- Discuss the key ideological underpinnings and critiques of neo-liberalism and populism as two
dominant approaches to development. Which of these two models would you consider more
appropriate for poverty alleviation and accelerated development in poorer countries and why? Discuss
with appropriate examples.
Neo-liberalism and populism are considered dominant approaches to development due to
their different views on development. These two concepts have been noted to have different
perceptions of what they consider as the key agents of development in relation to social
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change and the role of the state in the process. Populism emerged in the Third World in the
late 1960s with greater emphasis “placed on the incapacity of large-scale and capital-
intensive industrialisation to provide sufficient or sufficiently remunerative employment”
(Kitching 1982, p.99). However, Neoliberalism has become the dominant ideology of
development shaping our world today (Thorsen 2012, p.171). Neo-liberalism provides for the
presence of intermediary institutions, which can monitor the executive powers. As such,
proponents of this model argue that neo-liberalism is suitable in preventing issues such as
dictatorship, and facilitating development. On the other hand, proponents of populism argue
that populism helps in the representation of the will of the masses through a single leader
elected by the people, thereby facilitating development (Lavoie, 2012, pg. 219). Taking these
aspects into consideration, this paper aims at exploring the ideological underpinning of the
two models, critiquing the two models and pointing out the model that is appropriate in
eradicating poverty and facilitating development in developing nations.
The Key Ideological Underpinnings of Neo-liberalism
Neo-liberalism is thought of as an entirely new ‘paradigm’ for economic theory and policy-
making in that it is the ideology behind the most recent stage in the development of capitalist
society (Thorsen 2012, p.179). According to Thorsen (2012, p.188), neo-liberalism may be
defined as a loosely demarcated set of political beliefs, which is based on the conviction, that
the only legitimate purpose of the state is to be a safeguard for individual liberty, especially
commercial liberty of individuals and corporations, and to act as an agent in an unfettered
Neo-liberalism is the political economic belief that free market forces, which are
achieved by minimising government restrictions on business, provide the only route to
economic growth, development (Thorsen 2012, p.188). It advocates for great economic
liberalisation, privatisation, free trade, open markets, deregulation, and reductions in
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government spending in order to enhance the role of the private sector in the economy. In this
view, the purest form of capitalism is the best as it is both efficient and fair. Neo-liberalism is
now a global ideology spontaneously accepted by the Western world but more reluctantly by
the developing nations (Zafarullah & Huque 2012, p.66).
The significant aspect of neo-liberalism is the regulation of the economy through the
market (Peters 2010, p.19). Market competition is considered the principle force towards
economic progress, which often results into development. Faced with market competition, the
best ways to maximise profit are to grow and innovate. According to Friedman (1980):
“Neo-liberalism perspective on moral virtue is that a good and virtuous person is one who
is able to access the relevant markets and function as a competent actor in these markets.
Willing to accept the risks associated with participating in free markets, and to adapt to
rapid changes arising from such participation.”
Neo-liberalism’s ideologies apply in both national and international level context
with a system of free markets and free trade. The international trade is regulated solely to
safeguard the same kind of commercial liberty and strong property rights, which ought to be
realised on a national level (Norberg 2001; Friedman 2006 cited by Thorsen 2012, p.188).
Neo-liberals are opposed to the idea of monopoly and state regulation. Their primary
principles are the belief in the self-regulation of the market mechanism, affirmation of the
superiority of private enterprise, non-intervention of the government in social life, promotion
and maintenance competition in the market, being against the monopoly, adherence to
traditional and sound fiscal policy and opposition to the welfare state.
Neo-liberals are better represented in the Washington Consensus. Expressed by the
Washington Consensus, neo-liberals changed state-market relationships through structural
adjustment programmes (SAPs), which were imposed to poor countries through affliction
and/or in return for continuing financial support from the International Monetary Fund (IMF)
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and World Bank (Zafarullah & Huque 2012, p.101; Willies 2011, 56). SAPs consist of series
of neo-liberalism policies that embrace the idea of the minimal state. These policies are
aimed at reducing the role of government in the domestic economy through economic
governance, and opening up the domestic economy to foreign investment and trade (Willies
2011, p.57). Neo-liberals advocate for social services to be taken-over by the private sector.
Neo-liberals argue that the social sector should be owned by essentially rich people rather
than by the government. Therefore, they advocate for the transformation of social institutions
such as health facilities, schools and agriculture among other into profit organisations with
the aim of making them run more efficiently. Neo-liberals argue that the government should
only be left with the role of providing essential goods and services like security.
Neo-liberalism advocates for improvements in tax system as this increases state
income. Neo-liberals argue that there should be a removal of government controls on wages
and prices. They claim that the market should be in control of wage and price levels. Neo-
liberals also discourage unions and wage bargaining in support of employment contracts. As
such, they advocate for the reduction in the size of the government workforce as this helps in
cutting back on bureaucracy and inefficiency, thereby reducing the state expenditure.
According to neo-liberals, people are viewed as being individually accountable to the
consequences of their decisions and choices. Instances of glaring social injustice and
inequality are morally suitable, at least to the level at which they could be viewed as the
result of freely established choices decisions (Nozick 1974; Hayek 1976 cited by Peters 2010,
The critiques of Neo-liberalism
Currently, neo-liberal policies, which are focused on market-led development, have been
adopted by developing countries to some extent. However, the created opportunities for
making economic investments are solely benefiting the rich nations and few rich people of
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the country at the social cost of the poor (Zafarullah & Huque 2012, p.67). Neo-liberalism
pays no or little attention to addressing social issues, lacks concern about the poor or
vulnerable people as focuses on developing or empowering individual persons. It opposes the
state for being instrumental in development and supports market mechanism in relation to
steering economic development (Zafarullah & Huque 2012, p.67).
Neo-liberalism advocates for the individualism rights and freedom from state control,
thereby pursuing self-ownership enterprises and control over the economy. In relation to this,
neo-liberalism supports the social class gap, which is “the rich stay richer and the poor stay
poorer”, as opposed to being integrated. The aspect of social class gap is blamed for the
existence of lamentable spread of global capitalism and consumerism, as well as an equally
deplorable demolition of the proactive welfare state (Peter 2010, p.5).
Neo-liberalism is criticised for displacing, transforming and even destroying existing
economic and social engagement patterns, and moral behaviour (Zafarullah & Huque 2012,
p.67). Instead of being a solution to national problems, Neo-liberalism has led to social,
economic and environmental crises, at which the government are left alone to face. For
instance, through globalisation and foreign investments, the small domestic enterprises have
been taken over by foreign investors, and local citizens are left stranded. Only the foreign and
very few domestic investors with massive capital reap the fruits at cost of massive poor
people. Neo-liberalism creates high rates of unemployment, minimal competitive advantage
to domestic enterprises and an atmosphere of irresponsible government. It generates very
minimal or no sustainable economic development, and perpetrates poverty. According to
Zafarullah & Huque (2012, p.67)
“…the social impact of neoliberal policies has been significant in both developed and
developing worlds. Decline of social welfare, subsidy cuts in agriculture and primary
industries, reductions in employment opportunities, rising cost of health care and
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education, economic gains, and other social malaise required thinking, especially in the
context of development.”
Hence, developing countries cannot afford to ignore the human dimensions of development
given the misery in which the bulk of their population survives.
Liberal trade led to the imposition of destitution on individuals who lacked the ability
to compete, thereby triggering periodic crises in which less developed producers were
bankrupted, leading to the retrenchment of many individuals. The market was considered a
moral and economic force that penalized the incompetent, idle, and rewarded the hard
working and enterprising for the benefit of the entire society. However, the capitalists of less
developed states opted for tariff protection for their national industries (Ciobotaru, 2013, pg
119). On the other hand, the reformist focused on market controls to protect the vulnerable
from the entire force of competition (Rieu, 2011, 65). Socialist critiques viewed the
inequalities created by capitalism as an expression of unequal property distribution.
Populism Development Approach
Populism development approach is a more recent approach and involves a set of ideas
grouped together under the label of populism approach. Populism advocates for development
based on national context and development in the society in both urban and rural areas. It
represents a critique of (the failure of) mainstream development approaches (Kitching 1982,
p.60). Populism is known by several names such as ‘alternative development’, ‘development
from below’ (‘people-centred development’) ‘another development’ and ‘eco-development’.
According to Kitching (1982, p.22), the populist development approach is ‘a vision of world
of humanised production, which is based on small scale, but modern and scientific
technology. It is a world of cooperation in villages and small towns. Populism is aimed at
eliminating mass poverty at grassroots level and populous rural areas of the society. As such,
it is supported by the less costly means in social or human terms (Willis 2011, p.97). This
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approach advocates for the development based on small-scale individual enterprise both in
industry and in agriculture, as oppose to capitalist industrialisation and large-scale
concentrated production (Kitching 1982, p.21).
According to Kitching (1982, p.19), the main features of populist development
approach include are community participation/people-centred approach, empowerment of the
poor and women, small-scale enterprises in agriculture and industry, retention and
modernisation of peasant agriculture, sustainability of development or environmental
conservation, non-profit organisations and private voluntary organisations as agents of
change, and local knowledge as opposed to external models. Populists avoid grand theories.
Instead, they propose for solutions that are based on local and historical contexts. For them
the main culprits are the state and its allies in the west, dominant social classes, and World
Bank, IMF and World Trade Organisation. Lastly, they and emphasis on bottom-up approach,
decentralisation, self-help and empowerment.
The Ideology of Populist Development Approach
The ideology has been based on the ideas of three individual neo-populist thinkers
like President Julius Nyerere of Tanzania, Michael Lipton, E.F. Schumacher and others who
have developed theories about development in the underdeveloped countries (Kitching 1982,
p.62). The several elements (theories) of populism include are discussed below:
Populism as ‘Alternative Development Approach
The main proponent of ‘Theory of Urban Bias’, Lipton Michael (1977 cited by
Kitching 1982, p.84-92) argued that the existence of parasitical and corrupt urban elites is the
main reason why poor people stay poor (no development). The development policies are bias
as they always favour the town side, hence making these individuals to benefit at the expense
of the poor rural people. They cash most of development aid and exploit surrounding rural
areas. He presents evidence showing how little investment goes into agriculture sector. When
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development of rural sector is advocated, the objective is not to improve the lot of the poor
but to increase revenues from cash crops. Most of this revenue is directed towards the support
of urban centres. Even though industrialisation and modernisation are supposed to benefit the
poor, there is lack of an organised literate urban based working class. Besides, there exist
high levels of poor political will of the state to impose wages, feudalism (capitalism has
enhanced the power of feudalists) and massive imbalance between cities and villages
(Kitching 1982, p.85). Policies are not organised to favour the rural area people.
Urban bias is found in both socialist and capitalist states in Third World. It is not the
result of class exploitation but it is the result of power of urban class over a rural class. Urban
class is more effective in mobilising itself to take advantage of the situation. Lipton argues
that the only way though which a genuine mass development can occur is embracing policy
shift, which talks into consideration the transfer of resources to the rural poor. In relation to
the development industry of developing nations, Lipton stated, “…is markedly less efficient
than peasant agriculture in that its capital/output ratios are far lower…” He proceeded to state,
“in a capital shortage situation peasant agriculture uses capital far more efficiently than
industry” (Kitching 1982, p.85).
Development from Below
Robert Chambers (1983), E.F. Schumacher (1973) and others advocated development
from below or people-centred development as Populism development approach, which
focuses on putting the Last First/First Last. Chambers (1983, p.2) advocated for a totally new
way of thinking about and doing ‘development’. He called for complete shift towards
approaches that are more community-driven, participatory and process-orientated as they
embed new professionalism, which entails changed approaches and methods. Instead,
Chamber advocated for neatly designed projects/programme that are executed by government
agencies or big NGOs. Populism approach challenges some basic premises and the failed
DEVELOPMENT ADMNISTRATION 9
outcomes of the conventional approaches. It is concerned with making poor people more
productive, creative and self-reliant.
Based on his extensive research on rural poverty and livelihood, Chambers (1983,
p.2) argues that the outsiders view about poverty is wrong and distorted. According to
Chambers, individuals concerned with rural development are neither rural nor poor
(outsiders) as they under-perceive rural poverty. At the micro-level, the poor are subjected to
clusters of disadvantages, which are commonly known as vicious circle of poverty or
deprivation traps. Deprivation traps include poverty, physical weakness, vulnerability,
powerlessness and isolation. Schumacher (1973) argued that the populism’s “development
from below “approach will grapple with the massively exacerbates relative inequalities
(wealth, power) between rich and poor, city and the countryside, region and region, and
nation and nation (Kitching 1982, p.95).
Populism as ‘Another Development Approach’ focuses on the content of development
not the form. Actively promoted by Dag Hammarskjold Foundation, Sweden and
International Foundation for Development Alternatives (IFDA) (Kitching 1982, p.95), the
principal argument of this theory is that development should be need oriented. As such,
development should be geared towards material and non-material needs. Besides, it should be
endogenous by steaming from the heart of each society. Moreover, development should be
self-reliant in that each society should rely primarily on its strength and weaknesses.
Development should be ecologically in that it should not be harmful to the eco system/bio-
space and structural transformation (as an integral whole).
As Eco-development Approach, Populism is aimed at harmonising social and
economic objectives with ecologically sound management. This goal can be accomplished in
DEVELOPMENT ADMNISTRATION 10
a spirit of solidarity with future generation. As an eco-development approach, populism is
based on the principles of self-reliance, satisfaction of basic needs, new symbiosis of man and
earth and another kind of qualitative growth, which opposes zero growth or negative growth’
(Sachs 2000). It is an approach that offers answers to the impending environmental disaster
that is threatening the world. Furthermore, it advocates for methods of growth that ensure
social progress and management of resources that are compatible with environment. It entails
policies such as harmonisation of consumption patterns, time use and life styles, appropriate
technologies, ecologically based designs, low energy profile and promotion of renewable
energy base among others.
Nyerere’s ideology of development effort in the rural areas and agriculture constitutes
following basic tenets (Kitching 1982, p.66-69):
Stress on the primacy of agricultural development and opposition to large scale
Anti-urbanism: he viewed towns and cities as exploitative of the peasantry and
Co-operation and the middleman ‘exploiter’: He considered middlemen and
merchants as exploiters who buy the peasant’s produce cheaply and sell it dear to the cities.
As a result, he advocated for co-operation as a mechanism for eliminating this exploitation.
Money and Education: He insisted that wealth and development lie not in the
acquisition of money per se, but in the production of useful products through labour or, as he
says, ‘hard work’ and ‘intelligence’ (Nyerere 1967a).
‘Justice’ and ‘Fairness’ in Distribution: Nyerere advocated for equality and fairness
in the distribution of society’s wealth. According to him, farmers must receive a ‘fair’ price
for their produce. Moreover, the countryside must obtain a ‘fair return’ in services and
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administration for the taxes it pays. On the other hand, educated people in a poor and illiterate
society must receive no more than is ‘fair’ or ‘just’ for them to receive.
Critiques of Populist Development Approach
The essential populism ‘vision’ creates a world with holistic shape of development.
This vision creates a world of equality and small property. It embraces a minimally urbanised
world, an agriculture world and a decentralised world. Taking into consideration its capacity
to manifest in various situations, populism is considered a perfect solution for economic and
social problems of industrialisation and urbanisation. However, it lacks a coherent,
practicable, and long-term development strategy that can be set against conventional
development models (Kitching 1982 p.140). Populism highlights economic criticisms of
particular aspects of the industrialisation, but do not undermine its fundamental tenets. As
such, it compromises its strength as a total alternative development approach. Populism
makes good social and moral criticism, but on the whole it makes rather flabby economic
development theory (Kitching 1982 p.140).
Populism lacks an operationally useful aid to economic policy. It has fewer funding
support as it solely depends on the political will and development agencies. Therefore, in
some situations, populism may be a good novel exercise that contains perfect ideas for
accelerating development. However, it is often not pursued due to political threats/conflicts.
If not well managed, populism may lead to a scramble over resources and prioritisation of
conflicts at community, national and international levels (Miguel 2012, p.259). As a result,
the scramble for resources may cause “a split in society, with two distinct groups (the
populists and institutionalists) opposing each other.
It can be easily mixed or misinterpreted as political populism/old-populism. Populism
may be criticised to be a thin, or empty of values. As such, it needs to be combined with other
ideologies like modernisation, neo-liberalism among others (Miguel 2012, p.259). Miguel
DEVELOPMENT ADMNISTRATION 12
Goede (2012, p.260) argued that “other ideologies do not crowd out populism, but are
complementary to it”. Populist governments have not necessarily been successful in reducing
the pronounced gap between the wealthy and the less well off (Miguel 2012, p.261). As a
result, the predicted outcomes are hardly achieved (Willies 2011, p.108).
The more appropriate model for poverty alleviation and accelerated development in
As an approach of development, populism is considered deal and more appropriate for
poverty alleviation and accelerated development in poorer countries than the Neoliberalism
due to several reasons. Populism focuses on development of populace communities, which
are the rural areas of the country, where the poor are subjected to clusters of disadvantages.
Through participatory development that are advocated for by populism, interventions reach
the poorest people and communities without the interference of the intermediary institutions
and elites who, in most cases, are perceived to take advantage over the poor people through
corruption and power (Miguel 2009, p.259; Lipton 1977, p.63 cited by Kitching 1982, p.86).
Therefore, populism seeks to circumvent the restrictions of the institutions and elites. While
neo-liberalism advocates for market-led development through few elites with strong capital-
muscle of creating individual enterprises and appeals to create jobs for the competent people,
only few people gets sustained and hardly get developed. Thus, the poorest people are being
neglected to die on their poverty and the survivors being exploited in the process.
Populism aims at alleviating poverty and accelerating development at grass root level.
It ensures that there is more resource allocation to the underdeveloped people, communities
and states, as opposed to the developed countries and urban areas. As such populism is a
better approach for developing countries than neo-liberalism development approach, which
focuses on the creation of a growth pattern that benefits the few elites. These elites
accumulate wealth to themselves at the expense of the poor in the account of development,
DEVELOPMENT ADMNISTRATION 13
thereby leading to mal-development (Sachs 2000, p.213). In many situations, neo-liberalism
hardly leads to the development of the poor populace communities as it continues to enrich
the elites, who have power over the poor. Therefore, it serves to widen the economic
inequality between few rich and poor people (Zafarullah & Huque 2012, p.67). Neoliberalism
creates a lamentable atmosphere of physical weak, vulnerable and powerless communities
who are neglected in the process of development (Peter 2010, p.5). On the other hand,
populism represents a critique of the failure of mainstream development approaches
including neo-liberalism as it initiates more social democratic programmes than them
(Miguel 2012, p.261).
President Nyerere managed to implement his ideas by putting them into a practical
development strategy. As a result, many other nationalist leaders in Africa replicated the
ideology of populism through various public reforms such decentralisation and rural
development programmes after being visibly colonised (Willies 2011, 96). In the developing
countries, many individuals live in rural areas, and are extremely poor. By adopting the Neo-
liberalism system, these governments can ‘commit murder’ by letting their people die in
poverty (Willies 2011, 96). As such, most of these governments considered it appropriate to
focus on Populism Development Approach. In developing countries, government policies aim
at eliminating inequalities and modernizing agriculture so as to raise material standards of
living (Kitching 1982, p.66). Nyerere criticised various forms of ‘corruption’, especially the
growth of economic individualism. He opposed the aspect of growing class cleavages among
Africans in town and countryside. In addition, he emphasised that it must be the aim of
government policy to eliminate these inequalities and modernise agriculture so as to raise
material standards of living for the countryside people (Kitching 1982, p.66).
International Labour Organisation (ILO) and World Bank have been actively
persuading and promoting neo-populist development policies, which focused on the poorest
DEVELOPMENT ADMNISTRATION 14
people in society, at micro level rather than at a macro-level that would indirectly help the
poor (Willies 2011, p.103; Kitching 1982, p.99). Kitching (1982, p.126) conducted a
comparison of Tanzania and China who both pursued neo-populist policies, and concluded
that the actual performance was better in China than in Tanzania. His conclusion was linked
to the fact that Tanzania was not involved in the production of industrial raw materials and of
Populism ideas have confronted industrialisation and urbanisation with an alternative
‘vision’ of development, which advocates for the greater efficiency of small-scale over large
scale enterprises, agriculture and industry (Kitching 1982, p.98). Lipton urged that agriculture
is more efficient than industry in relation use of capital. Therefore, agriculture deserves better
allocation of resources than other sectors of economy. In relation to this, Kitching (1982,
p.138) stated, “…their critique is particularly convincing in situations where factor markets
are distorted in favour of capital and against labour.” In addition, increasing debt and
economic constraints forced poorer countries to accept restructuring packages associated with
IMF loans and adopt neoliberal market-led policies (Willies 2011, 98).
In summary, capitalists support removal of obstacles and regulation through market,
while populists emphasise on small scale enterprises and participatory rural development.
However, there is no one agreed theory of development. Neither Neoliberalism nor populism
is complete enough on its own. As such, none of them can serve as the most potent tool in
accomplishing the goals of total development. Therefore, the two systems of development
should be adopted when it comes to the development of nations. However, the populism
seems to hold a bright future for the developing countries as its ideologies are in line with the
development requirements of these nations. The best elements from each of the two
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development approaches can be complemented by lessons learnt from the field in the
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Ciobotaru, A. (2013). “Economic Neo-Liberalism and The Meaning of Structural Changes in
Global Economy,” Insights-Trends and Changes, 65(2), pp. 112-123.
Chambers, Robert 1983, ‘Rural poverty unperceived’, in Chambers, Robert, Rural
development: putting the last first, Longman Scientific and Technical, London, pp. 1-
- Rural poverty unperceived.pdf
Kitching, GN 1982, Development and Underdevelopment in Historical Perspective:
Populism, Nationalism and Industrialisation, Methuen London and New York.
Lipton, M 2010, University of Sussex Brighton-UK, ‘From policy aims and small-farm
characteristics to farm science needs, World Development, Elsevier Ltd, Vol. 38 (10),
Peters, M 2010, university of Auckland, ‘Neoliberalism, Introduction: Hayek and the
Austrian School’, Encyclopadia of Philisophy of Education,