ABSTRACT
The reorientation of US hegemony in the 1970s, and the consolidation of the globalization project in the 1980s, was complemented by the rise of neoliberalism as a sustained and organized attempt to challenge the influence of ideas about state-directed national development. By the early 1980s neoliberalism was in the ascendant in North America and Western Europe. This had major implications for theories of development as they had emerged and been elaborated after 1945. In particular neo-liberalism was a direct challenge to development economics, which had been central to development theory in the 1950s and 1960s and one of the main sources of economic policies for Asia and the Third World. This chapter starts with a discussion of the origins of neoliberalism. This is followed by an examination of the consolidation of the neoliberal ascendancy at the World Bank and the role of the World Bank in the promotion and revision of neo-liberalism in the 1980s and 1990s. Central to this process was the articulation of a reading of the East Asian Miracle that meshed with the increasingly dominant neo-liberal approach to capitalist development. In fact, the World Bank was central to the popularization of the term “East Asian Miracle” in the 1990s. This trend and the efforts of the Japanese government to counter the neo-liberal conception of the East Asian Miracle precipitated a major political battle over the causes and lessons of the East Asian Miracle. The effort to defend the theory and the practice of state-centered versions of the Asian Model was met with a process of accommodation, against the backdrop of unequal international power relations and the end of the Cold War. This conjuncture ensured that opposition to the neo-liberal ascendancy was increasingly domesticated to the liberal institutions and discourses of the nation-state system and the global political economy centered on US power. By the second half of the 1990s the dominant neo-liberal narrative had undergone some revision. The rise of rational choice theory, the new institutionalism and the new political economy were an important part of this process. However, despite revisions, neoliberalism continued to privilege a technocratic understanding of development grounded in ahistorical assumptions about the dynamics of capitalism in the Asia-Pacific and beyond. These trends were reinforced by the Asian crisis of 1997-1998.
