1. The Importance of Contextualizing Discussions of Complex Issues

In order to impress upon students the importance of contextualizing issues brought to the fore by neoliberalism, it is useful to give a short lecture on the origins of liberalism, focusing on the enlightenment period that spawned these ideas, and then moving to a contemporary context, Latin America, for example, and talking about how those ideas are understood and interpreted differently in the era of neoliberalism. The common thread running through all discussions of liberalism, whether economic or political, eighteenth century or twenty-first century, is the concept of freedom, a concept all students are familiar with at some level, and thus a good starting point for discussion.

I begin the lecture by reminding students of the definition of neoliberalism as the theoretical perspective that argues that “free market competition among businesses with limited state regulation is the best way to foster economic growth” (Jones Reference Jones2006, 176; see also Harvey Reference Harvey2005, 2). I explain that this particular term is fairly new (about 30 years oldFootnote ¹) yet liberalism itself has a long history. Adam Smith, author of Wealth of Nations (Reference Smith1776) wrote during an era of mercantilist economic policies and absolutist governments in Europe. Within this context, ideas of liberty and self-determination resonated with economists and citizens alike. Mercantilist policies are highly protective; they do not encourage investment in the private sector nor individual initiative. The enlightenment values of the time cut against these highly centralized, government-controlled policies. In both politics and economics there was a drive toward individual freedoms, self-determination, and representative government.

After providing a broad outline of the subsequent 200 years of economic theory and policy, I explain that in Britain and the United States these values based on eighteenth-century ideas again gained traction in the post-New Deal era as the welfare state was called into question and in its place free-market solutions to economic problems of the 1970s and 1980s were proposed. These ideas were championed by U.S. president Ronald Reagan and UK prime minister Margaret Thatcher in the 1980s,Footnote ² and finally consolidated with the triumphant historical moment of the cold war's demise. Francis Fukuyama (Reference Fukuyama1989) and others succeeded in conceptually tying together democracy and free-market capitalism with the thread “freedom”—echoing the eighteenth-century principles of liberalism.

Eighteenth-century liberalism was born out of a specific context, yielding a particular understanding of the concept and a certain enthusiasm for its ideals. The twentieth-century form, neoliberalism, also emerged out of a specific historical and geographical context, and has spread to other regions of the world. Arguably the region of the world where the issue of neoliberalism is most hotly debated today is Latin America, where the contemporary context is characterized by the juxtaposition of a globalized economy and, in many cases, feudal-style systems of land tenure, and where legal and logistical barriers to free enterprise activity are substantial.Footnote ³ Politically, the region is characterized by independent states that have often been locked in relationships of dependency vis-à-vis the global North, and acted as client states during the cold war. Many would argue that the recent “pink tide” of left-leaning leaders coming to power in Latin America is a direct result of people's disenchantment with the policies stemming from neoliberalism (see, for example, Panizza Reference Panizza2005). I propose to students that this tide might be a reaction against what neoliberalism symbolizes as well as what it actually prescribes. The “Washington Consensus” symbolizes another form of imperialism for many citizens of Latin America even if others claim that to be an exaggeration.

It is important to examine this disconnect between eighteenth-century Europe in an era of monarchical political regimes and mercantilist economic systems, and twenty-first-century Latin America in a post-cold-war era of transitions from authoritarian rule to democratic rule, amidst a global economy. While the context is different, the proposed ideas of liberalism/neoliberalism have the common foundation of promoting freedom in the economic and political realms of life. I suggest that divergence occurs because of varying conceptualizations of freedom across time and place, and with regard to the relationship between economic freedom and political freedom. A good way to start this discussion on freedom is to propose the following contrasting views. Kasper (Reference Kasper2002, 1) argues that laissez-faire “complements the democratic ideal of individualism with its emphasis on the primacy of private choice in all decisions.” Conversely, Schwarz (Reference Schwarz2005, x) argues that “because free-market freedom does not contain the kind and range of obligations we owe one another as free individuals, necessary for freedom to be moral, it is indefensible within the reasoning of freedom. It is therefore unable to produce a sustainable understanding of the common public good …” (see also Harvey Reference Harvey2005, 36–38). Thus, the discussion is guided by two sets of questions:

1. 1. What is freedom? Are there limits associated with freedom? Responsibilities? Here is an excellent opportunity to talk with students about the nature of freedom, a familiar concept, yet many have not engaged in critical thought about the balance of individual and group concerns (as mentioned by Schwarz above). Most people would agree that freedom is more than just “doing whatever you want to do,” but what are specific constraints? In the context of neoliberalism, both free-market liberals and their opponents bring in community/group concerns; they merely posit the relationship between individual and community in different ways and differ on the conditions under which they are able to reinforce or complement each other.

2. 2. What is the relationship between economic and political freedom, and what exactly does each mean? This question is a central issue in development studies as donors seek to build policy around that relationship. For example, does economic freedom promote growth helping to build a middle class that will then have the knowledge and socio-political standing to push for political reform? Or does political freedom yield accountable governments that help build the necessary legal and physical infrastructure needed for economic liberalization to be successful? Many analysts argue that this highly complex relationship again depends upon context, and it is useful to provide case studies for students. For example, South Korea seems to fit the model of the first scenario, while Ghana fits closer to the second.

This discussion exercise can help students make theory-practice links as they apply ideas about freedom to concrete political and economic systems. To take students further into the discussion of contextualizing neoliberalism, it helps to talk specifically about how nations and citizens are affected by neoliberal policies to identify winners and losers.

2. The Task of Identifying Winners and Losers, Strengths and Weaknesses of a Theory

Given that the effects of neoliberal policies are neither even nor consistent, identifying winners and losers is an important exercise. Trade agreements are useful vehicles for analyzing strengths and weaknesses of neoliberalism by examining who benefits and who does not as a result of free-trade policies. A good example is the North American Free Trade Agreement (NAFTA) because most students are at least somewhat familiar with it.

I begin by tracing the varied motivations that states may have for forming trading blocs, contrasting North-North blocs such as the EU, with South-South trading blocs such as MERCUSOR, and North-South blocs such as NAFTA. It is important to point out that while the primary motivation may be economic—to facilitate trade amongst members—there are also strong political motivations as, for example, the EU seeks to counter the hegemonic weight of the United States, or Brazil and Argentina try to be a bulwark against free-trade expansion of the Americas (e.g., FTAA). One can accept the value and benefits of free trade in the abstract but when it comes to its manifestations on the ground, the issue becomes complicated by ever-present political concerns within the states and regions in question. Particularly in the global South, there is a strong drive to maintain a degree of sovereignty (cultural and economic as well as political) in the midst of opening up economies. The regional trading bloc seems to strike a neat balance between openness and control, although Harvey (Reference Harvey2005, 79) sees the tension as problematic: “Again and again … the nationalism required for the state to function effectively as a corporate and competitive entity in the world market gets in the way of market freedoms more generally.”

So when assessing costs and benefits, strengths and weaknesses of free trade, one must look at both economic and political considerations. It is also important to examine carefully the effects of free trade. I propose to students that it is impossible to answer the simple question, “Has NAFTA been positive or negative for Mexico?” This provides a good opportunity to talk about winners and losers and varied effects. I do this by dividing students into groups of three to five, and assigning each group a figure to research. Relying on reference sources, testimonials, academic journal articles, and news articles, students work to gain a comprehensive understanding of how NAFTA policies affect, not the entire country of Mexico, but individuals who are embedded in the changing social and economic conditions in their own particular way. The following are short summaries of what I expect from these group projects.

• • The middle-class Mexican who has a mid-management job with a multi-national corporation is benefitting from NAFTA. Her opportunities were expanded as a result of trade openings between the U.S. and Mexico, and she is helping contribute to her family's well being as well as to the tax base of the country. Her newly acquired skills will allow her more flexibility in the labor market. In general, this is positive because, as many analysts argue, an expanded middle class is seen as the engine of economic growth, and in turn (with higher education levels, tax contributions, and political clout) they are able to push for political liberalization.

• • The government official might see NAFTA as an infringement upon Mexican sovereignty by its more powerful neighbors, especially given that substantial constitutional changes were required as a condition for joining NAFTA. However, he would also perceive the relationship as an advantage with the ability to count on support and protection from the United States in cases of financial crisis, drug trafficking problems, insurrections, etc.

• • One would have to know the conditions under which the factory worker came to be employed. Was he unemployed before NAFTA? Was he working in the rural areas and became displaced because of changing conditions for farmers? This would allow us to assess whether or not his life has improved. In general, however, the factory worker is benefitting in the short run by having a job and earning a wage, but these are precarious times as capital's mobility means that the factory is shortly on its way to China or Malaysia where wages are lower and human capital equally skilled. In addition, the multinational corporation is likely not based in Mexico, so profits repatriate (“capital flight”). There is no real permanent benefit except for a possible transfer of technology (if skills are transferred so that Mexican entrepreneurs can create or run firms).

• • Corn farmers in Mexico have had a difficult time since NAFTA imposed mandatory changes in the Mexican Constitution concerning communal ownership of property (the ejido system), the lifting of corn subsidies, and the removal of tariffs, policies that were bound to disenfranchise poor Mayan corn farmers and disrupt their way of life. When corn farmers in southern Mexico can no longer compete, they fall deeper into poverty. One response has been to actively rebel, and the Zapatista movement is an example. The free-trade model would say that following the law of comparative advantage, farmers should shift to another product or another profession.Footnote ⁴ This becomes difficult if an individual is not formally educated, does not own property or other forms of collateral, and does not have access to credit instruments.

I have noticed a change in the questions that students ask before and after this exercise followed by discussion. Before, they wondered, “Has NAFTA helped to reduce or exacerbate poverty in Mexico?” and “Does Mexico benefit from its partnership with the United States and Canada?” Now they may ask more informed questions that get at the heart of the debate: “If free trade ‘raises all boats’ by fostering economic growth, why are so many people in Mexico against the NAFTA agreement?”; “Under what conditions does the Mexican state benefit from NAFTA? The Mexican population?”; and “Which sectors of the population have seen improved quality of life as a direct result of NAFTA policies? Which sectors have seen a deterioration? How do we measure each of these effects?” These questions force students to examine sectors within a society, to open up the case study, and to draw direct links between policy and outcome. The complexity of the problem is clear in the words of free trade advocate Jagdish Bhagwati:

Here we see the quest for a workable balance of market and state forces. The discussion of winners and losers leads naturally into questions about the use of data in measuring gains and losses.

3. The Value of Empirical Data in Measuring the Success or Failure of a Particular Policy

Students often wonder why we cannot simply use empirical data to assess the success or failure of a particular policy, and avoid the political and philosophical wrangling. I respond by saying that, in the social sciences, while empirical data are indispensable for supporting an argument, assuming that the use of empirical data implies objective truth is a grave error. While numbers do not lie, they can be manipulated, selectively chosen, and ignored when convenient. Moreover, the choice of which concepts to measure and how they are operationalized can vary by researcher. As DeMartino (Reference DeMartino2000, 19) notes, “Even a cursory review of the empirical evidence gathered to date demonstrates that all sides in these debates can and have documented their respective claims … severe methodological difficulties attend the empirical adjudication of any debate of this sort.” In other words, researchers can find empirical evidence to back up their claims, often based on how concepts such as wealth, poverty, development, and inequality are measured and assessed. Thus, it is important to communicate to students the value of empirical data while cautioning them to assess carefully what data are being considered, how they were gathered, and how causality is explained.

A good source to illustrate these methodological dilemmas is chapter 4 in Kesselman (Reference Kesselman2007), “The Impact of Globalization on Poverty and Inequality.”Footnote ⁵ Robert Hunter Wade argues that globalization has a negative effect while Martin Wolf argues for its positive effects—both citing credible empirical data. I assign the text, and then ask students to write a short (two to three pages) response paper. The specific prompt for the paper is to identify the points on which the authors differ because: (1) they define concepts differently, (2) they measure different phenomena, (3) they choose different cases, or (4) they disagree about the causal links between variables. An illustrative example of how these authors come to different conclusions about causal relationships between variables appears as Wade argues that China's sharp increase in economic growth came before the rise in foreign trade (Kesselman Reference Kesselman2007, 139) while Wolf argues that growth was a direct result of economic integration (Kesselman Reference Kesselman2007, 150). This contrast encourages students to read data more critically and to assess how researchers explain the causal chain. While some debates focus on empirical data, others are more theoretical in nature; the next topic provides ideas on how to introduce students to the concept of theory.

4. The Nature of Theory and Varied Forms of Critique

In presenting an explanation of theory, I emphasize that all theories take as a starting point a set of premises. In most cases those premises are not untrue, yet they represent a simplified version of reality, thus sometimes subject to the criticism of being incomplete and one dimensional. Yet theories must abstract from reality in order to arrive at a coherent set of principles. Neoliberal theory is no different. It is a perspective that posits a universal law about the free market, good for all time and all places. This is one of the reasons that the theory is so powerful. However, it then misses historical and cultural specificity. Again, the nature of theory is such that it cannot take into account all of the specific details. If it did, it would not be a theory but rather a series of separate stories.

By understanding the nature of theory, one is then better equipped to assess and categorize various critiques. For example, is the critique challenging core principles of the theory or is it pointing at problems of implementation or applicability? Does the critique posit irreconcilable discord between the theory and one's desired objectives, or does the critique leave open the possibility for compromise? In order to ground these abstract questions in a concrete example, a class discussion might focus on the relationship between neoliberalism and the environment.

Among the foundational premises of neoliberalism is the idea that economic growth is the primary goal of economic policy. A critique that posits that economic growth should not be a primary goal because of its inevitable negative effects on the environment would be a fundamental theoretical challenge to the core principles of neoliberalism. Daly and Cobb (Reference Daly and Cobb1994) and Daly (Reference Daly1997) are useful sources for highlighting an ecological argument that argues against economic growth, thus negating the core idea of neoliberalism.

In contrast, a critique that argues that neoliberal policies can be reconciled with good stewardship of the environment (although are not necessarily designed to do so) posits a completely different relationship between them. Pinkerton et al.'s (Reference Pinkerton, Heaslip, Silver and Furman2008) “Finding ‘Space’ for Comanagement of Forests within the Neoliberal Paradigm” represents this category of critique, as the article examines the change from the traditional neoliberal idea of rolling back the state to the more creative approach of rolling out the state, which might include new forms of governance and government-civil society partnerships directed toward ecological objectives.

A third type of critique can be found in studies that highlight the complexity of the question of the relationship between neoliberal policies and the environment (see, for example, Watson and Achinelli Reference Watson and Achinelli2008 on Brazil and Davis Reference Davis2006 on Morocco). These works look at how the profit motive might lead to monocropping and soil degradation, yet on the other hand, how liberalizing trade might help farmers from the global South reach more markets. In other words, economic-oriented growth policies would be more environmentally friendly if they were accompanied by protective policies, and these examples are best examined on a case-by-case basis.

Thus, students engage in comparing and contrasting three different types of theoretical critiques: (1) critique of core principles, (2) critique that allows for compromise and re-interpretation, and (3) critique of the contextual application (but not of the central premise) of the theory.Footnote ⁶ More than just intellectual gymnastics, this exercise helps students formulate their own arguments and counterarguments as they develop a better understanding of the nature of theory. The next section continues this idea by examining how to identify the difference between analytical and ideological work.

5. The Difference between Ideologically Driven Work and AnalysisFootnote ⁷

Often, in a class discussion of neoliberalism or globalization, students choose a side depending on their ideological perspective, and then selectively point out examples to back it up. For example, critics of neoliberalism cite higher levels of poverty and gaps between rich and poor in states such as Cameroon or Nicaragua as a result of implementing neoliberal policies; supporters of neoliberalism cite the successes in growth rate and economic performance in states such as Chile or Singapore. When I provide counterevidence or point out the complexity that exists behind these basic measurements, the more ideological students appear uncomfortable. There are a couple of problems with this scenario: (1) the students who are new to this concept do not enter into the conversation because they are intimidated by the strongly held views of the others; (2) the discussion is set up immediately as a dichotomy that cannot be bridged and so the focus moves to choosing sides (again, usually determined by ideology). In order to avoid this problem, I propose a strategy in three parts:

1. 1. Hold a debate in class, using a chapter from Taking Sides: Clashing Views on Latin America Issues (DeGrave, Santos-Phillips, and DeGrave Reference DeGrave, Santos-Phillips and DeGrave2007).Footnote ⁸ All students read the chapter before class, and those students participating in the debate use the text as a starting point for their preparation. I assign students with strong views to defend the side opposite to what they believe, and pair them with students who are new to the concept. Then a moderator is assigned to run the debate (assignments are made at least one week in advance). The rest of the class engages in active listening, and students are expected to pose questions to the debaters. While the taking-sides approach does lend itself to binary thinking, it is a good way to start the conversation; plus, debate is a useful hook to spark student interest in the concept. Moreover, while the two sides have starkly different ideological positions in this chapter, ironically there is some overlap between their policy prescriptions. For example, both sides advocate more public-private partnerships.Footnote ⁹

2. 2. Because the moderator is assigned to run the debate, I try not to intervene. However, this requires a follow-up class to discuss the issues that came up during the debate, blind spots on both sides, and examples that were cited.

3. 3. I then assign readings that are more analytical in nature (e.g., exerpts from Rapley Reference Rapley2002) that provide a balanced treatment of neoliberalism. Thus, students are able to contrast authors who seek to defend an ideological position with authors who seek to analyze, maybe even reconcile, the two positions.

The goal of this exercise is for students to better understand the complexity of neoliberalism and talk about the strengths and weakness of the policies emanating from it. They engage in analytical thinking, and thus are equipped to recognize it and contrast it with ideologically driven work.Footnote ¹⁰ Much of the work they encounter in the social sciences requires a facility with these skills, especially the ability to move back and forth between theory and practice in their analysis of social and political phenomena. An important part of that process is being able to identify assumptions made by the theories, the topic of the next section.

6. Identifying and Analyzing Assumptions of Theories and Policies

Theoretical perspectives in the social sciences make assumptions about definitions of concepts, human nature, what is valued and prioritized in social life, and the preferred pace and direction of change. Those assumptions are often invisible to students because they are not expressed explicitly in the articulation of the theory. Yet in order to understand the terms of the debate and how to reconcile conflicting views on a particular topic, it is important to identify those assumptions. The following is a dialogue about Structural Adjustment Programmes (SAPs) between Nelson the neoliberal and Carrie the critic, with Meena the mediator coming in at the end. While it is a fictional dialogue, in one form or another it has been played out repeatedly in policy and development circles. Students should read the dialogue before coming to class, and be prepared to provide ideas about what Meena might say at the end. These ideas will form the basis for class discussion (examples outlined below).

Some of the ideas that I expect students to bring up (and I may provide hints to help them identify these key points of disagreement) include:

1. 1. Short-term vs. long-term concerns. Nelson is looking at the long term, with the idea that economic growth “raises all boats” and helps build a middle class, both extremely important for development. Carrie is concerned about short-term costs, not only for the people suffering now, but the prospects of a weakened population (in terms of health and education) not able to be the engine for growth that Nelson prioritizes. Here, I introduce the HIPC (Heavily Indebted Poor Countries) initiative, begun in 1996 by the World Bank, as an example of an attempt to address this short-term/long-term conundrum. Under HIPC, poor countries are given debt relief (to ease short-term pressures), yet are still expected to make the structural adjustments in the economy that encourage long-term growth.

2. 2. Issue of responsibility. Carrie and Nelson clearly disagree about who is responsible for the dismal economic situation in some less-developed countries. While Carrie points to powerful countries that supported corrupt dictators during the cold war, Nelson focuses on the leaders themselves who have failed to funnel aid or grant money into infrastructure or economic development projects. I point out to students that they are both correct to some extent, so it becomes imperative that responsibility be shared when it comes to rectifying the damage. These discussions and negotiations are delicate as actors seek to justify their actions by appealing to arguments about context, difficult choices, lesser of two evils, and so on. Still, these very real concerns require analysis as they are implicitly woven into arguments about development, structural adjustment, and other issues that involve the North-South relationship.

Other examples of fault lines that appear in this particular dialogue,Footnote ¹¹ and are thus good topics for discussion, include: private vs. public efficiency and accountability, the relationship between economic and political liberalization, and the relevance of a model of individual behavior as applied to the state. Ideas about concepts such as efficiency, growth, and development grow out of assumptions that are embedded in theoretical perspectives, and if the assumptions differ so will the conclusions and subsequent policy measures. Good solutions and compromises are possible when those assumptions are exposed and debated openly.