Global Economic Crisis and the Politics of Diversity

The current global economic crisis has led countries in Europe and the United States to adopt various austerity measures, following an initial emergency policy response of monetary and fiscal stimuli and a series of government bailouts of banks and other financial institutions (Boyer 2012; Callinicos 2012; King et al. 2012). However, this is not a general trend in the global economy, as there is great variation among countries in terms of the impact of the crisis and policy responses to it. While economic growth in Canada, for example, has been slow, many countries from the global South continue to experience higher levels of economic growth. These divergent patterns and context-bound particularities require critical reflection in regard to the intensification of a market-oriented path of development and the tensions and uncertainties associated with an increasingly precarious mode of living for many in the world. This book analyses the deep structural issues, fundamental ontological insecurities, and ecological consequences that express uneven processes in the global proliferation of a market model. The authors in this collection concretize these processes across geographically varied contextual conditions, yet do so within the general global conjuncture of the economic crisis.

In the aftermath of the 2008 financial crisis, governments and international finance organizations began to call for and take regulatory measures in order to prevent similar breakdowns in the future, causing some commentators to quickly pronounce neoliberalism dead. Consider, for instance, a recent example: while writing this chapter, a special report in the 21–27 January 2012 issue of The Economist — embellished with a red and black portrait of Lenin on the cover, triumphantly holding a cigar with a dollar sign on it — lamented that the ‘emerging world’s new model’ would be ‘the rise of state capitalism’. Yet, this line of argument is based on a rather simplified and narrow reading of neoliberalism, as a purer laissez-fair regime where spontaneous markets reign free with minimal role for governments. A closer look at its brief history challenges this reading of neoliberalism as a project of marketization that unfolds on both the practical and ideational levels. Practically speaking, governments have always played an active role in designing, instituting and facilitating the operation of markets, not only before but also under neoliberalism. In other words, the track record of three decades of neoliberal hegemony at a global scale demonstrates that the much-invoked dichotomy between state and private capitalism fails to do justice to the intensity and depth of technocratic—bureaucratic state involvement in implementing neoliberalism (Harvey 2005; Peck 2010).

This piece analyses some of the recent environmental governance changes in Turkey that could be described as neoliberal: privatization of watercourses, decentralization of water user associations (WUAs), and increasing use of market instruments, such as full cost recovery and privatization of urban water. In line with debates on variegation and neoliberalism (Brenner, Peck, and Theodore 2010), we argue that there are key historical traces and contextual factors that make the contemporary situation in Turkey unique and interesting with respect to broader debates on neoliberal environmental governance. Neoliberal practices and policies build on, accentuate, and articulate with these historical and contextual specificities. Historically, there are key connections to Ottoman policies and legacies, situating current pollcies as a disjointed continuation of some earlier and longer-term efforts (even as in other ways, contemporary policies also represent a sharp break from earlier policies and norms). The European Union accession process, recent economic crises, and the recent politics associated with the Islamic AK party all similarly bear a clear imprint on the pathways and effects of neoliberal environmental governance practices in this context. Our aim here is to untangle, and situate, contemporary environmental governance practices in Turkey in relation to some of these historical and contextual processes and pathways.

Public—private partnerships (P3s) with the for-profit private sector first emerged in Canada in the mid-1990s and have been steadily growing in popularity ever since. More recently, proliferation since the mid-2000s has been sustained largely through infrastructure projects developed within provincial health sectors. By 2011, P3 hospitals accounted for half to three-quarters of all P3 projects in British Columbia (BC) and Ontario respectively, the Canadian provinces most enthusiastic for P3s (see Partnerships BC n.d.; Infrastructure Ontario n.d.).¹ With large hospital re/development in particular, P3s are now the principal way in which these infrastructure projects and their accompanying support services are delivered. While the rise of P3s is a global phenomenon, which is in no way unique to Canada, specificity when evaluating this policy matters. By focusing on Canadian P3 hospitals, we are able to uncover how global neoliberal processes operate at the ground level (in the form of particular P3 projects) and how this unfolds within a specific sector (health care). In so doing it becomes evident that location-and sector-specific conditions shape the implementation of larger neoliberal forces.

New technologies have deep implications for labour: they transform relations between work and labour markets, including the nature and organization of work, skill requirements, job creation, and employment. Debates on the effects of new technologies on work and labour markets can be traced back to classical economists who witnessed labour substitution by machines and the abrupt disappearance of some trades during the first industrial revolution (Woirol 1996). Adam Smith (1994 [1776]) held that technology makes goods cheaper, generating more demand and then allowing the economy to reabsorb any technologically displaced labour — a perspective known as compensation theory. Karl Marx (1990 [1867]) was less optimistic. He viewed progressive unemployment as a result of the ever-increasing fixed capital-to-labour ratio that characterizes capital accumulation. Regarding changes in the labour process, Smith explored the effects of the increasing division of labour and the contraction of skills on specific activities. Marx analysed the labour-process changes arising from the progressive mechanization of production at the dawn of industrialization, showing that technology contributed to decrease production dependence on human labour through the division and deskilling of labour.

Social policy, specifically childcare policy, was historically a critical tool in promoting women’s labour market participation during the ‘socialist’ regime in China. Prior to economic reforms, the central government clearly specified the welfare function of childcare in relieving women’s household burden, thereby enabling women to more equally participate in production work under the socialist planned economy. However, in the last 30 years, as China has restructured the centrally planned socialist economy of the 1949–79 period towards a more export-oriented industrial economy (Arrighi 2007: 351–78), the Chinese government has been more interested in national growth than relieving women from household responsibilities and promoting welfare support for working women with children. As the economy has gradually opened up to market competition, social reproduction expenditures, especially those in state-owned enterprises, have been considered as costs to market efficiency and economic growth by the government. Therefore, public funding for childcare has been restrained and even cut. And cost-cutting in the domain of social reproduction greatly affects women’s employment opportunities, as women are still the primary caregivers in Chinese society.

The political economy of Brazil’s developmental trajectory from the early 1990s to the present is the focus of this chapter. It attempts to contextualize the broad political and economic currents that have swept and spun Brazil in recent years. Brazil has become distinguished as a nation that has addressed poverty while achieving economic growth. How much of that growth is a function of redistributive policies that have had virtuous circle affects, and how much arises from an exogenous and serendipitous commodities export boom that boosted exports by 233 per cent (in US dollars) from 2002 to January 2010, and/or from other factors, remains an open question. Likewise, Brazil’s recent growth has occurred in the context of extreme financial and fiscal repression. Brazil recorded the highest interest rates in the world in the early twenty-first century — ostensibly designed to thwart inflation. The fiscal budget is locked into a pattern of surplus maintenance — broken only by astute countercyclical policies during the downturn of 2008–09.

The current economic malaise in the Eurozone, the fragility of the recovery in the United States, and the two-decade long slump in Japan has concentrated the global economic crisis in the advanced countries. Many now pin their hopes of a global economic recovery on so-called emerging economies, especially China and India, as the new juggernauts capable of kick-starting the global economy. A ‘multispeed’ world, as Spence (2011) calls it, now characterizes the global economy with the engine located firmly in large developing countries. This change has led to increased interest in what Kaplinsky (2005) has termed the ‘Asian drivers’.

In 2007 the American economy experienced a severe crisis which spread through credit and financial markets, leading to declining rates of investment, lower consumption and growing unemployment in the United States. In an interview at the end of 2008, Agustin Carstens, former Minister of Finance (2006–9) in Mexico and head of the Mexican Central Bank between 2010 and 2016, stated that economic stagnation in the United States would have a limited effect on the Mexican economy. When the interviewer noted that Mexico usually catches ‘pneumonia’ when the United States has an economic ‘cold’, the minister responded that this time the Mexican economy would only ‘catch the sniffles’ (Notimex 2008). He believed that Mexico’s sound policies of fiscal austerity, public debt management and reserve accumulation would protect its economy from external shocks (Gil Diaz 2009: 29–31). However, this did not occur, and Mexico’s GDP declined 6 per cent in 2009 (INEGI 2011a). According to Mexico’s National Council on the Evaluation of Social Development Policy (CONEVAL), the number of people living in poverty increased by 3.2 million between 2008 and 2010 (CONEVAL 2011). The transmission mechanisms linking the American financial crisis to the Mexican economy were diminishing exports to, and workers’ remittances from, the United States, Mexico’s main trading and investment partner.

In Global Slump: The Economics and Politics of Crisis and Resistance, David McNally observes:

Periods of enduring crisis and sporadic resistance are complex and dangerous. Desperation, anxiety, and hopelessness preside. The dominant class seems no longer to believe in itself. Rarely does it bother to espouse lofty ideals like freedom and betterment of the human condition … Rather than trying to inspire belief in their system, society’s rulers seem to have no higher purpose than maintaining the status quo, squeezing profit and privilege out of a decrepit but well protected machinery of power …. Naked money-grubbing, mercenary politics, and the unconcealed use of force in the service of power are the order of the day. Governments seem content to attack the population; the rich live merely to get richer. In all these ways, the decade of austerity becomes one of social and cultural regression.

(2011: 187–8)

The human, social, and environmental costs of the current global financial crisis are often interpreted from a welfare-state perspective, with a focus on countries from the global North. Scholars in recent years have begun to examine the broader changes in state policy interventions designed to facilitate economic growth and consider the implications of these policies for social redistribution, climate change, and the politics of sustainability. The creation and use of financial markets for housing, health care, old-age security markets, and so on, has also begun to receive greater scholarly attention (Castles et al. 2010). Nevertheless, the consequences of climate change for social policy and the redistributive welfare-state remain largely unstudied (Gough and Therborn 2010: 716–8). It now appears that the state’s involvement in the financialization of the economy is deeper than a ‘retreat/evisceration of the welfare state’ perspective would allow us to appreciate. Despite significant differences in European and American models in respect to social policy profiles and redistributive strategies (Castles 2010: 630–42), the welfare-capitalist states are deeply implicated in financial markets through market-creating, market-correcting, and market-compensating social policies (Schelkle 2012).