularly the poor working conditions in Mexico (Locke 2010).

In the beginning, Nike felt no responsibility towards these problems found in their suppliers’ plants, as workers at these factories were not Nike direct employees. However in 1992, Nike’s hands-off approach changed as the Code of Conduct was formed. It is composed for Nike’s suppliers and requires them to manage some environmental issues, basic labor, and health and safety standards. However, even though all the factories seem to comply with Nike’s code of conduct, the reality is that poor working conditions and abused labor rights still exist (Locke

2010).