Neo-liberalism is the name often given to the political-economic restructuring or reforms program proposed for developing countries by developed country economists, the International Monetary Fund (IMF), and the World Bank in the last 15-20 years. Neo-liberalism is not just economics: it is a social and moral philosophy, in some aspects qualitatively different from Liberalism. Neo-liberalism is more a phenomenon of the rich western market democracies than of poor regions. The role of the State in the economy has always been a controversial issue in the public debate, but it has become more so in the last quarter of a century with the rise of neo-liberal thinking that preaches the virtues of unregulated markets and recommends de-regulation, opening-up, and privatisation. The failure or what can be termed as the ‘Intellectual Bankruptcy’ of neo-liberalism in developing countries stems ultimately from its failure to base its discourse on a balance and sophisticated theory of the inter-relationship between the market, the state, and other institutions.

The global affects of the financial crises that occurred in Asia, Russia, and Latin America during the late 1990′s has created a profound crisis in the conventional wisdom concerning international development and it wouldn’t be totally inappropriate to attribute this crisis to the beliefs, doctrines, and policies of neo-liberalism which, in the words of Jorge Nef and Wilder Robles, have been “far more successful in articulating a rationalization for the globalization of market relations and unprecedented( as well as unencumbered) capital accumulation than in effectively improving the living conditions of most human beings.” [1]Nef and Robles rightly criticise the “neo-liberal development model” for having caused “a massive deterioration of living standards, growing income disparities, environmental destruction, an erosion of national sovereignty and the undermining of equity-producing policies” in developing countries around the world. A quick glance at Latin Americas economic history shows that the neo-liberal paradigm of development has created a crisis there, which now requires the creation of an alternative development paradigm that can solve its extreme vulnerability to external forces, social exclusion, and poverty. Christopher Kay and Robert Gwynne believe that the two schools of development theory that originated in Latin America during the 1950′s and 1960′s-structualist development theory, often referred to as the ‘centre-periphery paradigm, “and “dependency theory”- can provide the theoretical basis for developing “an alternative development paradigm” to contest the current dominance of the neo-liberal paradigm. John Weeks’ data on labour market conditions in Latin America reveals those neo-liberal predictions that policy reforms aimed at creating labour market “flexibility” would increase employment and lead to higher wages are refuted by the facts which show “labour’s gains in the 1990s, when economic growth quickened, were meagre, and even negative in some countries. In addition, his analysis reveals that the regional integration schemes in Latin America, having been inspired by neo-liberal ideology, have a strong bias in favour of capital and not guarantee workers’ rights. This is especially important since, as Weeks notes, the extra-legal repression of workers’ rights is endemic across the continent, as it is in most developing countries. Therefore the increased economic integration of the countries of the Western Hemisphere is a “reactionary process based upon the repression of workers rights, this has thus facilitated the concentration of wealth and power in the hands of capital.

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