chapter  3
22 Pages

Neo-liberal reforms and accords: are they compatible with democracy?

WithMark Harcourt

Since the early 1980s, many countries across the globe have experimented with neo-liberal reforms, which have entailed reducing state intervention in the economy and freeing individuals and private corporations to set prices and determine outputs. Much is known about the often very negative impacts of these reforms on incomes, unemployment, and poverty. Much less discussed are the effects of these reforms on the political sphere, particularly the institutions and practices of democracy. Even less is known about the alternatives to neoliberal reform and how they might affect the political sphere. This chapter seeks to redress this imbalance by comparing the orthodox, neo-liberal reform strategy with a more heterodox alternative, based on compromises between peak bodies representing capital, labour, the state, and other groups and formalized in national-level agreements called pacts or accords. The chapter starts with a description of neo-liberalism and the particular types of neo-liberal reforms which the International Monetary Fund (IMF) and World Bank have urged many developing countries to implement. It then articulates the basic incongruities between neo-liberal reform and democracy, and how the various institutions characterizing the latter have had to be suspended, marginalized, or undermined to facilitate adoption of the former. Having established the political shortcomings of neoliberal reform, the chapter moves on to define and describe accords. Next, it deals with the fundamental compatibility of accord negotiation with democratic processes and values. The chapter also outlines how internal democracy within the peak bodies that negotiate accords can actually improve popular acceptance of, and support for, accords. Finally, empirical evidence is used to establish the many economic benefits of accords.