Neo-Liberalism (NL) Versus Sustainable Development (SD)

Neo-Liberalism (NL) Versus Sustainable Development (SD)

Introduction

The concepts of Sustainable Development (SD) and Neo-Liberalism (NL) have become influential debates in development over the last two and a half decades. Whereas supporters of sustainable development stress considerably more on the importance of efficiency in the utilisation of scarce natural resources, those in favour of neo-liberalism consider privatisation, free market and globalisation as more proficient methods of improving a country's economic standing in international markets (Todaro & Smith, 2012). This essay seeks to investigate whether Neo-liberalism can be compatible with Sustainable Development. The outcome of the study conducted prior to writing this essay indicates that the two concepts are incompatible due to their conceptual backgrounds & contrasting approach to development, as well as their environmental impact.

Discussion

Historical Background

Development became a global agenda when U.S. President Truman delivered a historical speech on 20 January 1949, just two years after the announcement of Marshall Plan. Note that the Marshall Plan is developmental aid provided by the U.S. to reconstruct European countries during the Cold War, post World War II era (Rist, 2008). Boosting economic growth was the main rationale of the assistance. In order to facilitate the process, the U.S. advised countries to adopt the free market economic system and build infrastructure that facilitates trade and commerce, such as roads, bridges, irrigation channels, dams, sea ports and airports).

Industrialisation then expanded from one country to another, developed to undeveloped, capital and capitalism began to move freely, globalisation and privatisation took place almost everywhere. However after three decades, starting in 1960, a number of countries, especially the developing ones, began to question the true power of neo-liberalism's free-market model. Independent movement of goods, services and capitals; minimal role of state and privatisation that has been believed to boost economic growth were proved as having adverse effects on the society. Poverty, inequality and income distribution mushroomed within and between countries; environment depleted and polluted, people were worried about their health and started to realise the interconnectedness between human beings and nature's sustainability being questioned (McCormic, 1995:56 as cited in Elliot, 2002, p. 21).

Disenchantment with the deteriorating environmental condition gave impetus to development thinkers to look for a new approach of development that would potentially care about the safety of the environment as well as current and future generations.

Neo-liberalism (NL)

Neo-liberalism is a political-economic concept that favours economic growth through the means of free trade, privatisation, globalisation and limited role of state intervention. This idea was reincarnated from the sixties' classical liberalism as a response to disillusionment over the state-led development model touted by Keynesian economics (Lee & McBride, 2007); (Peet & Hartwick, 2009). Initially, the concept was only applied in developed countries such as the U.S. & England. However, it was soon exported to developing countries through the Structural Adjustment Programme (SAP) as a precondition for access to loans and other financing options. Former British Prime Minister Margaret Thatcher and Former U.S. President Ronald Reagan played key roles in this process (Cohen & Kennedy, 2007, ...