Lund University SIMV07

Department of Political Science Spring Term 2012

Supervisor Jakob Skovgaard

Economic Development and

Environmental Degradation in the era of

Neoliberalism

Felipe Carvalho

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Abstract

After the 1980s, neoliberalism became the dominant philosophy of

development across the world. Whereas the widespread implementation of neoliberal

economic policies contributed immensely for a maximization of world economic

integration and activity, critics argue that the ideology was also responsible for

dramatically widening the inequality gap between and within nations, as well as for

the increasing deterioration of the planet’s environmental base.

Throughout the dissertation, the reader can follow a critical assessment of the

consequences associated with the implementation of neoliberal economic policies at a

local and global level. The author comprehensively argues that the worldwide shift

towards neoliberalization was accompanied by a remarkable increase in global

environmental degradation.

Furthermore, it is argued that in despite of neoliberal achievements of creating

a substantial globalized economy, major beneficiaries of such trend were the most

developed countries of the North. Therefore, the author strongly questions the

adoption of a global neoliberal agenda fostered by international institutions and free

trade agreements.

Lastly, the author argues that the United Nations conceptualization of

sustainable development successfully merges concerns over development and the

environment. The major finding of the research is that the promotion and pursuit of an

international sustainable development agenda can deliver significant results in both

economic development, and global environmental issues. However, a problematic

encounter appears when economic interests are confronted with environmental

concerns in the era of neoliberalism.

Keywords: Economic development - Environmental degradation – Sustainable

development – Neoliberalism - Brazil

Words: 18913

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Contents: I- Introduction …..………………………………………………….. 4

1.1) Objective and Research Questions ……………………………. 5

1.2) Method and Material …………………………………………. 5

II- Theoretical Framework

2.1) Assessing Neoliberalism ………………………………………… 8

2.2) The Washington Consensus …………………………………….. 13

2.3) Post-Washington Consensus and the critique of neoliberal theory 17

2.4) Neoliberalism and Environmental Degradation …………………. 23

2.4.1) The Environmental Kuznets Curve …………………………… 26

III- Globalization, Economic Development and Environmental

Degradation: Uneasy Trends

3.1) Economic globalization and the era of neoliberalism …………… 29

3.2) Economic Development and Environmental Degradation: An

inevitable consequential relationship? ……………………………….. 35

IV- Case study analysis

4.1) The implementation of Neoliberalism in Brazil …………………. 38

4.2) Brazilian current issues: Economic growth, environmental

degradation and the attempt to develop sustainably ………………….. 42

4.3) The interview …………………………………………………….. 45

V- Sustainable Development: A Practical Solution? ………………. 50

VI- Concluding Remarks …………………………………………… 56

VII- Executive Summary …………………………………………… 57

VIII- List of References ……………………………………………. 59

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I – Introduction

This dissertation will consist of an overall critical analysis of neoliberalism,

firstly elaborated by a historical reassessment of the theory, and secondly, by

presenting the pragmatics that made neoliberalism emerge from obscurity in the late

1960s into the commanding position of national and global policy today. By

elaborating a clear and comprehensive presentation of what neoliberalism entails, the

author intends to address the two research questions of the thesis.

First and foremost, the author will present the major issues regarding the neo-

liberal agenda and the promotion of free trade in relation to economic development

and environmental degradation. By doing so, a critical assessment of the linkage

between rapid economic development and increased levels of environmental

degradation will be constructed; in order to determine if environmental degradation is

in fact an inevitable consequence of economic development.

Moreover, a case study analysis regarding Brazil will be presented in order to

illustrate this complex paradigm. Firstly, a discursive description of the emergence

and consolidation of neoliberal economic policies in the country will be elaborated.

Secondly, effects of such policies will be emphasized and analyzed in order to

determine what has been preventing Brazil to develop sustainably.

Lastly, the dissertation will focus on the concept of sustainable development,

analyzing its prominent position on debates regarding economic development and

environmental degradation. Precisely, emphasis will be given to the problem of

conflicting international agendas in the midst of free trade and sustainable

development. Additionally, the uneasy correlation between the indolent progress of

sustainable development and the intensification of neoliberalism on a global scale will

be addressed.

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1.1) Objective and Research Questions

The main objective of the dissertation is to construct a comprehensive

presentation and critique of neoliberalism in order to answer the two main research

questions. The author’s point of departure is that neoliberalism has achieved a

supreme position on debates regarding economic development, leading to a

problematic worldwide shift towards neoliberalization. Favoring economic growth

activities in detriment of the environment and a sustainable development path,

understanding and explaining the shift towards neoliberalism is fundamental in order

to answer the following research questions:

Is environmental degradation an inevitable consequence of economic

development?

What are or have been the major impediments on Brazil’s attempt to

develop sustainably?

1.2) Method and Material

The methodology to be used in order to answer the research questions of the

dissertation is referred by political scientists as specific explanation. Specific

explanations are used in political science methodology in order to explain specific

events, describing causes and effects of it. “A good explanation tell us what specific

causes produced a specific phenomenon and identifies the general phenomenon of

which this specific cause is an example.”1

Moreover, specific explanations are composed of causal (CP – the phenomenon

doing the causing), caused (OP – the phenomenon being caused), intervening (IP –

These are caused by the causal phenomenon and cause the outcome phenomenon),

                                                                                                               1 Van Evera, S. (1997). Guide to Methods for Students of Political Science, 15

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and antecedent phenomena (AP – Phenomenon whose presence activates or magnifies

the causal action of the causal phenomena).2

This is how the author intends to apply the methodology in the argumentation:

Causal Phenomenon: Rapid economic development

Caused Phenomenon: Increased levels of environmental degradation

Intervening Phenomenon: Conversion of the national economy into an

environmentally harmful export-oriented economy.

Antecedent Phenomenon: Widespread implementation of neoliberal economic

policies.

According to Political Science Professor Stephen Van Evera, dissertations in

political science can perform seven principal missions, giving rise to seven types of

dissertation, one for each mission. These are: 1. A theory-proposing dissertation. 2. A

theory-testing dissertation. 3. A literature-assessing dissertation. 4. A policy-

evaluative or policy-prescriptive dissertation. 5. A historical explanatory dissertation.

6. A historical evaluative dissertation. 7. A predictive dissertation.3

In this case, the argumentation can be characterized as being a combination of

a literature-assessing dissertation, entailing summaries and evaluations of existing

theoretical and empirical literature on a subject, and a historical explanatory

dissertation, using academically recognized theory or “common sense” deduction to

explain the causes, pattern, or consequences of historical cases.4

Moreover, the argumentation will present a descriptive case study analysis in

order to explore the context of discussion in depth. By underlying principles and

causations, the case study regarding Brazil intends to illustrate, understand and clearly

explain the linkage between adoption of neoliberal economic policies, rapid economic

development and a significant increase in environmental degradation.

Regarding material, the dissertation will include a structured interview

conducted with former Executive Secretary of Brazil’s Ministry of the Environment

and current Director of the Secretariat of Climate Change and Environmental Quality,

Branca Americano. The interview will serve exclusively as an analytical tool for the

author; therefore, the material collected will be used in the elaboration of the

concluding analysis.

                                                                                                               2 Van Evera, S. (1997). Guide to Methods for Students of Political Science, 15 3 Ibid 4 Ibid, 90

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Since the dissertation will focus only on answering questions of “how” and

why”, as well as understanding and analyzing historical accounts, the choice of a

specific explanation method suits the work best. Primary sources to be used include

historical documents, scholarly journal articles and well-acclaimed academic books

on the subject of the research. By collecting data and observing empirical material,

the author intends to conduct the analysis and answer the proposed research questions.

It is important to assess that the dissertation will not attempt to measure effects of

environmental degradation in Brazil, focusing only on explaining the causes and

reporting on the existing linkage between increased levels of economic activity and

increased levels of environmental degradation. Therefore the argumentation will only

use qualitative research methods, such as structured interviews and observation of

data, excluding quantitative methods, such as statistic analysis.

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II- Theoretical Framework

2.1) Assessing Neo-liberalism

In this part of the dissertation, the author will set out to describe, understand

and explain the concept of neoliberalism. In order to theorize on how neoliberalism

influences economic development and environmental degradation, one must firstly

present the pragmatics that made neoliberalism possible to emerge in the late 1970’s,

until its consolidation as an hegemonic ideology shaping our world today.

A historical assessment of neoliberalism requires an extensive multi-level

approach. Most critics would argue that neoliberalism combine insights from a wide

range of sources, including Adam Smith, neoclassical economics, the Austrian

critique of Keynesianism and Soviet-style socialism, monetarism and its new classical

and supply-side offspring.5 According to other critics, neoliberalism is the political

ideology which resulted from a few efforts at reinvigorating classical liberalism in the

period immediately before and during World War II. This view is supported by the

thought that neoliberals have sought to redefine liberalism by reverting to a more

right-wing or laissez-faire stance on economic policy issues, compared to the modern,

egalitarian liberalism of Keynes.6

The rise of neoliberal theory can be traced back to 1947, during the post

Second World War Period. At that time, a small and exclusive group of advocates,

mainly academic economists, historians, and political philosophers gathered around in

order to create a society with the aim of reconstructing public policy. According to

them, central values of civilization, such as essential conditions of human dignity and

freedom of thought and expression were in danger of disappearing due to the

extension of arbitrary power.7

Furthermore, the members of the society described themselves as liberals in

the traditional European sense because of their fundamental commitment to ideals of

personal freedom. The neoliberal label signaled their adherence to the free market

principles of neoclassical economics that had emerged in the second half of the

                                                                                                               5 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 2 6 Thorsen, E. (2009). The Neoliberal Challenge, 10 7 Harvey, D. (2005). A Brief History of Neoliberalism, 20

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nineteenth century to displace the classical theories of Adam Smith, David Ricardo

and Karl Marx.8

Withstanding, neoliberal doctrine was therefore strongly opposed to state

interventionist theories, such as those of John Maynard Keynes, which rose to

prominence in the 1930’s in response to the Great Depression.9 The neoliberals were

fiercely opposed to theories of centralized state planning, such as those working close

to the Marxist tradition. State decisions, according to neoliberals, were bound to be

politically biased depending upon the strength of the interests groups involved (such

as unions, environmentalists, or trade lobbies). State decisions on matters of

investment and capital accumulation were bound to be wrong because the information

available to the state could not rival that contained in market signals.10

Nevertheless, the conventional view regarding neoliberalism is the thought of

a strong advocacy of economic liberalizations, having its roots on one fundamental

tenet of the liberal tradition, namely economic liberalism. Economic liberalism is,

basically, the ideological belief that states ought to abstain from intervening in the

economy, and instead leave it to an organization based on individualist lines, such that

the greatest possible number of economic decisions are made by private individuals

and not by collective institutions.11

However, it would be misleading to understand neoliberalism as it is

perceived today, as a recovery of the liberal tradition. Because of its long history in

theoretical and political meaning, liberalism has become a rather indefinite term,

nonetheless, one can surely distinguish liberalism in terms of classical and modern.

Classical liberalism is often associated with the belief that the state ought to be

minimal, which means that practically everything except armed forces, law

enforcement and other non-excludable goods ought to be left to the unregulated

dealings of its citizens, and the organizations and corporations they spontaneously

choose to establish and take part in.12

On the other hand, modern liberalism is characterized by a greater willingness

to let the state become an active participant in the economy. This has often issued in a

                                                                                                               8 Ibid 9 Ibid 10 Harvey, D. (2005). A Brief History of Neoliberalism, 20-21 11 Adams, I. (2001). Political Ideology Today, 20 12  Thorsen, E. (2009). The Neoliberal Challenge, 5

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pronounced tendency to regulate the marketplace, and to have the state supply

essential goods and services to everyone. Modern liberalism is therefore, for all

intents and purposes, a profound revision of liberalism, especially of the economic

policies traditionally associated with it.13

Withstanding, the major disagreement between classical and modern liberals

is that classical liberals favor laissez-faire economic policies because it is thought that

they lead to more freedom or real democracy. On the contrary, modern liberals tend to

claim that this analysis is inadequate, and that the state must play a significant role in

the economy, if the most basic liberal goals and purposes are to be made into reality.14

Moreover, most critics of neoliberalism would agree that it is not accurate to

understand this theory as sort of a new version of classical liberalism, such as

advocated by Adam Smith and his intellectual successors in the nineteen century.

Neoliberalism today, should be understood as an entirely new paradigm for economic

theory and policy-making. It is foremost, the ideology behind the most recent stage in

the development of capitalist society.15

Another fundamental market system accounting on the historical assessment

of neoliberalism is known as the term of embedded liberalism. After the Second

World War, a restructuring of international relations and of state forms were keen to

prevent a return to the catastrophic conditions that had threatened the capitalist order

in the Great Depression and the re-emergence of inter-state geopolitical rivalries that

had led to the war.16 Therefore, in order to ensure domestic peace, well-being,

inclusion and stability, a class compromise between capital and labor was constructed

in the right blend of the state, market, and democratic institutions.17

Furthermore, embedded liberalism is most often referred to the new world

order that emerged through the Bretton Woods agreements, and various international

institutions created in order to stabilize international relations between states, such as

the United Nations, the World Bank and the International Monetary Fund. The new

international market system was set up to support free trade and it was encouraged by

                                                                                                               13 Thorsen, E. (2009). The Neoliberal Challenge, 5 14 Ibid, 5 15 Ibid, 8 16 Harvey, D. (2005). A Brief History of Neoliberalism, 10 17 Ibid

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a system of fixed exchanged rates anchored by the United States dollar’s

convertibility into gold at a fixed price.18

Additionally, what embedded liberalism actually entailed was the acceptance

that the state should focus on full employment, economic growth, and the welfare of

its citizens, and that state power should be freely deployed, alongside of or, if

necessary, intervening in or even substituting for market processes to achieve these

ends.19

Very few critics of neoliberalism attempt to propose a comprehensive

definition for the theory, rather focusing their work on a severe critique framework

without giving a clear picture of what neoliberalism actually entails. In the following

quotation, David Harvey, prominent social theorist, elaborates one of the most wide-

ranging definitions of neoliberalism up to date.

“Neoliberalism is in the first instance a theory of political economic practices

that proposes that human well-being can best be advanced by liberating individual

entrepreneurial freedoms and skills within an institutional framework characterized by

strong private property rights, free markets and free trade. The role of the state is to

create and preserve an institutional framework appropriate to such practices. The state

has to guarantee, for example, the quality and integrity of money. It must also set up

those military, defence, police and legal structures and functions required to secure

private property rights and to guarantee, by force if need be, the proper functioning of

markets. Furthermore, if markets do not exist (in areas such as land, water, education,

health care, social security, or environmental pollution) then they must be created, by

state action if necessary. But beyond these tasks the state should not venture. State

interventions in markets (once created) must be kept to a bare minimum because,

according to the theory, the state cannot possibly possess enough information to

second-guess market signals (prices) and because powerful interest groups will

inevitably distort and bias state interventions (particularly in democracies) for their

own benefit.”20

One may attempt to propose a critical analysis of Harvey’s definition of

neoliberalism. It is apparent that Harvey understands neoliberalism as being a

completely independent and new phenomenon, relating mostly to the recent stages of

                                                                                                               18 Ibid 19 Ibid 20 Harvey, D. (2005). A Brief History of Neoliberalism, 2

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capitalism and globalization, rather than being a resurgence of traditional liberalism.

According to the author, there has been an emphatic turn towards neoliberalism in

political-economic practices and thinking since the 1970’s. Some of these practices,

common to all states, being them long-ranged social democracies or newly minted ex-

Soviet states, are: Deregulation, privatization, and the withdrawal of the state from

several areas of social provision.21

A constant perspective to most critics of neoliberalism is that the theory

straddles a wide range of social, political and economic phenomena at different levels

of complexity. Some of these are highly abstract, for example the growing power of

finance or the debasement of democracy, while others are relatively concrete, such as

privatization or the relationship between foreign states and local non-governmental

organizations.22

Furthermore, according to Harvey, neoliberalism values market exchange as

an ethic in itself, capable of acting as a guide to all human action, and substituting for

all previously held ethical beliefs, it emphasizes the significance of contractual

relations in the marketplace. Moreover, it holds that the social good will be

maximized by maximizing the reach and frequency of market transactions, and it

seeks to bring all human action into the domain of the market.23

Withstanding, the full privatization of markets followed by the systematic use

of state power to impose financial market imperatives, the elimination of all trade

barriers and the reduced power of labor are core characteristics of neoliberal theory. It

is assumed that individual freedoms are guaranteed by the freedom of the market and

of trade, being necessary and sufficient for the creation of wealth and therefore for the

improved well-being of the population at large.24

After describing the fundamentals roots and core concepts of neoliberalism in

theory, one can begin to dissert the pragmatics that made neoliberalism emerge from

the shadows of relative theoretical obscurity in the 1970’s into a practical doctrine

that influences the lives of billions of people around the world today.

                                                                                                               21 Harvey, D. (2005). A Brief History of Neoliberalism, 3 22 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 2 23 Harvey, D. (2005). A Brief History of Neoliberalism, 3 24 Ibid, 4-7

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2.2) The Washington Consensus

Throughout the post-war period and the decades of 1950 and 1960, embedded

liberalism delivered high rates of growth to advanced capitalist countries with

remarkable efficiency. The political orientation system had been successfully

combining an international free trade agenda with the freedom for states to enhance

their capacity of providing welfare for its citizens, to regulate their economies and to

tackle unemployment rates. However, for much of the developing world, embedded

liberalism remained an unrealistic hope.

However, by the end of the 1960’s, embedded liberalism began to tumble,

both internationally and within domestic economies. Unemployment and inflation

were surging in various states, signaling a serious crisis of capital accumulation on a

global scale.25 Events such as the Arab-Israeli War and the OPEC oil embargo of

1973 indicated that international relations between states were once again falling into

disorder.

Withstanding, embedded liberalism and the Bretton Woods system of fixed

exchange rates were weakened and no longer functioning properly. The decade of

1970 was characterized by stagnation, accelerating inflation, growing unemployment

and an overall catastrophic crisis of the global economy. An alternative for the

ongoing capital accumulation crisis was rapidly demanded and the answer came in

form of an exceptional shift towards neoliberalization by the major capitalist

countries, such as the United States and Great Britain.

Additionally, powerful ideological influences were circulating through

corporations, the media, and various institutions in order to promulgate neoliberal

perspectives. The long march of neoliberal ideas through these institutions, the

organization of think-tanks (with corporate backing and funding), the capture of

certain segments of the media, and the conversion of many intellectuals to neoliberal

ways of thinking, created a climate of opinion in support of neoliberalism as the

exclusive answer for tackling the current economic crisis.26

Unsurprisingly, the following years of 1978-80 became known as the

prominent period allowing for the implementation and consolidation of neoliberalism

                                                                                                               25 Harvey, D. (2005). A Brief History of Neoliberalism, 12 26 Ibid, 40

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as the new economic ideology regulating public policy and world affairs.

Simultaneously in three different parts of the globe, major steps were taken towards a

vast implementation of neoliberal policies that would revolutionize the world’s

economic history.

In 1978, Deng Xiaoping began the liberalization of the communist-ruled

economy of China. A year after, Margaret Thatcher, elected Prime Minister of

Britain, made neoliberalism the major guiding principle of economic thought and

management in the country. Then, in 1980, Ronald Reagan was elected President of

the United States and set the nation on course to revitalize its economic policies.27

Withstanding, significant transformations were adopted in all three countries,

accounting for a remarkable revolution of the world’s economic conception. In

China, Deng Xiaoping defined a path to completely alter the country in a period of

two decades from a closed frontier to an open center of capitalist dynamism with

sustained growth rates unparalleled in human history.28 In Great Britain, Margaret

Thatcher focused on a mandate to curb trade union power and put an end to the

miserable inflationary stagnation that had enveloped the country for the preceding

decade.29 Similarly in the United States, Ronald Reagan curbed the power of labor,

began to deregulate industry, agriculture, and resource extraction, and liberate the

powers of finance both internally and on the world stage.30

For over a decade, neoliberalization set the stage for a flourishing and ever

more substantially integrated world economy. One can certainly affirm that around

the 1980’s, neoliberalism was established as a truly global policy, accounting for an

extraordinary proliferation of trade, capital and technology flows around the world.

Strongly promoting a free up for trade and investment across borders and a

deregulation of markets and state interventions, neoliberalism rapidly became the

driving force of the new international economic order.

Whereas the major capitalist countries were enjoying great rates of growth and

acknowledged success due to the worldwide shift towards neoliberal economic

policies, for much of the Third World, the benefits of neoliberalism was still seen as a

pipe dream. By the 1990’s, as an attempt to promote economic prescriptions for

                                                                                                               27 Ibid, 1 28 Ibid 29 Ibid 30 Ibid

  15  

developing countries, the International Monetary Fund, the World Bank and the

United States Treasury Department introduced an economic reform-package which

came to be known internationally as the Washington Consensus.

This consensus reflects the convergence of the three given institutions based in

Washington, D.C., around neoliberal economic policy instructions for the developing

world. In essence, national authorities of developing countries were advised to design

their economic policy in such a way as to stimulate develop and growth without

excessive price inflation, to balance their fiscal accounts over a cycle, to keep external

accounts within readily financeable bounds, to deepen their internal financial markets,

and to open their markets for goods and services, and eventually for all forms of

private capital investment.31

The policies associated with neoliberalism and the prescriptions conceded by

the Washington Consensus can be simply unfolded if analyzed through the lens of

neoclassical economic theory. Presuming that the market is efficient and the state is

inefficient, the market rather than the state should address such economic problems of

development as industrial growth, international competitivity and employment

creation.32

According to the main advocates of the Washington Consensus, the main

reason why poor countries remain poor is not because they lack infrastructure or

money, but rather, because of misconceived state intervention, corruption,

inefficiency and misguided economic incentives. Neoliberals also claim that

international trade and finance, rather than domestic consumption should become the

engines of development. 33

Moreover, the neoliberal premises of the Washington Consensus imply that

certain development policies are naturally desirable. First and foremost, the state

should be rolled back in order to focus on three functions only: defence against

foreign aggression, provision of legal and economic infrastructure for the functioning

of markets, and mediation between social groups in order to preserve and expand

market relations. Secondly, economic policies such as privatization, deregulation and

the extinction of state planning, contributes to the desired outcome.34

                                                                                                               31 Ravenhill, J. (2008). Global Political Economy, 261 32 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 113 33 Ibid 34 Ibid

  16  

Accordingly, fiscal and monetary policy discipline ought to be imposed, in

order to eliminate the government budget deficit, control inflation and limit the scope

for state economic intervention. The instrumentality of such policies are: tax reforms,

expenditure cuts, and the shift of government investment away from directly

productive sectors such as electricity provision, telecommunications, and towards the

provision of public goods, especially health and education.35

Additionally, neoliberal economic policies also advise the liberalization of

trade and the devaluation of the exchange rate. Whereas the former compels domestic

firms to become more efficient, due to the pressure of presumably more competitive

foreign producers, the latter stimulates exports and promotes specialization according

to the country’s comparative advantage.36

Finally, this combination of policies, regulations and incentives is designed to

reduce the role of the state. In doing so, it transfers to the financial markets the ability

to determine the pattern of international specialization and the capacity to determine

the economic priorities, both inter-temporally (levels of investment and consumption)

and inter-sectorally (allocation of investment funds and determination of the

composition of output and employment).37

Furthermore, it is highly relevant to highlight that the package of measures

associated with the Washington Consensus and the neo-liberal agenda comprises both

national and international elements. As it has been pointed out, at the national level,

free trade policies and the reduction of the role of the state in the economy are

strongly advocated. Besides, at the international level, the policies supported are the

ones that aim to remove hindrances to trade and to promote the inflow of foreign

direct investment.38

According to neoliberal advocates, tariffs on imports or exports are major

impediments to trade. “Tariffs are a form of taxation that are levied on the value of

goods that are entering or leaving a country. They can be both a form of revenue and

a way of protecting domestic industries.”39 Allied with the free trade advocacy is the

thought that tariffs undermine potential gains, therefore, it is argued that the removal

                                                                                                               35 Ibid 36 Ibid 37 Ibid 38 Hobden, S. (2011). Politics in the Developing World, 77 39 Ibid

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or reduction of trade tariffs will promote trade and lead to a more efficient use of

resources, as domestic industries are exposed to international competition.40

Moreover, neoliberals have also argued in favor of allowing currencies to float

freely rather than being managed by governments. As part of the free trade regimes,

countries have been persuaded to allow their currencies to float freely, causing

devaluation of the currency and consequently making domestic production more

competitive internationally, while increasing the cost of imports. Additionally, free

market policies argue that there should be no discrimination against foreign capital

wishing to invest in the country, and that any barriers to investment should be

removed.41

Considering the core characteristics of neoliberal theory, the premises of the

Washington Consensus and the historical assessment of how neoliberalism rapidly

developed across the world, one can certainly address a critique to neoliberal theory.

The next sub-section of the argumentation will firstly present the discussions

regarding economic development on the Post-Washington Consensus period.

Following, a strong critique to neoliberalism will be elaborated, highlighting the

major effects of the implementation of the ideology in regards to economic

development discussions and environmental concerns.

2.3) Post-Washington Consensus and the critique of neoliberal theory

Previously, it has been highlighted that a remarkable shift in development

policies from state-led to market-led approaches emerged and it was consolidated

throughout the 1980’s, under the rise of neoliberalism. Additionally, emphasis has

been given to the outstanding dissimilarities in economic performances between the

most and least developed countries since the shift towards neoliberalization occurred.

The prospects for national economic growth highly depend upon elaboration

of development strategy, a task that has traditionally been given to the state. Much of

the debate regarding developing strategy falls into what is appropriate in terms of

state provision and whether or not the state should intervene in the market. However,

since the introduction of the Washington Consensus, this debate has been undermined

                                                                                                               40 Ibid 41 Hobden, S. (2011). Politics in the Developing World, 77

  18  

and the role of the state in development strategy has been drastically reduced, if not

demised.

The Washington Consensus policies are based on the assumption that global

economic integration through free trade is the most effective route to promote growth,

and that the benefits of growth will trickle down throughout society.42 However, this

assumption seems to be highly questionable when applied to poor countries. In the

rich countries neoliberalism seeks to roll back the welfare state, at least partially. In

contrast, in the poor countries, the welfare state have never existed, and although state

intervention was often unwieldy and inefficient, it was indispensable for rapid growth

and the promotion of social justice, among other areas. In these countries, Washington

Consensus policies reduce state capacity to address pressing social problems,

including poverty, unemployment and the concentration of income and wealth.43

Consequently, the implementation of neoliberalism and of Washington

Consensus premises throughout the Third World was highly inefficient. Neoliberal

policies were incapable of delivering significant improvements in economic

performances and as a result, dissatisfaction with the Washington Consensus spread

across the poor countries. Being articulated by civil society movements and non-

governmental organizations, the dissatisfaction gradually gained voice also in the

developed world.

The major dissatisfaction was the assumption that poor countries were

suffering from the global economic integration, the consolidation of free trade

agreements and the reduced role of the state in development strategy. The effects of

financial crisis in Mexico, East Asia, and Russia intensified the critique, as it was

clearly not only in the poorest countries that the Washington Consensus premises did

not seem to be working.44

Increasingly, the power of civil society movements and the aversion towards

neoliberal premises began to have effect on internal debates at Washington

institutions, such as the World Bank. In 1997, the appointment of notable individual

Joseph Stiglitz, as chief economist of the World Bank, can be regarded as a brief shift

away from the neoliberal orthodoxy.45

                                                                                                               42 Ravenhill, J. (2008). Global Political Economy, 424 43 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 115 44 Ravenhill, J. (2008). Global Political Economy, 434 45 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 117

  19  

During his time as chief economist and senior vice-president of the World

Bank, Joseph Stiglitz argued that inappropriately managed market liberalization was

devastating for the poor. Moreover, he believed that globalization had to be made to

work for the poor.46 Withstanding, an overall opinion emerged, that the benefits of

global economic integration had to be shared more evenly.

Highly influenced by the Stiglitz momentum as the leading economist of the

World Bank, the so-called Post-Washington Consensus was born. Whereas the

Washington Consensus aimed for growth, the Post-Washington Consensus stresses

that growth alone is not enough, it must be made pro-poor; and that poverty reduction

is crucial for development.47

Under the Washington Consensus, the International Monetary Fund and

World Bank decided on the universal development design; but under the Post-

Washington Consensus, national governments were supposed to own development

strategies, and civil society was supposed to participate in their formulation.

Conditions should relate to processes rather than policies, and development strategy

should not be imposed by external actors. A new emphasis on governance, in other

words, who decide, was a distinctive feature of the Post-Washington Consensus.48

One can certainly affirm that the articulation of the Post-Washington

Consensus was different than the one of the Washington Consensus. However, in

spite of Stiglitz’ efforts for changes in ideology at the World Bank, in practice not

much was actually altered. According to most critics of Neoliberalism, the Post-

Washington Consensus suffers from weaknesses similar to those of the Washington

Consensus.49

The major flaw appointed by critics on both approaches is that they share the

same methodological foundations, including reductionism, methodological

individualism, utilitarianism and the dogmatic presumption that exchange is part of

human nature rather than being an aspect of society. Consequently, for the Post-

Washington Consensus, the market is a natural rather than a socially created

                                                                                                               46 Ravenhill, J. (2008). Global Political Economy, 434 47 Ravenhill, J. (2008). Global Political Economy, 435 48 Ibid, 435 49 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 118

  20  

institution, and although its optimality can be questioned under certain circumstances,

the market itself cannot be challenged.50

The second significant critique is that both approaches recommend very

similar policies for poor countries. They are both highly conservative in fiscal and

monetary policy, and support free trade, privatization, liberalization and deregulation.

The only significant difference between them concerns the speed, depth and method

of reform, because new institutionalism accepts the potential usefulness of localized

state intervention in order to correct specific market failures.51

Moreover, critics point out to the fact that rich countries did not become rich

by following neoliberal policies. Periods of rapid growth in both rich and poor

countries have not coincided with neoliberalism; and the policies associated with

rapid growth in Latin America (1930-82), East Asia (1960-98) and China (1978 to the

present), flatly contradict the prescriptions of the Washington Consensus on several

counts.52

Altogether, critics of neoliberalism argue that neither of the strategies

elaborated by the Washington think tanks is sufficient to make a considerable

difference to outcomes in terms of growth and poverty reduction in the South. The

emphasis of the strategies continue to be directed towards domestic policy reform and

growth via trade liberalization, however, they continue to neglect structural issues,

such as the South’s perception of lack of voice in global rule.53

In the following quotation, William Finnegan, American author and journalist

of “The New Yorker”, unmistakably addresses the issue of poor countries and global

institutions ruling: “the main problem, from the perspective of poor countries is

simply that the rules drawn up, and decisions handed down, at the World Trade

Organization, the International Monetary Fund and other international tribunals, are

drawn up and handed down almost entirely by the rich countries. They have the

negotiators, the expertise, the financial leverage, and in some cases (such as the IMF

and World Bank) the weighted vote to win virtually every dispute. Even when rich

                                                                                                               50 Ibid 51 Ibid 52 Saad-Filho, A. & Johnston, D. (2005). Neoliberalism: A Critical Reader, 116 53 Ravenhill, J. (2008). Global Political Economy, 435

  21  

countries clearly violate an agreement, their poor-country counterparts may lack the

resources (meaning, often, simply the lawyers) to lodge a successful protest.”54

Considering the articulations of global institution ruling, it is undeniable that

there must be a greater voice for poor countries in global governance of development.

It is extremely necessary that developing countries achieve an enhanced role in major

global institutions. All member states should be able to represent themselves fairly,

and more importantly, veto power from a single country should be removed. These

are the feeblest preconditions for global institutions to achieve legitimacy in the eyes

of global citizens.55

Another exceptional issue with the implementation of neoliberalism and the

practices of the Washington Consensus in developing countries is the increase of

social inequality. According to David Harvey, redistributive effects and increasing

social inequality have in fact been such a persistent feature of neoliberalization as to

be regarded as structural to the whole project.56 Economic development reforms must

be accompanied by a government commitment to growth with equity, otherwise

social inequalities will rise and poverty reduction will not be tackled. In highly

unequal societies, such as Brazil, the benefits of growth are distributed highly

unequally. This means that unequal countries have to grow much more than equal

countries to bring benefits for the poor.57

Moreover, the issue of rising social inequality associated with

neoliberalization is not an exclusive feature of developing countries. After the

implementation of neoliberal policies in the late 1970’s, the share of national income

of the top 1 per cent of income earners in the United States soared, to reach 15 per

cent by the end of the century. The top 0.1 per cent of income earners in the United

States increased their share of the national income from 2 per cent in 1978 to over 6

per cent by 1999, while the ratio of the median compensation of workers to the

salaries of CEOs increased from just over 30 to 1 in 1970 to nearly 500 to 1 by

2000.58

According to predominant critics of neoliberalism, such as David Harvey, one

can suggest that neoliberalization is associated with the restoration of the power of                                                                                                                54 Finnegan, W. (2008). Global Political Economy, 436 55 Ravenhill, J. (2008). Global Political Economy, 440 56 Harvey, D. (2005). A Brief History of Neoliberalism, 16 57 Ravenhill, J. (2008). Global Political Economy, 440 58 Harvey, D. (2005). A Brief History of Neoliberalism, 16

  22  

economic elites. Evidence shows that extraordinary concentrations of wealth and

power emerged all over the world since the neoliberal turn. In Great Britain, the top 1

per cent of income earners have doubled their share of the national income from 6.5

per cent to 13 per cent since 1982. In Russia, a small and powerful oligarchy arose

after neoliberalism was introduced in the 1990’s. Significant surges in income

inequalities have also occurred in Mexico after adopting free-market oriented

policies.59

However, no other country has had its combination of fast economic growth

due to free-market oriented policies and very fast rise of inequality since the early

1980’s than China. Inequality is now higher than before the communists won the civil

war in 1949, and higher than in the United States, Russia and Japan. Inequality

between regions is probably higher than in any other sizeable country. The ratio of the

average income of the richest to poorest province (Guangdong to Guizhou) rose to 4.8

by 1993, and remained at 4.8 in 1998-2001. The widening gaps between a sliver of

mega-haves, a fraction of haves, and a great mass of have nots, poses a serious threat

to social cohesion in China.60

Furthermore, evidence shows that in despite of several states implementing

structural adjustment programmes under the premises of the Washington Consensus,

economic performance has been dire. In Sub-Saharan Africa, average real income

today is below the level of the 1980’s. In Latin America and Eastern Europe,

economic performance has also been poor; its average income being about the same

as during the 1980’s, notwithstanding its generally diligent adoption of Washington

Consensus policies.61

Withstanding, one can conclude that economic growth and development is in

fact crucial to reduce poverty, and that neoliberal policy reforms can deliver short-

term growth only in exceptional cases. However, another conclusion is that the

poorest class of society often miss out on the growth and development wave.

Additionally, evidence shows that the introduction of neoliberal economic policies is

highly linked with an increased in social inequality, leaving developing countries

highly unequal.

                                                                                                               59 Ibid 60 Wade, R. (2008). Global Political Economy, 393 61 Ravenhill, J. (2008). Global Political Economy, 378

  23  

In conclusion, it has been argued that the worldwide shift towards

neoliberalism and away from state interventionism created a truly globalized

economy by the 1980’s, in which the interests of the rich have prevailed in detriment

of the development of the poor. Moreover, it has been argued that the debate

regarding economic development is now in the hands of international institutions,

which have become responsible for addressing global policies of development. In the

next section of the dissertation, another extraordinary linkage to neoliberalism will be

presented; the increase of environmental degradation at a local and global level.

2.4) Neoliberalism and Environmental Degradation

This section of the dissertation will begin to address the complex relationship

between neoliberalism and environmental degradation. Straight forwardly, one of the

major consequences of the worldwide shift towards neoliberalization since the 1980’s

is the significant increase in environmental degradation. Both at a local and global

level, the introduction of neoliberal economic policies have been placing considerable

stress upon the environment.

Indices of human well being including the costs of environmental

degradations suggest an accelerating negative trend since the 1970 or so. And there

are enough specific examples of environmental losses resulting from the unrestrained

application of neoliberal principles to give sustenance to such a general account.62

The accelerating destruction of tropical rain forests since the 1970 is a well-known

example that has serious implications for climate change and the loss of biodiversity.

The era of neoliberalization also happens to be the era of the fastest mass extinction of

species in the Earth’s recent history.63

Moreover, one can assert that in despite of the growing stance of

environmental movements around the world, the balance sheet on the environmental

consequences of neoliberalization is almost certainly negative. 64 Whereas the

environment has definitely assumed an important and rising status on national

political agendas of most developed countries since the 1980’s, the shift towards

                                                                                                               62 Harvey, D. (2005). A Brief History of Neoliberalism, 172-173 63 Ibid, 173 64 Ibid, 172

  24  

neoliberalization has signified a remarkable increase in environmental degradation at

a local and global level.

The status of the environment as an issue of national policy agendas has been

geographically unbalanced. Whereas in most developed countries, social movements

in regards to the environment have for long exerted a restraining influence on

governments and corporations, the status of the environment as an issue on

developing country agendas remains significantly modest. Environmental issues have

to compete for policy space with other pressing concerns in most developing country

agendas, often being subject to displacement by issues that assume a greater priority

for the nation.65

In Brazil, for example, policymakers have adopted the position that pollution

and environmental degradation were a price worth paying for development.66 This

perspective only comes to illustrate how development and environmental concerns are

inexorably related in developing country agendas. Unfortunately, national policies are

giving too little and too late attention for environmental issues, focusing primarily on

economic growth above all conditions.

Furthermore, one may discuss to what extent the ever-growing global

economic activity, enhanced by neoliberalization, directly affects the environment.

Studies show that economic activity has multiplied to create a thirteen trillion US

dollars world economy, and this figure could grow five or tenfold in the coming half-

century. Industrial production has grown more than fiftyfold over the past century,

four-fifths of this growth since 1950.67 Accordingly, much of these economic growth

activities pull raw materials from forests, soils, seas, and waterways.

Unsurprisingly, the two commanding nations of the global economy, the

United States and China, are the main culprits in the growth of carbon dioxide

emissions these last few years.68 One country alone, the United States, which makes

up just four per cent of the world’s population, is responsible for twenty per cent of

global emissions, while one hundred and thirty six developing countries together

account for twenty four per cent.69

                                                                                                               65 Newell, P. (2011). Politics in the Developing World, 317 66 Baer, W. (2008). The Brazilian Economy: Growth and Development, 337 67 Lechner, F. & Boli, J. (2011). The Globalization Reader, 433 68 Harvey, D. (2005). A Brief History of Neoliberalism, 173 69 Newell, P. (2011). Politics in the Developing World, 318

  25  

In the case of China, the relation between rapid industrialization and disregard

for environmental consequences is absolutely clear, having remarkable effects in

several different stances. Firstly, the country has increased its carbon dioxide

emissions by astonishing forty-five per cent over the past decade. Secondly, the

growth of car ownership has made the country move from a self-sufficient oil

producer position in the late 1980’s to become the second largest global importer after

the United States. Thirdly, also in relation to the significant increase in car ownership

and use, China now has sixteen of the twenty worst cities in the world with respect to

air quality. Finally, Chinese rivers and water supplies are highly polluted, full of

dangerous cancer-inducing chemicals, adding up to a critical bundle of environmental

problems that the central government is only now beginning to address.70

Moreover, neoliberalization also has a particular connection with the

exploitation of natural resources. The preference for short-term contractual relations

puts pressure on all producers to extract everything they can while the contract lasts.

Fish stocks, such as sardines off California, cod off Newfoundland, and Chilean sea

bass are classic examples of a resource exploited at an optimal rate that suddenly

crashes without any seeming warning.71

Additionally, one may also connect the neoliberal insistence upon

privatization to the difficulties in establishing any global agreements on principles of

forest management. In poorer countries, with substantial forest resources, global

agreements of forestry would protect valuable habitats and biodiversity. However, the

pressure to increase exports and to allow foreign ownerships and concessions, strictly

enforced by neoliberal practices, means that even minimal protections of forests break

down. Making matters worse, poor countries are often pressured to privatize their

forests and to open up exploitation to foreign lumber companies on short-term

contracts.72

Furthermore, fierce critics of neoliberalism stresses that the world’s

commitment to the practices of the neoliberal ideology is at the same time a cause of

the environmental crisis and a barrier to its resolution.73 According to Lorraine Elliot,

an international relations scholar, author of The Global Politics of the Environment,

                                                                                                               70 Harvey, D. (2005). A Brief History of Neoliberalism, 174 71 Harvey, D. (2005). A Brief History of Neoliberalism, 174 72 Ibid, 175 73 Elliot, L. (2004). The Global Politics of the Environment, 226

  26  

“economic and political interests are not simply intervening factors in an otherwise

value-free and effective process as the problem-solvers would have it. Rather they are

inextricably bound up with the ways in which environmental problems are articulated

and understood, with the causes of the environmental crisis and with the dysfunctions

of the contemporary political and economic world order. Prevailing power

relationships, which reflect and constitute the contemporary world order, are

perceived as an ecological double assault – as a cause of the environmental crisis and

a barrier to its resolution.”74

In conclusion, it is appropriate to affirm that the neoliberalization initiated in

the 1980’s has accounted for significant stress upon the planet’s environmental base.

Both at a local and at a global level, environmental degradation has increased due to

the direct effects of neoliberal economic policies and the intensification of global

economic activity. One may affirm that environmental degradation is a byproduct of

global economic development fostered by neoliberalism. Further, the argumentation

will present a discussion regarding whether or not environmental degradation is an

inevitable consequence of economic development.

2.4.1) The Environmental Kuznets Curve

Discussions regarding national economic growth and the increase of

environmental degradation usually include an illustration of what is known as the

environmental Kuznets curve. Elaborated by Russian American Harvard economist,

Simon Kuznets, the curve is a graphic representation predicting that as countries

develop and societies become richer, the pollution per unit of production will

decrease.75 According to this model, environmental degradation will decrease because

money becomes available for developing countries to spend on environmental

mitigation and because the immediate material needs of societies have been or are

being met.76

Unsurprisingly, neoliberal economists support the accuracy of the Kuznets

Curve, claiming that even though economic growth can worsen environmental

                                                                                                               74 Ibid 75 Elliot, L. (2004). The Global Politics of the Environment, 160 76 Ibid

  27  

conditions in the short run, in the long run once a society harnesses sufficient per

capita wealth, environmental standards will invariably rise.77

The major argument of neoliberal advocates is that air and water quality can in

fact deteriorate in the early stages of industrial production. Pollution such as smog

and lead will rise along with economic growth, however this occurs because

governments focus on increasing industrial growth and national income rather than on

pollution controls.78 Yet, according to neoliberal economists, this is a temporary

phenomenon. Once per capita income reaches high levels, pollution begins to fall.

This occurs partly because citizens demand better living environments, and partly

because firms and governments now have the financial and institutional capacity to

respond effectively.79

Furthermore, neoliberal advocates use the example of Japan’s environmental

history to support the correctness of the Kuznets Curve. After the Second World War,

industrial production and economic growth in Japan soared, and by the 1960s Japan

was suffering from acute pollution, not unlike many of the heavily polluted areas of

India and China today. Citizen protests over the health consequences of pollution

escalated in the 1960s and 1970s. In response, the Japanese government brought in

strict environmental regulations, and Japanese business developed new environmental

technologies. The result was a dramatic improvement in the domestic environment.80

Notwithstanding, critics of neoliberalism strongly undermine findings

associated with the Kuznets Curve. Firstly, they see the link between growth and

lower long-term pollution as being simplistic. They argue that it is possible for

economies to get stuck along the curve, never reaching a point where pollution

declines.81 Secondly, the Kuznets Curve usually draws on data for industrial pollution

rather than depletion of natural resource. In addition, the curve does not account for

the integrity of the ecosystem as a whole, ignoring irreplaceable losses such as,

biodiversity and species loss. It discounts too, the potential for cumulative ecological

change to erupt into a sudden and uncontainable crisis.82

                                                                                                               77 Dauvergne, P. (2008). Global Political Economy, 460-461 78 Ibid 79 Ibid 80 Ibid 81 Dauvergne, P. (2008). Global Political Economy, 463 82 Ibid

  28  

Moreover, according to critics of free trade, the Kuznets Curve does not

address the possibility that, as the amount of one toxic substance declines, the amount

of another may arise. Additionally, the critics’ major argument is that the Kuznets

Curve only works for a limited range of pollutants and resources. It fails, for example,

for carbon dioxide emissions, the leading cause of global warming, which have been

rising steadily alongside economic growth.83

Lastly, critics of neoliberalism point out to the fact that a decline of a

particular pollutant in one country may occur because industrial production shifts

offshore. In response to the Japanese case, critics argue that Japan’s domestic

environment was able to improve, partly because dirty industries shifted into South-

East and North-East Asia.84 This practice of moving away from heavy industry and

towards service and information industries seems to be a natural occurring within

strong economies.

In conclusion, one can easily agree with arguments presented by neoliberal

critics and undermine the findings of the environmental Kuznets curve. It seems

illogical to believe that the accelerated economic growth fostered by neoliberalism

does not represent a serious threat to the environment. Even if one may agree with the

argument that in the long run, economic growth will improve environmental

institutions and governance, one cannot disregard the short-term effects of economic

growth activities upon the environment.

                                                                                                               83 Ibid 84 Ibid

  29  

III- Globalization, Economic Development and Environmental

Degradation: Uneasy Trends

3.1) Economic Globalization and the era of Neoliberalism

Discussing globalization can be a highly challenging task. Therefore, it is

extremely important to delimit the scope of this notorious phenomenon. As it is

argued by several authors, “globalization has many layers and dimensions.”85 This

part of the dissertation will unfold this complexity by narrowing the concept to its

economic dimension and focusing it exclusively on debates regarding the benefits of a

global economy, according to neoliberal economists and opponents of free trade.

First and foremost, it is relevant to assess the fact that economic globalization

as a conceptual term, is surrounded by a heated debate between neoliberal economists

and opponents of free trade, encompassing ecologists, economists, environmentalists,

and social activists within the group. According to sociology Professors Frank J.

Lechner and John Boli, globalization now is what its critics make of it.86

Accordingly, the critics conceptual definition of the term is wide-ranging and

nonetheless, remarkably controversial: “(…) it is primarily an economic force,

emanating from the West, that imposes an unjust, unequal, and environmentally

harmful capitalist system on the world to the detriment of local cultures and

democratic self-control.”87

Additionally, critics of neoliberalism and economic globalization, such as

prominent Indian activist, Vandana Shiva, argue that “Globalization is not a natural,

evolutionary, or inevitable phenomenon, as is often argued. Globalization is a

political process that has been forced on the weak by the powerful.”88

On the other hand, economists influenced by neoliberal thought, claim that

globalization is remarkably beneficial for poor countries. The belief of free market

advocates is that global welfare is maximized by the liberalization of trade, finance,

                                                                                                               85 Lechner, F. & Boli, J. (2011). The Globalization Reader, 47 86 Ibid 87 Ibid, 479 88 Shiva, V. (2011). The Globalization Reader, 501

  30  

and investment, and by the restructuring of national economies to provide an enabling

environment for capital.89

Additionally, neoliberal economists see a clear benefit of the consolidation of

the global economy and argue that those who fight against these processes are

suffering from global phobia. Their argument is that, firstly, the more global the

economy, more manufactures of products in a given country can take advantage of

commodities, production processes, and markets in other countries. Secondly,

globalization encourages the diffusion of knowledge and technology, which increases

the opportunities for economic growth worldwide. Thirdly, the rich countries and

corporations in the global North have capital that they will lend to developing states

for economic growth if these states accepts the rules of the neoliberal economic

system. Fourth and finally, if trade barriers are minimal and government takes a minor

role in trying to manage the economy, the chances for government corruption and

political interference are greatly reduced.90

However, most critics cast doubt on economic globalization benefits and more

precisely, on the neoliberal argument that a truly global economy is beneficial for the

poor. According to critics, economic globalization has dramatically increased

inequality between and within nations, and far from this circle of prosperity widening,

as the neoliberal argument entails, the opposite is actually happening: the gap between

rich and poor is widening fast, and economic globalization is to blame.91

Moreover, critics of neoliberalism accuse its opponents of putting thumbs on

the scale so as confirm the conclusion that a power-less process of globalization

brings benefits to just about all participants through the automatic working of

markets, provided states do not get in the way; which obscures the way that dominant

industrial financial states drive the policy side of globalization so as to tip the playing

field in favor of themselves, their firms, their citizen-consumers, and above all, the

tiny fraction that draws its income from owning and managing capital.92

In fact, the neoliberal argument about the benign effects of economic

globalization on growth, poverty, and inequality, lacks significant supportive

evidence. On the contrary, evidence shows that developing countries have performed

                                                                                                               89 Thomas, C. & Evans, T. (2011). The Globalization of World Politics, 465 90 Lamy, S (2011). The Globalization of World Politics, 126 91 Ravenhill, J. (2008). Global Political Economy, 376 92 Ibid

  31  

badly in growth-propelling manufacturing, notwithstanding the more open

opportunities of the globalized world economy. In terms of share of world

manufacturing output, Western Europe, North America and Japan still account for as

much as three-quarters, and China accounts for only nine per cent, up from 4 per in

cent in 1995.93

Considering arguments from both sides of the debate, one can certainly

conclude with the support of evidence, that the real beneficiaries of neoliberalization

and the consolidation of the global economy are the capitalist countries of the West.

The argument that economic globalization is beneficial for everyone can easily be

knocked off by its pedestal when one analyzes what studies show. A majority of the

increase in world consumption between 1993 and 2001 accrued to those already in the

top ten per cent of world income distribution, four-fifths of whom lived in the West;

and within the West, those in the top one per cent top 0.1 per cent have benefited

hugely disproportionately.94

Furthermore, one can certainly affirm that the pragmatics of economic

globalization are centered and directed towards the West. Not only the international

economy is highly driven by Western countries, but also the financial engine of

economic globalization is centered in the West. These elements make it easier for the

financial sector to squeeze profits from a wide range of global economic activity and

concentrate those profits in the hands of a tiny section of the population.95

Additionally, the business community in the West, with its enormous

resources also drives the public debate regarding global economic policy. All this

helps to generate a positive normative glow around neoliberalism and economic

globalization, reinforcing the idea that competent and responsible economists take

neoliberal stances.96

In this atmosphere, anyone who argues against neoliberal ideas is suspected of

being incompetent or deviant. The main political parties depend on the business

community for finance, and present what is good for business as what is good for the

nation. The parties compete to win support of the mass media, which is owned for the

                                                                                                               93 Ravenhill, J. (2008). Global Political Economy, 398 94 Ibid, 399 95 Ibid 96 Ibid

  32  

most part by groups, which are at times aggressively committed to a neoliberal

agenda.97

Considering the current debate and the contrasting perspectives regarding

economic globalization, the argumentation will now begin to analyze the relation

between economic globalization, neoliberalism and the process of consolidation of the

global economy, focusing on emerging countries such as Brazil and China.

Thirty-five years ago, Brazil and China were among the poorest countries in

the world. High levels of poverty, inequality, and under-developed industries were

common characteristics of all three nations. Throughout the 1980’s and more

intensified during the 1990’s western neoliberal economic thought became the

dominant political philosophy of development across the globe.98

What happened next was the proliferation of economic globalization at

unprecedented speed, referred to many as the 1990’s wave of economic globalization.

Throughout the Third World, and intensely in Brazil, the state was rolled back and the

market was given the role of major engine of economic growth and associated

development.99 Additionally, developing countries were encouraged to open and

liberalize national economies in order to achieve faster rate of progress. The idea

supported by neo-liberals was that more open economies were keen to make nations

more prosperous.100

For many years, leaders and economists cheered as world trade grew faster

than world GDP, foreign direct investment surpassed domestic investment and the

volume of international currency transactions increased exponentially. Several Third

World countries, such as Brazil, emerged from former marginal positions to become

rapidly regarded as growing export tigers.101 Additionally, barriers to free trade of all

sorts, especially tariffs on goods and services, have come down to please corporations

with global reach, which ultimately, achieved global dominance in several economic

sectors, from oil to computers and from automobiles to retail.102

Meanwhile, critics of free trade were already highlighting the dangers of

economic globalization and the ideological effect of western neoliberal thought on

                                                                                                               97 Ibid, 400 98 Thomas, C. & Evans, T. (2011). The Globalization of World Politics, 465 99 Ibid, 465 100 Wade, R. (2011). The Globalization Reader, 190 101 Lechner, F. & Boli, J. (2011). The Globalization Reader, 151 102 Ibid, 149

  33  

eastern societies. In the following quotation, Vandana Shiva, remarkably expresses

the voice of eastern critics: “Globalization has come in three waves. The first wave

was the colonization of the Americas, Africa, Asia, and Australia by European power

over the course of 1.500 years. The second wave was the imposition of West’s idea of

development on non-Western cultures in the postcolonial era of the past five decades.

The third wave of globalization was unleashed approximately five years ago as the era

of “free trade”, which for some commentators implies an end to history, but for us in

the Third World is a repeat of history through recolonization.”103

Whereas global economic integration brought an end to the western monopoly

of goods production, it also brought a hallmark of economic globalization; the

management of economic affairs by international organizations, such as the World

Trade Organization, the International Monetary Fund and the World Bank. Suddenly,

national governments, multinational corporations and international organizations were

acting together to promote global rules. Little attention if any, was given to the fact

that all countries now belonged to a truly global economic system, in which several

developing countries, notably Brazil and China, now play a much more significant

role.104 Simultaneously, in this highly integrated economic system, events in one

place can rapidly ripple through the rest of the world, making it extremely vulnerable

to distant troubles and future financial crises.105

Notwithstanding, the attention was centered on the positivism and benefits of

economic globalization. Advocates of neoliberal thought pointed out to the fact that

millions of people around the globe were rapidly improving their standards of living

thanks to globalization.106 China’s remarkable economic expansion, in particular,

was interpreted as a clear link between economic liberalization, growth, poverty

reduction and social inequality. The neo-liberal argument was that “globalizers tend

to grow faster, and faster growth helps poor countries catch up with rich ones, so

globalization dampens inequality.”107

One can certainly argue that no other place in the world has been more

drastically transformed by economic liberalization than the city of Shenzhen, China.

Since the late summer of 1980, which marked the market-oriented reforms and the                                                                                                                103 Shiva, V. (2011). The Globalization Reader, 501 104 Lechner, F. & Boli, J. (2011). The Globalization Reader, 149 105 Ibid, 151 106 Ibid 107 Ibid, 161

  34  

regard of Shenzhen as a special economic zone by the Chinese government,

population in the city has grown at least a hundredfold.108 Withstanding, nearly

every rule that might restrict business development was changed or removed in

order to facilitate free-trade processes. Additionally, few limits or controls were

applied and businesses from around the world were highly welcomed to set up

shop.109

According to neoliberal thought, the future of developing countries such as

Brazil, looked bright and prosperous thanks to economic globalization. However, it

did not take long for patterns to show that this road to development would soon

become a long and bumpy ride. Firstly, ASEAN countries were severely hit with a

regional financial crisis with clear global ramifications in 1997. Secondly, concerns

over the unfair international trade agenda began to appear. By all means, a trade-

liberalization agenda set by the North, and articulated to serve special interests of

developed Western states was doomed to be problematic.110

Ultimately, it is the conversion of large and powerful national economies such

as the ones of Brazil and China, into environmentally harmful export-oriented

productions, that set the challenge for a prosperous future in the developing world.

Economic globalization fostered by neoliberal economists is not only responsible for

transforming these countries economies into environmentally harmful ones, but also

for making national governments promote hyper-growth and unrestricted exploitation

of the planet’s resources to fuel the growth.111 Focusing on these absolute lines, the

dissertation will now follow a closer analysis of the problematic relationship between

neoliberal policies for economic development and the increase of environmental

degradation.

                                                                                                               108 Fallows, J. (2011). The Globalization Reader, 156 109 Ibid 110 Stiglitz, J. (2011). The Globalization Reader, 213 111 Lechner, F. & Boli, J. (2011). The Globalization Reader, 485

  35  

3.2) Economic Development and Environmental Degradation: An

inevitable consequential relationship?

The patterns of economic globalization have significantly intensified the

relationship between economy and ecology in the past few decades. This correlational

trend is stressed on a debate between ecologists and economists regarding the impacts

of economic development upon the environment. In the following quotation from the

World Commission on Environment and Development, this ambiguous linkage is

successfully illustrated: “We have in the past been concerned about the impacts of

economic growth upon the environment. We are now forced to concern ourselves

with the impacts of ecological stress upon our economic prospects. We have in the

more recent past been forced to face up to a sharp increase in economic

interdependence among nations. (…) Ecology and economy are becoming ever more

interwoven – locally, regionally, nationally, and globally – into a seamless net of

causes and effects.”112

Moreover, it is precisely this net of causes and effects regarding economic

growth and environmental degradation that will be analyzed in the following

discussion. On one hand, ecologists argue that economic growth and the massive

increase of economic activity in the past few decades are core causes of

environmental degradation. On the other hand, economists fully undermine this

argument, claiming that economic growth is in fact the solution for most

environmental concerns.

The ecologist argument is based on immediate consequences of economic

growth. In order to achieve economic growth, developing countries such as Brazil, are

abusing their lands on the grounds of economic interests. Whether is in the form of air

and water pollution (mainly caused by industrial production), deforestation and

erosion (caused by expansion of agricultural areas in order to fulfill export needs) or

the extraction of natural resources itself, the fact is that developing countries are

currently accounting for remarkable environmental degradation. It seems clear that

much of the economic growth activities enforced by governments, account for

significant environmental damage.

                                                                                                               112 Lechner, F. & Boli, J. (2011). The Globalization Reader, 434

  36  

Additionally, developing countries such as, Brazil, remain largely dependent

on exports of natural resources to generate economic dividends. Withstanding, pulling

raw material from forests to fulfill exportation needs is subject to enormous domestic

and international pressure, causing overexploitation of the environmental resource

base.113

Furthermore, it is highly relevant to add the disproportional level of

environmental degradation being caused before and after neoliberal economic policies

were established in Brazil. Environmental degradation has always been part of human

history, however, the acceleration of economic growth activities (enforced by the

free-trade agenda and neo-liberal economists) together with the pursuit of an urgent

economic development (enforced by the national government) is the core cause of

environmental overexploitation in Brazil.

The role of developing countries in questions of environmental degradation

and economic growth has been on the center stage by critics of free trade. The

following quotation is retrieved from the World Commission on Environment and

Development, and successfully illustrates this problematic encounter: “Developing

countries must operate in a world in which the resources gap between most

developing and industrial nations is widening, in which the industrial world

dominates in the rule-making of some key international bodies, and in which the

industrial world has already used much of the planet’s ecological capital. This

inequality is the planet’s main “environmental” problem; it is also its main

“development” problem.114

Notwithstanding, neoliberal economists argue on the contrary, claiming that

environmental degradation is not a by-product of economic growth, rather being a

phenomenon directly related to poverty. At a World Bank meeting, economists have

publicly stressed their concerns regarding the relationship between the environment

and poverty: “A world free of poverty is critical for the long-term effect of the planet.

The struggle of the poor to survive is a core cause of problems such as deforestation,

desertification, and unsanitary water. The poor exhaust nearby natural resources, such

as fresh water, seafood, and wildlife. They cultivate unsuitable land to grow food and

earn income. And they despoil local waterways with rubbish and sewage.”115

                                                                                                               113 Ibid 114 Lechner, F. & Boli, J. (2011). The Globalization Reader, 434 115 Dauvergne, P. (2008). Global Political Economy, 460

  37  

In fact, neoliberal economists go much beyond this argument, stressing the

idea of economic growth being the solution for environmental problems: “The

globalization of free trade fosters efficient worldwide production as well as the

transfer of environmental technologies and higher environmental standards from the

North to the South. (…) Every WTO Member Government supports open trade

because it leads to higher living standards for working families, which in turn leads to

a cleaner environment. (…) More income means that more can be spent to preserve

the environment as well as to enforce environmental regulations.” 116

Unsurprisingly, neoliberal economists also argue over the beneficiary role of

transnational corporations on the debate of environmental degradation: “Transnational

corporations transfer critical technologies, expertise, and funds into the South.

Without this investment, economies stagnate, slip backwards, and sustain

environmental degradation (…) Transnational corporations that invest in the South

also tend to employ higher environmental standards than local laws require.” This

idea is referred by economists as “exporting environmentalism”.117

In conclusion, one may argue that economic growth and associated

development usually results in increased levels of environmental degradation.

However, that is not to say that an inevitable consequential relationship exists

between these trends. It seems evident that developing countries pursuing rapid

growth under the premises of neoliberalism disregard environmental concerns. Due to

a strong commitment to neoliberal policies, developing countries tend to prioritize

economic development goals above all conditions, consequently generating an

increase in environmental degradation. In a concluding part of the argumentation, the

concept of sustainable development will be presented as a practical mediator in

discussions regarding development and the environment.

Considering major arguments of neoliberal economists and opponents of free

trade on the debate regarding economic development and environmental degradation,

the next section of the dissertation will present a clear case study analysis in order to

conduct a critical assessment and an overall conclusion on the subject of discussion.

                                                                                                               116 Ibid 117 Ibid

  38  

IV – Case Study Analysis

4.1) The implementation of neoliberalism in Brazil

The dominant presence of the state over the economy has been a trademark

characteristic of Brazil from the late 1940s to the early 1990s. Notwithstanding,

precisely in the early years of the 1990 decade, a remarkable shift away from state

control and a consensual acceptance of neoliberal economic policies was adopted.

However, Brazil’s movement toward neoliberal economic policies such as

privatization, began earlier, in the late 1970s. As the debt crisis resulted in a decade of

low growth and investment, a movement in favor of privatization emerged.

Simultaneously, a consensus was gradually formed stressing that the way to lead

Brazil out of the morass was to privatize a large part of the economy.118

Not long after, in the first half of the 1980s, effort was made to privatize state

firms. The Special Commission for De-Statization, which was established in 1981,

identified one hundred and forty privatizable state firms and recommended the selling

of fifty in the immediate future. Of these, twenty were sold in the years 1981-1984,

bringing in a total of one hundred and ninety million US dollars. Additionally, in the

period 1985-1989, eighteen other firms were privatized, bringing the government

receipts of five hundred and thirty three million US dollars.119

Notwithstanding, it was not until the change of administration in March 1990

that a considerable governmental adoption of neoliberal policies appeared. Shortly

after the new President, Fernando Collor de Mello, took office, a privatization

program of a much larger dimension was introduced. The general view within the

Collor administration was that the privatization process including large state firms

was an integral part of a full-scale program aiming to modernize the Brazilian

economy through a general liberalization process.120

Moreover, with privatizations being given high priority by the government,

Congress passed the National Privatization Program, which was to dominate Brazilian

affairs throughout the entire decade. By August 1993, the privatization process had

                                                                                                               118 Baer, W. (2008). The Brazilian Economy: Growth and Development, 227 119 Ibid 120 Ibid, 228

  39  

brought the government revenues amounting to 6.4 billion US dollars, and the value

of other nineteen firms that were to be privatized was estimated at about eleven

billion US dollars.121

Furthermore, with the change of government in September 1992, due to the

impeachment of President Collor, the new President was at first reluctant to continue

the privatization program. However, after a three-month freeze, the government of

Itamar Franco decided to continue the privatization process with further amendments.

In fact, the law that created the National Privatization Program was changed to allow

for unlimited participation of foreigners. As a result, by the end of the Itamar Franco

presidency in January 1995, more companies were privatized under his government

than during the previous Collor administration.122

In the period of 1991 to 1994, most state firms privatized were in sectors such

as steel, fertilizer, and petrochemicals, however, with the change of administration to

President Fernando Henrique Cardoso in January 1995, privatizations were enhanced

to include sectors such as mining and public utilities, essentially roads and

telecommunications.123 In addition, it is relevant to assess that in the following years

of 1996 and 1997, Brazil privatized both its largest exporter, mining company, Vale

do Rio Doce, and its major electricity company, Light S.A.124

The comprehensive Brazilian privatization process briefly initiated in the

1980s and strictly enforced throughout the 1990s, resulted in over one hundred and

twenty state enterprises being sold, amounting to a figure of just over eighty seven

billion US dollars in revenue. 125 However, whereas economic efficiency was

absolutely clear, little change if any was noticed in patterns of development. As many

critics of neoliberalism point out, a sudden rise in national economic activity does not

necessarily lead to a better distribution of income, poverty reduction or any

development related issue.

In addition to the wide-ranging privatization process, Brazil also adopted other

neoliberal economic policies throughout the 1990s, such as the opening of the

economy for foreign direct investment and for the intensification of international

trade. During President Collor time in office, a major governmental policy was to                                                                                                                121 Ibid, 226-230 122 Baer, W. (2008). The Brazilian Economy: Growth and Development, 230 123 Ibid 124 Ibid 125 Ibid, 232

  40  

open up the Brazilian economy by gradually dismantling tariffs of importation and

considerably granting stimuli to exportations. The intent of these policies was to

increase efficiency in the economy through foreign competition and to increase the

inflow of direct foreign investments.126

Moreover, the government gradually instituted several different measures in

order to facilitate foreign investment. The average import tariff declined from forty-

one per cent in 1989 to fourteen per cent in 1994. Unsurprisingly, foreign direct

investment increased dramatically in Brazil during the second half of the 1990s,

reaching an astonishing inflow of 32.8 billion US dollars in direct foreign capital by

the year 2000.127

Additionally, in January 1995, Brazil signed together with Argentina,

Paraguay and Uruguay, the Mercosul Common External Tariff agreement, liberalizing

trade within these countries significantly further, and at the same time becoming

actively involved in a common market which sought a gradual disappearance of

regional barriers to trade and investment.128

As it has been comprehensively argued, Brazil undertook a significant shift

toward neoliberalization in the beginning of the 1990s. During a period of nearly over

a decade and three different President mandates, neoliberalism achieved the position

as the major guiding principle of economic thought and management in the country.

However, in January 2003, the election of former trade union leader and head

of Brazil’s Workers Party, Luiz Inacio Lula da Silva, was perceived by several

Brazilian political analysts and foreign observers as a threat to the ongoing neoliberal

policy profile. The general view, consummated during Lula’s run up to victory, was

that Brazilian governance would portend a dramatic shift to the left, providing a

radical alternative to the policy profile pursued up to that point.129

Accordingly, the domestic and international investment community’s reaction

to Lula’s election was one of nervous expectation. There was fear that the new

government would be tempted to default on part of the national debt, that the foreign

investor friendliness of the previous government would not be maintained, that there

might be a reversal of the privatization program that had prevailed throughout the

                                                                                                               126 Ibid, 182 127 Ibid, 184 128 Ibid, 265 129 Ibid, 151

  41  

1990s, or that the fiscal responsibility established under President Fernando Henrique

Cardoso would not be sustained.130

Notwithstanding, Lula’s years in office ended up bitterly disappointing many

of his left-wing supporters, and pleasantly surprising the domestic and foreign

investment communities with a strong continuation of market-oriented policies

adoption. During Lula’s first mandate, Brazil experienced a remarkable upturn in

economic performance, as real Gross domestic product grew by 5.71 per cent, led by

an industrial expansion of 7.89 per cent.131

Currently, under Presidency of Dilma Rousseff, Brazil continues to

substantially grow economically, finishing the year of 2011, as the sixth largest

economy in the world. Additionally, Brazil is now internationally recognized in the

subset of world leading emerging economies under the title of association BRICS,

comprising Russia, India, China and South Africa in the group.

In conclusion, one can affirm that in despite of Brazil’s fiercely adoption of

neoliberalism the government has failed to achieve crucial social and environmental

objectives. Whereas the shift towards neoliberalization may be associated with the

consistent improvement in economic performance, one can discuss at what costs such

achievements have been made.

Firstly, as it has been argued previously as a circumstantial characteristic of

neoliberalism, a high rate of economic growth does not necessarily result in an

improvement of a country’s income distribution. On the contrary, the tendency for

increasing concentration of income can be easily observed in the Brazilian case.

Evidence suggests that the improvements generated by the adoption of market-

oriented policies exclusively favored the more developed region of the country,

therefore contributing to an aggravation of Brazil’s regional imbalances.132

Secondly, the country’s continuing commitment to neoliberalism entailed a

prioritization of economic interests in detriment of the environment. Brazilian

policymakers set out to follow a neoliberal agenda that highly contrasts with the

country’s environmental needs. The signing of free trade agreements such as the

Mercosul in 1995, strongly reversed the country’s commitment to a sustainable

                                                                                                               130 Ibid, 154 131 Baer, W. (2008). The Brazilian Economy: Growth and Development, 156 132 Ibid, 156

  42  

development agenda signed under the United Nations Rio Declaration on

Environment and Development in 1992.

On the next section of the dissertation, this correlational trend between

economic interests and environmental concerns will be emphasized, alongside with

the presentation of facts and examples that illustrate this complex linkage.

4.2) Brazilian current issues: Economic growth, environmental

degradation and the attempt to develop sustainably  

Previously, it has been argued that the opening of Brazil’s economy, the wide-

ranging privatization process and the overall retreat of the state in detriment of the

market were the prominent neoliberal economic polices adopted by the Brazilian

government throughout the 1990s and early 2000s. Forthwith, one may present the

major consequences and trickle-down effects of the Brazilian neoliberal experience in

regards to the environment.

For a long period of time, the environmental impact of Brazil’s economic

development was neglected by both policymakers and academics. Fortunately, this

attitude has changed considerably as a result of the growing environmental protection

movement in advanced industrial countries. Not only have they had an impact on

policies in those countries, but they have encouraged such movements in other parts

of the world.133 Following the tendency, environmental groups also appeared and

rapidly expanded within Brazil, placing pressure on governmental authorities to keep

environmental damage under strict control.

Straightforwardly, there are several recent examples of strictly governmental

enforced economic growth activities that resulted in significant impact upon Brazilian

ecosystems, which can be taken into analytical perspective. Such examples range

from major environmental disasters such as the Campos basin oil spill in November

2011, to the augmentation of logging operations in the Amazon Forest, and pass by

the case of increasing water and air pollution in the main industrial states of Rio de

Janeiro and Sao Paulo. Another heated and internationally debated environmental and

                                                                                                               133 Baer, W. (2008). The Brazilian Economy: Growth and Development, 311

  43  

economic related issue in Brazil regards Amazon deforestation in order to fulfill the

expansive land use for the production of ethanol biofuel.

Altogether, these given facts only come to illustrate the government lack of

concern from the environment in detriment of economic interests. Due to a limitation

of time and space, this case study analysis will focus exclusively on a single example

of environmental consequence in relation to Brazil’s recent economic development.

Clearing rain forest areas in order to acquaint for the demand of agricultural growth,

more precisely, the expansive cultivation of soybean will be further explored.

In recent years, the massive expansion of soybean cultivation in Brazil has

provided a clear example of the problematic relation between economic growth,

environmental degradation and the pragmatics of the globalized economy. The issue

known to many as the “Soybean wars of Latin America” regards a recent exponential

growth in plantation of soybeans in order to serve the high demand for the crop in the

Chinese market; whose population just over 1.3 billion inhabitants developed a

significant taste for soy-fed cattle. Since its boom in 1997 until present times, soybean

cultivation areas have grown immensely in Brazil, making the country become the

second largest soy export in the world with a revenue of over eight billion US dollars

a year.134

However, while this new industry has undoubtedly generated economic

growth for an impoverished nation, its direct consequences have been nonetheless

catastrophic. Regarding environmental issues exclusively, the imbalanced soybean

cultivation have acquainted for astonishing numbers of Amazon deforestation and

erosion. According to Brazil’s Space Research Institute, deforestation of the Amazon

has increased almost six fold in the last year alone, with much of the destruction

occurring in Mato Grosso State, the center of Brazilian soya farming.135

Moreover, one can elaborate a few concluding points after analyzing this brief

case study. The first point to be made regards the increasing interdependence between

the two emerging economies of Brazil and China. Supporting this argument,

Benjamin Selwyn, professor of International Relations and Development Studies at

the University of Sussex stresses that in the last years, China overtook the US as

Brazil’s biggest trade partner with more than €56 billion in trade. (…) You can see

                                                                                                               134 U. Bickel & J. M. Dros (2003). The impacts of Soybean cultivation on Brazilian Ecosystems 135 Monahan, J. (2011). Brazil: Amazon Deforestation rises sharply

  44  

the shift taking place in terms of re-orientation of the Brazilian agriculture towards

China.136

Secondly, one can certainly conclude that national governments are

significantly constrained by the imperatives of the global economy. The role of the

modern nation-state is certainly undermined by global aspects, as governments no

longer have control of decisions at the national economic level.137 This scenario

demonstrates that national governments are being forced not only to prioritize

economic over environmental issues, but also to adopt decisions and policies without

consideration for higher interests at a regional or global level.

The third point comes to reinforce the answering of the first research question

of this dissertation: Developing countries’ soaring economic growth is in fact

resulting in massive environment degradation. Furthermore, it is absolutely clear as

this case study shows, that pursuing rapid economic growth through neoliberal

economic policies will automatically lead to an increase in environmental

degradation. However, it would be misleading to affirm that environmental

degradation is an inevitable consequence of economic growth and associated

development. The problematic encounter is the ideology behind the pursuit of

economic development; neoliberalism has proven to be malicious in several regards

and particularly to the environment, opening space for different paths and ideologies

on economic development debates.

Nonetheless, that is not to say that neoliberal economists are completely

unfounded or that opponents of free trade are remarkably correct when debating

economic development. For example, neoliberal economists are correct when arguing

that if one looks at long-term effects and not to direct consequences, economic growth

and associated development tends to increase social awareness which ultimately leads

to improvements in environmental institutions and governance. This observation is

supported by the fact of economic growth leading to higher income per capita, which

ultimately enhances citizens’ demands for better living environments. Additionally,

once economic growth is sustainable, firms and governments achieve the financial

and institutional capacity to respond to environmental degradation effectively.138

                                                                                                               136 S. Syed (2011). Bric nations become increasingly interdependent 137 Lechner, F. & Boli, J. (2011). The Globalization Reader, 217 138 Dauvergne, P. (2008). Global Political Economy, 462

  45  

Fourth and finally, after critically assessing the narratives of the

neoliberalization process in Brazil, one can answer the second research question of

the dissertation. The continuing commitment by Brazilian policymakers to the

practices of neoliberalism and the following of a neoliberal agenda has been the major

impediment on the country’s attempt to develop sustainably. It seems evident that a

sustainable development path contradicts neoliberal stances, making it difficult for

one to believe that a developing country, such as Brazil, can fully promote and

implement the concept of sustainable development in the era of neoliberalism.

4.3) Interview

This part of the argumentation consists of a structured interview conducted

with former Executive Secretary of Brazil’s Ministry of the Environment and current

Director of the Secretariat of Climate Change and Environmental Quality, Branca

Americano:

1. What is your opinion regarding the linkage between introduction of

neoliberal economic policies, rapid economic development and the increase of

environmental degradation in Brazil?

“It is evident that a rapid economic development without a well-established

regulatory framework will consequently result in environmental degradation.

Regarding Brazil, specifically, there is a clear relation between the introduction of

neoliberal policies and the ongoing economic development, which ultimately results

in environmental degradation.

Environmental degradation is first and foremost, the result of an

inappropriate relationship between men and his environment. This fact does not

regard politics, being them neoliberal driven or not. The major driver of deforestation

in Brazil today are the agrarian reform settlements. In the production, if there are no

clear rules on how to use natural resources, or in other words, on how to incorporate

externalities, either through command and control policy or by a valuation system,

environmental degradation will inevitably occur. The rule that matters in capitalism

is to maximize profit, and this will be done with the variables that are in the equation

  46  

and preferably without restrictions. What matters and what will actually determine

whether or not there will be environmental impact, are the variables that are in the

equation. By valuing assets and placing restrictions, environmental impact can be

reduced and controlled.

On the consumption side, there is a need for great awareness and appropriate

pricing, otherwise, there will be a significant environmental impact. I think the

biggest challenge is in fact on the consumption side. Nine billion inhabitants by 2050,

all with basic needs to be met, and with most of them willing to actively participate in

the consumer society without much concern about what this actually means in terms

of resource utilization in relation to planetary limits.

Lastly, I believe that a research on the relation between neoliberal economic

policies and environmental degradation has a higher ideological regard than a

scientific one. If you take for example, the USSR; activities performed during that

period had a flagrant environmental impact, however, this theme was not in the

agenda of most countries at that time. Presently, one can look at countries such as

Venezuela and Costa Rica and find that environmental degradation is significant even

without the presence of neoliberal economic policies.”

2. How would you evaluate the implementation of the concept of sustainable

development, from its elaboration until the present moment?

“The concept began to be used, which to my understanding, it is already a

very good point because it demonstrates a great level of awareness and concern.

Most times, the concept is used in order to be politically correct, with no regard to a

firm and concrete change, being procedural, in investment or in a decision criterion

level.

In regards to its conceptualization, I believe that the concept of sustainable

development is extremely attached to various political interests within the United

Nations, political movements, economic interests and therefore will not evolve as

much as it should. A negative example of this problematic relationship can be seen on

the disappointing results presented on the Rio+20 final document.”

  47  

3. According to you, what were the impediments that prevented the

implementation and progress that it was expected for the concept of sustainable

development by the time of its creation in the 1990’s?

“The concept of sustainable development suffered at an early stage with problems

of elaboration and mostly implementation. The elaboration of the concept itself was

highly problematic and debatable, generating doubts and skepticism from many

parties involved. Once elaborated, a great impediment was actually the elaboration

and promotion of actions that would contribute for sustainable development.”

4. How do you see the Brazilian development today? According to you, is the

country committed to sustainability issues?

“Brazil has definitely improved a lot in the last eighteen years of governance.

Beginning with the Real Plan, followed by two mandates of President Fernando

Henrique Cardoso, two mandates of Luiz Inacio Lula da Silva and now with Dilma

Rousseff. I believe that we could have done been better, however, we have actually

progressed significantly in regards to income distribution, and on the fight against

poverty.

Regarding sustainable development, I consider the concept a fundamental part

for our model of development, and we are far from doing well. Sustainability issues in

Brazil are still extremely underdeveloped. Most companies use the concept of

sustainability as a marketing strategy. Very few companies have in fact, a serious

policy of sustainability, however they do no receive any incentives for doing so. The

government develops individual policies in some sectors but there is no coordination

between different governmental bodies and sectors. When its time to elaborate and

develop economic policies, no concern to sustainability issues is taken into account.

The instruments for promoting a green economy are systematically blocked by all

sides, such as, the brown sector of the economy, social sectors that are manipulated

by the limited and ideological Brazilian left-wing, and ultimately by governmental

bureaucracies.”

5. Considering a global analysis, how would you evaluate Brazil’s

commitment towards the implementation of the sustainable development concept?

  48  

“Due to the prevailing aspect of diplomacy, Brazil is in fact committed to

sustainable development goals at the international level. However, our commitment is

to a great extent attached to our internal social pattern. The major factor preventing

the implementation of the sustainable development concept in Brazil today is the myth

that environmental concerns regard the developed countries agenda exclusively. On

this matter, the Brazilian government has failed to contribute both nationally and

internationally, being in discussions or with polices and incentives, in order to

accelerate the implementation of sustainable development in the country.”

- 6. What is your opinion regarding the problematic if not contradictory, position of

certain sectors of the Brazilian government today? On one side, you have a sector

defending policies aiming higher protection of the environment and the Brazilian

ecosystems, on the other side, you have a sector pushing forward a consolidation of

economic development above all costs.

“ It is evident that there is an extremely problematic conflict of interests within

the Brazilian government today. This conflict within the governmental sectors is

present especially when the alternatives are placed opposing economic development

with environmental protection. In very few areas of the government, there is a

perception that what is at stake is a development model where natural capital is

central and strategic, rather than an environmental protection with conservative

purposes. In some cases, this conflict is the result of lack of knowledge resulting in a

clear option for a brown developmentalism. In other cases, it is simply a matter of

specific short-term interests, such as mining, oil or the agribusiness.

This internal conflict within the government is present in several encounters. I

believe that regarding climate change in particular, there are clear examples. During

the meetings in Copenhagen (COP 15), there was a clear discrepancy between the

Brazilian Ministry of the Environment and the Foreign Relations Ministry. Positions

defended were diametrically different, specially in regards to the international

position of Brazil in world politics.

Moreover, there are also conflicts within the government when it comes to the

elaboration of sectorial plans under the law establishing the National Policy on

  49  

Climate Change (PNMC – 29th of December 2009). Some plans are better than others

when it comes to environmental concerns, but all of them are going through a long

and broad discussion. The energy sector seems to be highly debatable and even

refractory at some points of discussion. On the other hand, the agricultural sector,

has been subject to very elaborated plans with a broad application of green activities.

Those include new practices and bold targets, aiming to expand the application of

sustainable practices. The consensual point of view states that it is not necessary to

deforest in order to maximize production. However, there are points of discussion

within the government that seems to be intractable. The most actual example is the

ballot regarding the new Brazilian Forest Code. The problem is surrounded by a

conflict of interests within different actors involved in the political arena.

All in all, I believe that one can separate this type of problem in two different

categories. The first one regards a conflict in which points of view are opposed and

the ultimate result is a heated dispute, such as the ballot of the Forest Code. The

second category can be even more chaotic and may be associated with the total lack

of guidelines and coordination, which results in decisions being made in opposite

directions. Ultimately, the truth of the matter is that only a small but core group of

people decide upon everything in the government and at most times sustainability is

not part of the agenda. A clear example of this encounter was the government

initiative to maximize consumption in order to stimulate the economy, whereby a

decision to reduce taxes on the white line of cars was taken without even making a

classification according to efficiency. If one analyzes this government decision

distinctly, one inevitably concludes that sustainable development is not a criterion for

governmental decision making in Brazil.”

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V – Sustainable Development – A Practical Solution?

Previously, the discussion regarding economic development and

environmental degradation resulted in a highly complex conclusion: On a long-term

perspective, economic growth tends to be beneficial for environmental issues because

it helps to increase citizens’ awareness and the financial capacity of governments to

respond effectively.139 However, the economic growth approach adopted and enforced

by governments of emerging countries such as Brazil, have been leading to immediate

catastrophic consequences upon the environment. Therefore, the dissertation will now

present a highly desirable, nonetheless disputable, solution for this problematic

encounter; the concept of sustainable development.

Elaborated in 1987 and published by the United Nations in the Brundtland

Report, the concept of sustainable development refers to the “pursuit of development

that meets the needs of the present without compromising the ability of future

generations to meet their own needs.”140 The ideological background of the concept is

highly diverse, however, the main idea held by the Commission who elaborated the

report was the “possibility to build a future that was prosperous, just and secure at all

levels.”141

Enhancing notions of common interests among all countries, the Brundtland

Report required “all nations to adopt sustainable development as the overriding goal

of national policy and international cooperation.”142 Emphasis was explicit given to

natural limits of growth, and the importance of maintaining the world’s environmental

resource base. Additionally, focus of attention was on needs, the highest priority

being given to those needs experienced by the poor. Ultimately, the idea of fairness

between generations as well as between the rich and the poor was central to the

elaboration of the concept.143

One of the most interesting aspects concerning the concept of sustainable

development is that it disguises priority conflicts between environmental issues and

                                                                                                               139 Ibid 140 Vogler, J. (2011). The Globalization of World Politics, 351 141 Elliot, L. (2004). The Global Politics of the Environment, 157-162 142 Ibid 143 Ibid

  51  

development issues, satisfactorily considering its intertwined relation.144 Accordingly,

the concept incorporates a set of guidelines and reforms, fostering a new era of

economic development alongside the protection of the environment.

Unsurprisingly, the concept of sustainable development did not evolve without

disputes and criticism over its fundamental grounding. One of the most problematic

issues within the concept is precisely the debate regarding pursuit of economic

growth. According to the Brundtland Report, further growth was essential, but it

needed to be made environmentally friendly. The Report regarded economic growth

as an essential requirement for development to be made sustainable because it was the

means to overcome poverty, which the Commission identified as a major cause of

environmental degradation.145 However, the Commission’s approach to economic

growth becoming sustainable, was that it had to be less material and energy intensive,

taking into account the full environmental costs of economic activity, and that it

should not increase vulnerability to crises.146

Furthermore, the Commission emphasized that international economic

relations needed to be re-oriented in order for developing countries to achieve

sustainable growth. In other words, “Trade, capital and technological flows had to be

more equitable and take grater account of environmental imperatives. Market access,

technology transfer and international finance had to be improved in order to help

developing countries to diversify economic and trade bases and to build self-

reliance.” 147 Withstanding, the center of dispute regards the achievement of

sustainable growth. On one side, global environmentalists, ecologists and social

activists represent the developing countries of the South; on the other side of the

dispute, neoliberal economists represent the industrialized rich countries of the North.

The problematic issue regards the elaboration of a common global agenda for

sustainable development, in which interests and needs of both sides are equally

incorporated.

The Brundtland Report emphasized the need for institutional reform as a

major requirement in order for sustainable development to be fulfilled. These reforms

included both national and international changes: “A political system that secures

                                                                                                               144 Burnell, Randall & Rakner, (2011). Politics in the Developing World, 316 145 Elliot, L. (2004). The Global Politics of the Environment, 157-162 146 Ibid 147 Ibid

  52  

effective citizen participation (…) an economic system that is able to generate

surpluses and technological knowledge on a self-reliant and sustained basis, a social

system that provides solutions for the tensions arising from disharmonious

development, a production system that respects the obligation to preserve the

ecological base for development, an international system that fosters sustainable

patterns of trade and finance.”148

Moreover, one can certainly argue that the inability to elaborate and promote a

common agenda for sustainable development is the core of the problem. Much of the

debate is centered on political will, the role of the nation-state or even the question of

adequacy of the nation-state to deal with global problems.149 Although remarkably

rich in ideological perspectives, the Brundtland Report failed to address practical

matters for the nation-states to adopt, which later became the hallmark of the 1992

United Nations Conference on Environment and Development in Rio de Janeiro.

The Rio Summit was significantly focused on addressing strict norms for

nation-states to follow; emphasized on principles 2, 7, 8, 12 and 13 of the final

document. Withstanding, principle 8 of the Rio Declaration, called for all nations “to

achieve sustainable development and a higher quality of life for all people, States

should reduce and eliminate unsustainable patterns of production and consumption

and promote appropriate demographic policies.”150 With the goal of establishing a

global partnership towards sustainable development, the Rio Summit resulted in the

agreement known as Agenda 21, which enhanced a suggestive idea that United

Nations member states were committed to move quickly in order to implement legally

binding rules to mitigate environmental degradation.151

However, only a year after the United Nations Summit in Rio de Janeiro,

another highly relevant international meeting occurred in Uruguay, known as the

Uruguay Round of the General Agreement on Tariffs and Trade (GATT). This latter

meeting established new norms and regulations to trade and commerce, highly

increasing world affairs and marking the consolidation of the neoliberal free trade

agenda.

                                                                                                               148 Ibid 149 Lechner, F. & Boli, J. (2011). The Globalization Reader, 149 150 Ibid, 439 151 Elliot, L. (2004). The Global Politics of the Environment, 157-162

  53  

According to neoliberal critics, such as Indian activist Vandana Shiva, the

normative political commitment to sustainability and justice established in Rio de

Janeiro, was replaced by the rule of trade and the elevation of exploitation, greed, and

profit maximization as the organizing principles of the market, the state, and

society.152 In conclusion, one can affirm that the contrast between economic and

environmental interests was once again highlighted by the world leaders’ commitment

of liberalizing international trade in detriment of pursuing sustainable development.

Global level concerns were undermined as countries showed more interest on

pursuing their own development and economic goals.

Unsurprisingly, only five years after the Rio de Janeiro Summit, meetings in

New York known as the “Rio + 5 Conference”, accentuated the United Nations

conclusion that “from a global perspective the environment has continued to degrade

and progress towards a sustainable development future is just too slow.”153

Additionally, in 2002, the United Nations member states met again in

Johannesburg for the World Summit on Sustainable Development and a ten-year

review of Agenda 21; the declaration proposed at the Rio de Janeiro Summit. The

main intention of the United Nations in this Conference was to “reinvigorate at the

highest political levels the global commitment to sustainable development”. 154

Interestingly, the Conference began with a negative report from UN Secretary-

General Kofi Annan, emphasizing that “progress towards the goals established at

United Nations Conference on Environment and Development (the 1992 Rio de

Janeiro Summit) had been slower than anticipated, and in some respects conditions

are actually worse than they were 10 years ago.”155

Furthermore, Annan argued that there was a fragmented approach to

sustainable development, that there had been no changes in the unsustainable patterns

of production and consumption, and that there was a lack of mutually coherent

policies in the areas of finance, trade, investment, technology and sustainable

development. In an unprecedented matter, the United Nations Secretary General

                                                                                                               152 Shiva, V. (2011). The Globalization Reader, 500 153 Elliot, L. (2004). The Global Politics of the Environment, 157-162 154 Ibid, 22-28 155 Ibid

  54  

questioned the notion that globalization had been beneficial, observing that the

world’s poorest countries have generally been left behind.156

Significantly argued by critics throughout the earlier decade, the view was that

the Johannesburg Summit would only succeed if accompanied by “concrete

commitments proposing specific time-bound measures.” 157 Unsurprisingly, the

Summit resulted in an overall feeling of disappointment with the lack of concrete

plans to enforce commitments proposed by the United Nations exactly a decade

earlier in Rio de Janeiro.

Regarding environmental degradation in particular, the implementation of

concrete plans by national governments is of remarkable importance and urgency,

however, it seems ever more unlikely that nation states will agree on mutual

responsibilities over the environment without signing legally binding agreements

containing clear remarks on rights and justice.

Unfortunately, sustainable development goals must rely strongly on political

will, and as argued by critics, “Political will has not kept pace with environmental

change.”158 Therefore, the core of the problem seems to be the lack of authority in the

international system of states, or as neorealist international relations scholars would

argue, the anarchic environment in which nation states reside. State sovereignty,

national interests and national law remain central concepts on the politics and

diplomacy of international agreements. By all means, nation-states have no obligation

or responsibility to reinforce global norms without legally binding international

agreements.

The latest United Nations summit on Environmental issues was held in

Copenhagen, Denmark, on December 2009. Although mainly focused on the Global

Climate Change issue, the Copenhagen Conference also served to highlight

commitments towards sustainable development. Unfortunately, the participating states

could not agree upon a set of legally binding targets.

Notwithstanding, the overall assessment of the summit was in fact positive to

a certain level of analysis. First and foremost, the Summit reinforced the absolute

commitment of the United Nations to include environmental issues in the current

international agenda. Secondly, the Copenhagen Conference was certainly marked by

                                                                                                               156 Ibid 157 Ibid 158 Ibid

  55  

the ever more prominent role of emerging economies such as the ones of Brazil, India

and China in international diplomacy and negotiations. Furthermore, it is also relevant

to assess the multilateral cooperation among African states, which opposed legally

binding limits in the absence of sufficient financial transfers from the developed

world.159

In conclusion, one can surely affirm that it is possible for developing countries

to achieve economic growth and associated development without increasing levels of

environmental degradation. Reinforcing the answering of the first research question of

this dissertation, environmental degradation is not an inevitable consequence of

economic development. There are different ways in which economic development

goals can be achieved; one of them is the conscientious path towards sustainable

development.

Notwithstanding, developing countries have followed the premises of

neoliberalism, which as this study has comprehensively shown, have a negative

connection with environmental concerns. It seems plausible to affirm that the further

embrace of the neoliberal ideology and its practices, will surely prove to be

catastrophic for the global environment in the near future.

Moreover, the progress of the concept of sustainable development entails a

process of change. Undoubtedly, the world needs significant changes when it comes

to exploitation of natural resources, international trade agreements or institutional and

corporate behavior. Withstanding, this process is far from being a straightforward

one, however, it has certainly evoked civil society with hope for a more just and

prosperous world in future generations.

Apart from the failures and inefficacy of world leaders in establishing national

and international norms for nation-states, corporations, and institutions to follow a

sustainable development path, the world has certainly gained with the mobilization of

world society against the pragmatics of neoliberalism and economic globalization.

Nothing provides with a better picture of globalization and the current world order,

than the faces of socially active citizens protesting against economic globalization and

irresponsible governance, at several different places simultaneously around the world.

It seems clear that world society is in a remarkable point in time whereby

future is dependent on the adoption of two highly contrasted pathways: One

                                                                                                               159 Paul Taylor & Devon Curtis (2011). The Globalization of World Politics, 322

  56  

characterized by economic growth, private profit maximization and alarming

environmental degradation and the other, by democratic institutional governance and

ecological balance. Every citizen of the world has the ability in its own hands to

change the course of neoliberal globalization to the pathway of sustainable

development.

VI- Concluding Remarks

After extensively describing and critically assessing neoliberalism from a

theoretical and practical perspective, one can affirm that the hegemonic position of

the ideology in economic development debates resulted in considerable negative

consequences. It has become common knowledge that the prominent advocates of

neoliberalism now occupy respectable positions in the media and in several

international institutions, such as the World Bank, the International Monetary Fund

and the World Trade Organization. Unrestrictedly, neoliberal economists have also

achieved significant influence in civil society systems, such as universities. One can

certainly affirm that neoliberalism has become by all means, a globalized dominant

mode of discourse.

In conclusion, one can assert that the neoliberal turn initiated in the early

1980’s began to set significant stress upon the planet’s environmental basis. Three

decades later, world politics of the environment and the alarming global

environmental crisis are current issues associated with the consolidation of neoliberal

globalization. In short, the further embrace of neoliberal practices will result in

nothing but a calamitous foreseeable future.

Lastly, civil society has already shown its potential role when protesting

against international institutions that rule both trade and finance. It has also,

successfully demanded better local living environments to its authorities and

contributed immensely to the rapid global expansion of social and environmental

movements. It is distressing time for civil society to embrace and support sustainable

development as the ultimate force against the imperatives of neoliberalism.

  57  

VII – Executive Summary

The worldwide shift towards neoliberalization initiated in the 1980s continues

to generate extensive public and academic debate. This dissertation has combined an

analysis of much of the academic discussion with a comprehensive narrative of the

major consequences and trickle-down effects of the implementation of neoliberalism

on a local and global scale.

First and foremost, the dissertation has argued that neoliberalism emerged

from considerable obscurity to be consolidated as the dominant ideology of

development across the world in the early 1980s. Furthermore, it has been stressed

that an international neoliberal wave took place in the following years, whereby the

role of the state was remarkably undermined by the role of the market, therefore

contributing for the emergence of a truly global economy.

Moreover, emphasis has been given to the rapid maximization of capital and

the successful economic performance of most developed countries granted by the

neoliberal turn; however, the distribution of benefits was geographically uneven. A

position strongly advocated by the author is that a common consequence of

neoliberalism is an increasing income gap between and within nations.

Throughout, the argumentation has maintained the perspective that rapid

economic growth, fostered by neoliberalism, has significant consequences upon the

environment. The study has shown that there is a linkage between the introduction of

neoliberal policies, an increase in economic growth and associated development, and

a consequential expansion of environmental degradation. Notwithstanding, the

research has demonstrated that environmental degradation is not an inevitable

consequence of economic development.

According to the author, there are different ways in which a country can

achieve its economic development goals. In the era of neoliberalism, developing

countries have followed a neoliberal agenda consisting of development practices

designed by the Washington Consensus. Focusing primarily on the roll-back of the

state and the full implementation of market-oriented directives, Washington

Consensus policies aim for the spread of neoliberalism and the intensification of

economic growth through international free trade agreements. Unsurprisingly,

  58  

Washington Consensus policies have failed to achieve success and popularity in

developing countries, contributing for an increase in civil society dissatisfaction with

the pragmatics of globalization, neoliberalism and free trade.

Additionally, in order to illustrate the problematic position in which

developing countries are affronted in the era of neoliberalism, the argumentation

presents a case study regarding Brazil. According to the author, the country portrays a

clear image of the ambiguous relationship between the introduction of widespread

neoliberal economic policies, sudden growth, and a considerable augmentation of

environmental degradation.

Furthermore, the dissertation concludes that the United Nations

conceptualization of sustainable development successfully merges concerns over

development and the environment. The major finding of the research is that the

promotion and pursuit of an international sustainable development agenda can deliver

significant results in both economic development, and global environmental issues.

Notwithstanding, a problematic encounter appears when national and

international economic interests are confronted with local and global environmental

concerns. According to the author, this is one of the main reasons why the progress of

sustainable development has been insignificant on a large scale. It seems plausible to

affirm that the worldwide endowment of neoliberalism is once again, the one to

blame.

Moreover, the era of neoliberalism has been characterized by two contrasting

agendas. The first, pressed by neoliberal economists, argues in favor of the increase of

international economic growth as a solution to economic development issues such as

poverty reduction, which can ultimately contribute to the prevention of global

environmental degradation. The second agenda, pressed by opponents of free trade,

fosters the promotion and pursuit of a sustainable development path, whereby

principles of ecological balance are strictly considered, merging economic

development issues with environmental degradation concerns.

In conclusion, the author stresses that neoliberalism has not only been partly

responsible for the increasing and alarming global environmental crisis, but it also

continues to prevent the implementation of a worldwide sustainable development

agenda.

  59  

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