Thursday, March 25, 2010

Neoliberalism and the Church

When I talk to representatives of some churches, or to anti-globalisation advocates, they constantly blames all the evils in the world on neoliberalism, and us economists are the ones who have imposed neoliberalism on the world. Yet, I do not know what neoliberalism is.

I just read through Stan Duplessis' dissection of the Accra Declaration and I take this opportunity to highlight the disconnect between the Church and Economics. The Accra Declaration was adopted in 2004 at a meeting of the World Alliance of Reformed Churches. The Declaration first lists all the ills of the current world: poverty, famine, wars, limited access to drugs, environmental degradation, and pandemic disease. Then it argues without transition that they are "directly related to the development of neoliberal economic globalisation... an ideology that claims to be without alternative, demanding an endless flow of sacrifices from the poor and creation", and then argues that Neoliberalism "...makes false promises that it can save the world through the creation of wealth and prosperity, claiming sovereignty over life and demanding total allegiance, which amounts to idolatry". Wow. Neoliberalism appears thus to be a powerful cult, that could be thus be competing against established religions.

What are the tenets of Neoliberalism? Again, I need to refer to the Declaration, through the quotes in Duplessis' piece to get a definition:
  1. Unrestrained competition, consumerism and the unlimited economic growth and accumulation of wealth are the best for the whole world;
  2. The ownership of private property has no social obligation;
  3. Capital speculation, liberalization and deregulation of the market, privatization of public utilities and national resources, unrestricted access for foreign investments and imports, lower taxes and the unrestricted movement of capital will achieve wealth for all;
  4. Social obligations, protection of the poor and the weak, trade unions, and relationships between people are subordinate to the processes of economic growth and capital accumulation.

What this defines is complete anarchy, with no role whatsoever for the government. I cannot think of a single economist who would argue for such an agenda. Even, I would say that economists continuously grapple with many forms of market imperfections or failures and how to define policies (implemented by a government) that deal with these issues. It is true that economists point out that governments have weaknesses, and that markets and prices are powerful allocation mechanisms, but they have recognized limits. Liberalization has its place in some situations, and the resistance to it comes usually from some parties that lose rents from regulation. No one advocates liberalization at any cost, and transition costs are recognized to be often large.

Our world is rich, but unevenly so. I am particularly annoyed when people push for limits to the flow of this wealth across the world in order to satisfy entrenched interests. For example, those who have the most to gain from free trade are the poor of this world, because it gives them access to larger markets, allows them to obtain jobs and income that pulls them from their traps. The world economy is not a zero sum game, where whenever someone gains somebody else must be losing. The gains from exchange are substantial. Churches should learn this, instead of offering resistance to any change and accuse a supposed ideology of all the ills, many of which actually could be at least partitially be solved by opening up. Churches should give the poor a chance to participate in this world.

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