Neoliberal Globalization, Income Inequality & Poverty By: Renaldo McKenzie

To what extent has neoliberal globalization affected the working class in the Americas, particularly in the Caribbean and the United States and how has it responded, in spite of capitalist structures, to avert retaliatory insurgencies to its power? Currently I am engaged in coursework that explores the concept and practice of neo-liberal globalization as a historical phenomenon beginning in the sixteenth century when capitalism replaced feudalism. My studies particularly while at Penn provided a dynamic and comprehensive approach within which to engage the subject matter. They provided a historical, political, economic, sociological, and anthropological approach to investigating neoliberal globalization’s effects on Jamaica. The experience throughout the research has led me to conclude that globalization is an old-age practice that has evolved in the form we know as neoliberalism today. But its aims and effects are always the same, to create greater wealth at lower costs. And this is done through exploiting the masses or reducing the need for labor. 

Now, during my present course of study, I wanted to understand how neoliberal globalization affected Jamaica in the ways that it did, in the context of classical? theorists’ assertion that the only path to economic prosperity and wealth for developing states was to neoliberalize their economies. However, since the 1960s, already suffering from colonialism, the “Global South” has been forced to open up their economies, thereby leaving their nascent and fledging local markets unprotected from already industrialized and developed capitalist regimes and their multi-nationals that invade, dominate and destroy their local markets and control their wealth. This has exacerbated poverty and inequality in Jamaica. 

Indeed this finding from a previous study was a precursor to my intended thesis. Albeit I will continue to explore “Neoliberal Globalization.” However, during my research, readings, conversations with academics and scholars and students in and outside of academia, I realized that neoliberal globalization has also affected the lives of people in the developed world far more than it did people in the developing world. Minorities, immigrants (especially those from the global south) and poor working class households have suffered from de-industrialization, which has shifted millions of wage-dependent jobs to China, Mexico and other developing states with cheap labor. Unlike the global south, the US is highly commodified in that the social risks are embedded in the market. The south has a familiarized, decomodified and bucolic society with “Democratic-Socialist” policies that universalizes healthcare and welfare, a large underground economy, and the cost of living is much lower. 

Thus the experience of poverty and inequality is less complex and not as intense given the communal and universality of welfare and government intervention programs. Hence, the negative effects of globalization are not just limited to Jamaicans, but felt among people everywhere, so that the experience of poverty and inequality under neoliberal globalization is international. This is consistent with what one observer describes as the “global elitism,” in which global elites share more in common with each other than with those of their countrymen.  Further, this concept either changes or challenges Emily Davidson’s “Commodity-Chain Analysis” or North-South dynamics hypothesis, which suggested that the south produces what the north sells/consumes. 

In effect, globalization has created a unique situation in which the developing world is forced to produce consumer goods for the North much cheaper than what it would normally cost capitalists to produce in the north. Capital has always sought greater profit, which is achieved through efficient production of goods. But efficiency, according to Braverman and Edwards, is a convenient way of hiding the exploitative strategies of neoliberals to oppress labor to satisfy their greed and power.  The fact is globalization has created a strategy that allows the elites to consolidate their power in the world by shifting capital around easily thus taking advantage of cheap labor, amassing wealth, and disenfranchising labor. This undermines the political democratic system, in that;governments in the developed world have very little control over international capital and wealth. 

Globalization was supposed to be the ideal model of development. It had the power of overthrowing the mitigating socio-economic forces that creates underdevelopment and unlocks free trade, investment, specialization, and division of labor, which facilitates economic develop for economic prosperity. But the question is, economic prosperity for who, what, where, and when? One thing is certain, the world is not flat, and competition is not perfect; these neoliberal principles held in any neoliberal state, such as the US or Jamaica, are mere “obfuscation of the processes that will lead to the concentration of wealth and, therefore, the restoration of class power” (David Harvey 2007). “Neoliberal Globalization” propped up the wealth of the few over the masses and turned former colonies such as Jamaica into dependent indebted states.  Mike Davis argues that “although the debt-collectors claim to be in the business of economic development, they seldom allow poor nations to play by the same rules that richer countries used to promote growth in the late 19th century and early 20th century (2006).  Zygmunt Bauman in his book “Globalization and the Human Consequences” explains that neoliberals have a hegemonic relationship with the developing world. This he explains is the bureaucratic phenomenon; in that the bureaucrats of the “North” set rules that govern the “South” and that these rules do not have much bearing on those who set them. 

Similarly, “Structural Adjustment Policies” (neoliberal strategy to free up capital) as economist Ha-Joon Chang points out they (neoliberal elites) hypocritically “kicked away the ladder.” Michael Manley agrees when he stated in an interview that the IMF working under the control of the neoliberals was only interested in conditionalities that served their self-interest and not the interest of Jamaica that needed capital to pay its workers and invest in a long-term development plan that would make his country and people more competitive. According to him, in an interview with Stephanie Black, producer of the documentary film, Life and Death, the IMF said that what was in his best interest had nothing to do with anyone else... that’s your problem (Stephanie Black 2001).

Undoubtedly, the journey throughout my studies on the subject matter has helped me to observe the unfortunate reality that neo-liberalism or capitalism is scarcely about rules. It is about the concentration of power through the consolidation of resources/assets via corrupt processes. Karl Marx observed that production needs capital and there must be some pre-accumulation of capital. This pre-accumulation was procured by the elites through violence, by driving the feuds off their land. Indeed economic history has always been about violence and tension between the haves and the have nots, and it is violence/action that seems to be the only solution for the oppressed as Frank Fanon writes in his book “Wretched of the Earth. But violence cures and it kills, and does not necessarily extinguish greed. Nevertheless, revolutionary means might be the only solution to an entrenched institutional ideology that creates inequality and poverty under “monopoly capitalism.” This might be the conclusion because Braverman, Edwards, Richardson et al assert that the rise of the large organization is a strategy to concentrate bourgeois/capitalist super power which is not easily overcome. 

Karl Marx theorized that there is a historical strategy to create disparity and an underclass (lumpenproletariat), whose idleness can be utilized to crush any opposition to its existence. Racism and classism was successfully used in American history as a strategy to divide and conquer. So then, on the face of it, racism is not the issue, but a means to an end. And it’s neither “left” nor “right.” It’s part of the elite’s strategy to divide and conquer. People’s solidarity is a vehicle of power. So why not put people against each other so that they can lose sight of the big picture and fight for scarce benefits and spoils among themselves. And that is why Martin Luther King Jr. writes that "Freedom is not freely given by the oppressor, it must be demanded by the oppressed." Gunst in his book “Born fi Dead” illuminates the practice by Jamaican politicians to use the poor in Kingston to “get” votes and to protect political power by organizing people in categories and groups against each other.  

These strategies have made it easier for neoliberals to restructure along economic lines the Puerto Rico’s Community of East Harlem, which Anthropologist Phillipe Bourgois describes as a traumatic experience in which deindustrialization forces the entire community to be overrun with drugs as the only viable solution. He also explains that these communities manifest class based and ethnic discrimination that are characterized by occupational segregation. This is an experience that has also come to define people of the global south who depend heavily on the underground narcotic economy for survival. Yet even these alternative solutions attract strong penalties and sanctions which results in a high incarceration rate among people of color, immigrants from the South and the poor.

Hence, the “main single cause of increases in poverty and inequality during the 80s and 90s was the retreat of the state.” Governments were forced to reduce the welfare programs. This led to increasing immigration, decreasing formal employment, falling wages, collapsing revenues, and squatter settlements. Infrastructure and public health lost race with population growth. Street vending, drugs, and criminality became the occupational choice of the southern man as formal employment dropped to new lows in Latin America, the Caribbean and Africa. But “the same adjustments that crushed the poor and the public sector middle-class offered lucrative opportunities to privatizers, foreign importers, narcotic trafficants, military brass, and political insiders. The nouveaux rich went on a spending spree in Miami and Paris, while their shanty-towns compatriots starved” (Davis 2006). 

This proved to be another strategy of the neoliberals to consolidate and sustain their power and wealth thereby mitigating any backlash from the working class in the “global south” or the “North.” An emerging middle class with conservative ideals trained in neoliberalism that got their status on the backs of their fellow men. Undoubtedly, capitalism employs a strategy of garnering power so as to amass wealth. Globalization is a strategy that has targeted and destroyed people’s capacity for self-reliance disrupts their lives and kills their local industry, thus making them dependent. But these former colonies share something in common with the working class, people of color and the poor in post-industrial societies, their livelihood have been taken from them and have become dependent on lower paying jobs, hand-outs from politicians, dead-end jobs and or “scoundrels.”  Racism and classism served as an effective strategy in the US and global societies to quiet the masses. Surely, this journey and our findings and assumptions have provided a basis to engage in further academic work that explores post-industrial experience of “Neoliberal Globalization” on the working class and their response. What has been the nature of neoliberal globalization in the west? How different or similar are the experiences of poverty and inequality in Jamaica versus the United Stated under neoliberal globalization? What accounts for the differences? What has been the response or the mitigating factor against neoliberal globalization, and if so, how effective is it? This thesis attempts to discuss these questions with four studies, Neoliberalism and the American Inner-city, Black Nationalism and Garveyism, Social Assistance and the Global Justice Movement. 

The capstone project paper examined whether or not Jamaica’s inequality trends from 1985 – 2007 was a consequence of the structural adjustment policies stipulated by the neo-liberal technocrats of the ‘Washington Consensus’ on Jamaica. We began this examination by questioning the premise on which this variable lies: Neo-Liberalism creates inequality and poverty. Having established that neo-liberalism creates inequality and poverty, we then asked ourselves, why and how the Jamaican government adopted and implemented structural adjustment policies by tracing the evolution of structural adjustment policies. Thirdly, we examined the results/implications of structural adjustment on Jamaica by presenting and analyzing Jamaica’s income inequality and poverty trends. Finally, we assess whether or not these trends correlate with our assertions.  Unlike the MLA Capstone Project, this thesis explores post-industrial experience of neoliberal globalization on the working class and their response –Essentially, we want to know what has been the nature of neoliberal globalization in a developed society such as the United States. How different or similar are the experiences of poverty and inequality in Jamaica vis-a-vis the United Stated under neoliberal globalization? And what accounts for these differences? What has been the response or the mitigating factor against neoliberal globalization, and if so, how effective is it?  

The capstone research referenced the work of David Moss of the Harvard Business School, which posits that there are remarkable correlations between bank failures (and financial crises), financial regulation/deregulation, and inequality across U.S. history. Correspondingly, this relationship is noticeable present in the history of Jamaica’s neo-liberal experimentation. From 1971 – 1993, the top 20% experienced a sharp fall in their income, while the bottom income groups all had increases in their income as the gini coefficient fell from 0.53 to 0.362. In 1991/92, there was an acceleration of neo-liberalism in Jamaica, in which the Jamaican government implemented greater financial deregulation and reform, so that by the mid-1990s the financial and banking sectors collapsed and the country underwent severe economic recession. Hence, like David Moss’ correlation, these reforms and deregulation in the 1990s which led to financial failures and recession, followed greater inequality, as the top 20% experienced a rise in their incomes thereby increasing the P/R ratio from 42.6 to 53.5% from 1993 – 2002 and extending the income inequality between groups as the gini recorded a movement from 0.357 to 0.483 in 2002.  This direct correlation is one that links the MLA Capstone with the M.Phil. Thesis that will examine David Moss’ observation of the Post-Industrial Society – the relationship between bank failures, deregulation, and inequality. 

Moreover, personal savings as a percentage of disposable income rose to 13.7% and since the 80s has been falling so that now, personal savings as a percentage of disposable income stands at -2.9% Correspondingly, over the last thirty years the middle class in America has been shrinking, and poverty childhood hunger and famine have been on the rise in the United States. Concurrently, unions and union activities have de-intensified and protest movements have been infiltrated and or intimidated “out of business” thereby ensuring that the neoliberal state remains functionally relevant to the global elites in the United States. Unemployment has reached new high and communal arrangements among the working class affected (a third world practice) have spiked. This symbolic violence against the working class by the elites has been met with complicity without any plausible opposition to the state. “Union dormancy” and lack of effective social protestations have guaranteed a massive transfer of wealth from the middle class to the very rich. This has been the experience of many people in the global south, who have suffered from the imposing force of the large corporation from the neoliberal state. 

However, United States, unlike Jamaica, is highly diversified and developed with annual per capita incomes and domestic production that more than quadruple Jamaica’s rates. Yet, globalization and the current recession have produced similar hardships among their most vulnerable peoples, with rising poverty and extremely high unemployment. This project combines and builds on my previous studies. With our present state of affairs in the world given the global pandemic and the backlash of the masses stemming from George Floyd’s death and the rising inequities in society, We will need to discuss Neoliberalism and its consequences on the inner city in this global context. Then we may explore how certain peoples have responded to oppression and economic degradation, firstly Black Nationalism and Garveyism, which we determine as limited yet necessary, secondly the State’s response through social assistance, and finally, we can conclude with the Global Justice Movement and a discussion about violence and Social Change as a plausible solution to the problems we are faced with in our society today.