Impacts of Neo-liberalism on democracy

NEOLIBERALISM 1
Impacts of Neo-liberalism on democracy
Name:
Course:
Lecturer:
Institution:
Date:

NEOLIBERALISM 2
Impacts of Neo-liberalism on democracy
Before the 1990s, the developing world was thriving under authorities and totalitarian
leadership. Democracy was reinstated in the 1990s. The looming economic crisis at the time
has given rise to the aspects of neoliberalism. The adoption of neoliberalism was taking
shape. This study examines and evaluates the impacts of neoliberalism on democratic politics
after the return to democracy in the 1990s. The scope of the study extends to evaluate the
quality of democracy during the neoliberal era using illustrations of participatory democracy.
Neoliberalism has become a pervasive institution in the world, just like democracy.
Neoliberalism emerged from the critics of welfare and Keynesian state policies by Friedman,
von Mises and von Hayek. Neoliberalism emphasizes on the re-assertion of the market logic
in political and economic life above all other logics. In the contemporary world system
setting has witnessed a drastic reduction of state intervention in the economy, leading to the
dismantling of the past developmental states. This is what has represented neo-liberalism.
The international financial agencies were the key contributors to the development of
neoliberalism as they intervened to harmonize the wide range of commercial, industrial,
monetary and fiscal policies through the implementation of neoliberal policies. Thus, the state
opened up their national economies to the world market through privatization, elimination of
subsidies, deregulation and liberalization of financial and trade policy (Hall 2011). These
market-oriented policies were adopted throughout the developing world. Contrary to the
expectations of proponents of neo-liberalism, the market-oriented policies associated with
liberalism have not achieved prosperity in the developing world. However, they have elicited
social protests and immiserations. The development of neoliberalism had a significant impact
on democracy. For the purpose of this study, democracy is described as the non-coerced,
regular and genuine power competition among organizations and individuals through

NEOLIBERALISM 3
legitimate elections. Some scholars go to the extent of equating free markets with democracy
to showcase the relationship between neoliberalism and democracy.
Under the auspices of neoliberalism, the world witnessed critical changes in state
functions, which range from managing the national economies to managing the world
economies. There exists a scholarly disagreement on the contribution of market-oriented
policies to the possibility of democratic governance. Proponents of modernization theory
argue that neoliberalism leads to economic development, which in turn enhances the nation’s
prospect to sustain and embrace democracy. The negating scholars argues that through the
erosion of state accountability and capacity, neoliberalism assists in degrading democracy.
There are those neoliberal thinkers who argue for restrictive democracy through the non-
majoritarian institutions and procedures involved in decision making ranging from
technocratic and authoritarian rule to the rule of law (Zack-Williams 2017).
Additionally, in the premise of functional and normative justifications, neoliberalism
tends to install market coordination in replacement of democratic procedures. Through the
direct democratic measure, neoliberalism advocated for the complementation of
representative democracy. There exists a disjuncture between the political practices and the
theoretical critique of representative democracy under neoliberalism. This can be related to
the reshaping of European economic governance and the semi-authoritarian technocracy
espoused by Ondo-liberalism with the motive of restricting representative democracy. In the
1990s, the neoliberal economic reforms witnessed in the developing nations gave rise to the
clout of capitalist classes and also the rise of political parties of ethnic identities (Olsen
2019). The market-policy shift, which replaced the pre-existing state-directed economic
development, resulted in economic and political corruption where criminalization of politics
and electoral malpractices became the order of the day.