Since decades, modern economics is considered to be a social science, and has become so deeply rooted in the thoughts of western individuals that it has gained a position as nothing more than common sense, even though its fundamental rules have proved to be illogical (Radice, 2008). These rules also act as the guiding principles for Neoliberalism, which is a theory that derives its roots from modern economics. The foundation of modern economics was laid by Adam Smith, who is also known as the father of modern economics, in his work ‘The Wealth of Nations’ (Liow, 2012).
2. 2
TABLE OF CONTENTS
1. THEORETICAL FRAMEWORK ........................................................................................................3
2. NEOLIBERALISM AND ITS POLITICAL RATIONALITY .......................................................................4
3. THE NEOLIBERALISATION OF SINGAPORE.....................................................................................5
3.1. POST 1965 HISTORY OF SINGAPORE – ANALYSING THE DYNAMICS OF SINGAPORE AS A DEVELOPMENTAL STATE ...5
3.2. TRANSITION OF SINGAPORE TO A NEOLIBERAL STATE FROM ADEVELOPMENTAL ............................................7
4. SINGAPORE AS A NEOLIBERAL STATE ...........................................................................................9
4.1. CLARIFICATIONS ABOUT THE STATE..................................................................................................10
4.2. THE CONVERGENCE OF GOVERNMENTALITY AND IDEOLOGY...................................................................11
5. CONCLUSIONS...........................................................................................................................12
REFERENCES.....................................................................................................................................14
3. 3
IMPACT OF NEOLIBERALISM ON THE
DEVELOPMENT OF SINGAPORE
1. THEORETICAL FRAMEWORK
Since decades, modern economics is considered to be a social science, and has become so deeply
rooted in the thoughts of western individuals that it has gained a position as nothing more than
common sense, even though its fundamental rules have proved to be illogical (Radice, 2008).
These rules also act as the guiding principles for Neoliberalism, which is a theory that derives its
roots from modern economics. The foundation of modern economics was laid by Adam Smith,
who is also known as the father of modern economics, in his work ‘The Wealth of Nations’ (Liow,
2012).
According to Clarke (2005) Adam Smith believed that nothing in this world is for free and nobody
would engage in a transaction that would not benefit them. Thus, countries engaged in free trade
only because both parties gained something from such a transaction. This )rgument gave birth to
the ideology of neoliberalism (Liow, 2012). Milton Friedman favored this, and defined
neoliberalism as undertaking an economic activity which benefits the two parties involved, given
that the activity is undertaken with bilateral consent and perfect knowledge (Hursh & Henderson,
2011). As a result, restricting free trade distorts the system and decreases the opportunities
available to individuals to improve their welfare (Liow, 2012).
Another argument presented by Smith was that expanding markets through free trade allowed
greater specialization and hence promoted division of labor (Clarke, 2005). Countries involve in
trade only when both parties benefit from it, without making the other one worse off (Hursh &
4. 4
Henderson, 2011). An example of such an advantage is specialization and division of labor. Smith
argued that putting restrictions on free trade and exchange would not only hamper the opportunities
for increasing division of labor, but the economic growth of a country and well-being of all its
citizens as well (Liow, 2012).
2. NEOLIBERALISM AND ITS POLITICAL RATIONALITY
The economic crisis of the 1970s gave rise to the ideology of neoliberalism (Read, 2009). The
neoliberalism economic theory, which was further developed by Friedman and Von Hayek, was
considered to a possible solution to end the crisis, even though it only resulted (and still is) in
greater income inequality and the accumulation of capital in the hands of the ruling elite (Harvey,
2005). Rose (1999) points out that in the literature criticizing Friedman, Hayek and other
economists who were against the concept of social welfare and government-planned economy,
neoliberalism acted as a bridge that linked these numerous tactics, and integrated them to make
them appear as if they are contributing in a comprehensible logic. These economists focused on
the merits of economic competition, and emphasized on the belief that an economy is an
independent variable, which must be kept separate from politics (Liow, 2012). This rationality
resulted in the instillation of different types of assemblages and practices for the regulation of
professional and financial activity, social benefits, healthcare and so on (Brown, 2005).
Brown (2005) states that the state’s success in sustaining and fostering the market can be seen in
the relationship of the state with the neoliberal political rationality, and such successes make the
state more legitimate and acceptable. Market rationality acts a guiding principle for the state-
related practices, and structures them in such a way that they are enwrapped by this concept (Liow,
2012). The position of the state is defined in the following entrepreneurial terms: the workings of
5. 5
the market are not any of the state’s concern. However, the state must consider itself a performer
of the market in its total jobs, including the judicial system (Radice, 2008). Brown (2005) pointed
out that since the state is fully responsible for stimulating economic growth, a healthy and
flourishing economy becomes an advocated of state legitimacy. He further added that this is also
because of the economic rationality from which the actions of the state have been derived (Brown,
2005).
Subsequently, neoliberal expertise of power is created as a result of the neoliberal political
rationality, and this power acts on subjects by altering the former’s expertise of the self,
streamlining their mode of existence and worldviews, in order to make them sufficient enough to
self-regulate in alignment with the market principles (Liow, 2009). A neoliberal governmentality
can only be brought into exercise by the interaction of the self with expertise of power (Liow,
2012). According to Read (2009) governmentality influences the actions of groups and individuals
to a great extent. Keeping this in mind, it can be said that a neoliberal government is a combination
of knowledge and expertise that assists in regulating the daily life behavior and activities of the
state, its citizens and groups according to the neoliberal political rationality or, in other words, a
market-based rationality.
3. THE NEOLIBERALISATION OF SINGAPORE
3.1. POST 1965 HISTORY OF SINGAPORE – ANALYSING THE
DYNAMICS OF SINGAPORE AS A DEVELOPMENTAL STATE
The core critique of developmental state suggests that the government macroeconomic planning
can help to boost the economic growth. As this task holds great importance, it is usually performed
6. 6
by a few technocrats who have autonomy from the state in deciding what is best for generating
economic growth (Liow, 2012). However, these decisions might not be supported by majority of
people. Government has greater control over the economy and it exercises that control through
continuous planning regulation, mainly relating to the drafting strategies and undertaking trade
and other activities (Liow, 2009). Apart from that, ideological state apparatus (ISA) is substantially
used to transmit the values of the state and shape their behavior in ways possible for the
advancement of the interest of those who run the state, as suggested by Althusser (2008). Similarly,
repressive state apparatus (RSA) is also used to exercise government control through the
establishment of particular institutions, which is also evident by the military rule period during the
1980s in South Korea and Taiwan (Liow, 2012).
Castells (1999) says that Singapore is universally known as a developmental country due to these
reasons. As mentioned above, the state’s intense involvement in the country’s economy is very
visible through its activities. A perfect example of this is the number of nationalized companies
that have an objective of stimulating economic growth. This is coupled with the state’s effort to
attract foreign direct investment by providing logistics and infrastructure. According to Liow
(2012), these efforts pulled Singapore through a couple of economic stages, and then laid the
foundation for the third one, known as the Knowledge-Based Economy (KBE). Moreover, the
developmental state also worked towards establishing a proficient civil service bureaucracy, and
made a good use of political repression aimed at fulfilling the different objectives: social, political,
and economic. It is without doubt that some principles of developmental state strongly apply to
Singapore as it is still considered to be a developmental state by some. Given the developments
since independence i.e. past three decades, whether or not the state of Singapore will remain
unchanged, is a debatable topic.
7. 7
The conversion of Singapore into a prominent business hub is well-researched (Huff, 1994; Liow,
2012). An important reason behind is likely to be the adoption of Export-Oriented Industrialization
(EOI) approach by Singapore’s government officials since independence. The sheer efforts of
various institutions, particularly the Economic Development Board (EDB), and the use of strict
laws to keep labor’s political view indifferent resulted in inflow of foreign investment into the
country (Radice, 2008). The presence of foreign multinational companies (MNCs) across the
country is a good example of this. People’s Action Party (PAP) which was ruling the country
during that time, considered this industrialization strategy, led by the government, to be an
effective means of boosting economic growth. As a result, this was considered practical approach
at that time (Liow, 2012). Chua (1995) believes that be it social, economic or political, this concept
of pragmatism is in instilled in PAP’s approach in all aspects of life.
However, it is interesting to note that everything considered to be “pragmatic” is actually defined
from PAP’s position, and not the rest of the population, who may not be in favor of their stance
(Liow, 2012). Taking into account the above situation, the following questions are raised: what
will be the consequences of a collaboration between a political rationality of neoliberalism and a
developmental state? What are likely to be the consequences a place like Singapore specifically,
where a particular belief taken from some type of “pragmatic” utilitarianism is imposed, and why?
3.2. TRANSITION OF SINGAPORE TO A NEOLIBERAL STATE FROM A
DEVELOPMENTAL
It appears that Singapore is moving towards a neoliberal regulatory state, from a developmental
one. This can be observed in many speeches made by the PAP politicians, which stated that policies
set by the government must be regarded as ‘market-friendly’. Moreover, they must have
8. 8
economically-rational justifications. The most rational approach is formed by policies that are
designed keeping in mind the principles of the free market, due to the operations of the global
economy, which are in line with capitalism. For example, Inderjit Singh, who was the chairperson
of the “Parliamentary Committee of Government for Finance and Trade and Industry” believes
that in the long run, the growth model for Singapore must resemble to Washington Consensus
model, which believes in giving markets greater power to stimulate growth (Tan, 2018).
The “Committee on Singapore’s Competitiveness” (CSC, 1998), is a report on Singapore’s
competitiveness, which states that the role of the government has always been to deliver
predictable, rational and stable economic objectives and supervisory environments that include
good relationships among industries, free trade and enterprise, and resource allocation through
price mechanism, among others (Liow, 2012).
Moreover, since the late 1980s, the PAP has made continuous efforts to assist the expansion and
flourishing of the business services and financial industries by making the economy more
amenable of inflow of foreign investment, in an attempt to make the country a regional business
and financial center. They plan on further integrating Singapore’s economy with other capitalist
economies. A good example of this is the liberation of the banking sector and most importantly,
the privatization of their national bank: Development Bank of Singapore. Relating to these
financial institutions, CSC recommends that supervision should be substituted for regulation, as
regulation may risk or taint the flourishment of sound financial institutions (Narumi Naruse, and
Gui, 2016; Liow, 2012).
Apart from this, PAP has adopted a large number of strategies from the neoliberal economics, in
an attempt to encourage instruments supporting the country’s economic growth concerning the
9. 9
international economy to continue their operations. This course of action was particularly visible
in the 1990s, specifically in the repercussions of the 1970s economic crisis. During this period,
policies were designed and measures were taken to stimulate economic growth. These included
economic deregulation and privatization which affected many sectors such as telecommunications,
banking, public transport, power sector and other services sectors. Other reforms, such as
decreasing the interest rate, were undertaken to reduce national savings and increase aggregate
consumption (Chua, 1997).
Moreover, government-linked companies which were initially set up in an attempt to kick start the
economy were decoupled. The extent to which these policies were implemented varied.
Furthermore, in recent years, PAP also privatized the healthcare and public transportation sector.
It had become possible to adopt these neoliberal reforms only because the general population
perceived them as the best way to stimulate economic growth, as the acceptability of the PAP was
dependent upon this. However, the extent to which this economic growth is beneficial for the
citizens is another argument. PAP undertook these actions, and subsequently implemented the
recommendations of the CSC as well, which elevated the position of PAP as the supporter of
neoliberal economy, and it was speculated that the movement of a developmental state to a
neoliberal regulatory state will be witnessed soon. However, there is more than what meets the eye
(Liow, 2012).
4. SINGAPORE AS A NEOLIBERAL STATE
The ideas of Rodan, Hewison and Robinson (2005) played a significant role in forming the concept
of the neoliberal-developmental state, which comprises of three features. The first defining feature
of a neoliberal-development state is that the primary features and associations of the developmental
10. 10
state have remained constant, even though certain neoliberal reforms have been implemented by
the PAP. The second feature is linked to the first one (neoliberal economic reforms), which is
concerned with a neoliberal political rationality’s presence and operation. The third and last feature
is a result of the second one; it states that the neoliberal political rationality is significantly
important for the ascent of the neoliberal governmentality, which is based on the employment of
neoliberal expertise of subjectivity and subjection, in order to achieve its target of nurturing
economic growth.
4.1. CLARIFICATIONS ABOUT THE STATE
Lemke (2001) believes it should be kept in mind that, like every other state, the Singapore
neoliberal-developmental state is a result, not a priori entity that leads to any political activity.
Foucault’s (2008) argument further adds to this viewpoint. He says that ‘the state itself holds no
importance. It needs to mark its presence through strategies, practices and bodies’. Furthermore,
he points out that the state results from the ruling of a variety of governmentalities (Foucault,
2008). Apart from this, Foucault (2008) also regards that it is ‘super structural in relation to a when
it comes to the entirety of power network that comprises of the governmentalities of knowledge,
family, sexuality and the body.
As a result, the state is the sole representative of a wide number of supreme relations which make
it possible for the state to function (Liow, 2012). To analyze the modern state, it is empirical to
use governmentality and its practices as a key (Foucault, 2008). Similarly, Lemke puts forward an
argument that contradictory and conflicting government activities result in the formation of the
state. Therefore, the state must be considered as a consequence i.e. as a resultant factor as well as
11. 11
an instrument of the social relations associated with power and the political strategies (Lemke,
2001).
Hence, it must be kept in mind that the shift in the political stance and position of Singapore to a
neoliberal-developmental is a result of numerous past proceedings, which eventually led to the
creation, alteration, growth and maintenance of the different power relation, policies and
institutions which, at present, highlight its “importance”.
4.2. THE CONVERGENCE OF GOVERNMENTALITY AND IDEOLOGY
The relationship between philosophy of PAP on fixation and practicality on economic growth as
a method of measuring the government’s competence and the neoliberal political rationality can
be located in the historical events and developments. The practical aspects of the ideology are in
alignment with those that are promoted by the political rationality of neoliberalism. This is
remarkable yet unsurprising as both of these values support the creation of an ideal environment
that nurtures capitalism. This makes the acceptance of the latter easier. The dominant pragmatism
ideology made it easier to introduce the concept of market-led economic growth and its benefits
for the economy as a whole, to the citizens, permitting the neoliberal political rationality to be
deeply embedded in the social and political structure of Singapore, than it would have been
otherwise (Teo, 2011). Ideology and political rationality’s convergence to one point is outlined,
supposing that both being instrumentally rational and the market are beneficial in themselves, for
the society as a whole. This concept is manifested most vividly by setting a goal of economic
growth at state level, while simultaneously adopting a culture that focuses on consumption at an
individual level. This is also apparent in how the PAP accommodates the operating of “market
12. 12
forces” by designing the country’s economic strategies and objectives this way. This method
portrays these formulations as a factor that contributes to the national welfare (Liow, 2012).
The success of neoliberal policy directs that there is less need for Singaporeans to get in-line with
the opposition by PAP. However, there is a need to look forward towards, material consumption,
economic prosperity, overall growth as well as sustainability. This has been defined by Goh Chok
Tong, who was the former Senior Minister, as “Swiss Standard of living” (Liow, 2012). Although
there may lay exceptions, since the method of pursuing individuals is very beneficial and ensures
the submission towards the goals. On the other hand, PAP has other means that can be used to
regulate citizenry. In the operations of government alongside the individual power, such
regulations can never be undermined, especially in the case of Singapore.
5. CONCLUSIONS
The practice of free-market capitalist economy has proved beneficial for Singapore’s economy. It
favors both: PAP dominated state and capitalism since, under it, the capital formation has always
been efficient. The implementation of such neoliberal economic system can be classified as either
technological or strategic. It is represented by the Work Pass System, and the discouragement
towards upgrading, which shows their aim towards aiding the accumulation of capital. The
upgrading technique involves motivating individuals towards self-entrepreneurship to a great
extent. They have the idea of shaping the individuals’ minds in the society by holding them
accountable for their own well-being. Such expertise changes the way Singapore’s state is involved
in social matters. The state gives high regard to the concept that an individual must treated separate
from the social and economic structures of the society, hence encouraging him to determine his
existence by himself. The concept of “self-reliance” is used as a mild alternative to justify the
13. 13
minimal role of government in providing public services. It is important to note a large fraction of
population is ready to accept this desire since they believe in the effectiveness of the policy, and
that it would subsequently shape the society in a way adhering to the neoliberal technology.
Hence, it can be concluded that posing challenges to the neoliberal developmental state of
Singapore is like challenging the neoliberal political efficiency i.e. capitalism. However, going
against it may prove highly inefficient and adversely affect the Singapore’s social economy.
Following question may arise: what does such a policy mean? This can be answered by considering
political liberalization in Singapore. Such a move may be considered important but in actual, things
will revert to status quo unless the change is supported by a complete reorganization of the
economy and analyzing the economic and social policies all over again. Thus, the elements of a
more equal distribution of resources coupled with cooperation is what more suits such a society.
If otherwise, more opposition would result alongside the PAP in the parliament, making the
opposition stronger, therefore it is better to rather get the opposition towards the similar goal.
14. 14
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