Neoliberalism

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Neoliberalism - Meaning[change | change source]

Neoliberalism is a difficult term that deals specifically with economic ideas about free markets. Neoliberalism is characterized by free market trade, deregulation of financial markets, privatization, individualisation, and the shift away from state welfare provision. The neoliberal era began in the 1970s and continues to the present. It is a specific form of free market Capitalism that has largely come to dominate global economics. It was originally referred to as "globalization" and began with "Free Trade deals" in the 80s and 90s. The "anti-globalization" protests of the 90s were attempts to resist Neoliberalism. The term neoliberalism came to prominence in Academics in the early 2000s, and has been used in broader public circulation since the late 2000s, although because of the various meanings attached to the word Liberal, it is often misunderstood.

It is important to note that neoliberalism is strictly ideas about economic policies and is not related to the liberalism of American Democrats, those on the left, or progressives. Neo-liberalism is not to liberalism what neo-conservatism is to conservatism. In fact, the first implementation of neoliberal ideas into practice were initiated by Conservative governments (see Examples below). However since its introduction, Neoliberal economic strategies are practiced by governments both on the left and the right - Liberals, Democrats, Conservatives and Republicans alike. Neoliberalism can be thought of as the revival of the economic ideas of the classic liberal era - during the enlightenment - thus it is a new form of classic enlightenment-era economic ideas (the same economic policies that lead to the Wall Street Crash of 1929, and the Great Depression of the 1930s)

These ideas were revived by a group of classic liberals (20th Century conservatives) who were concerned about the direction Keynesian (Welfare) economic practices might lead[1] In the 1940s, a group of economists including Friedrich Hayek, Ludwig von Mises, Milton Friedman, Frank Knight, Karl Popper, and George Stigler created the Mont Pelerin Society.[2] This organization was created to discuss and disseminate free market principles and ideas such as the removal of government intervention in economic affairs - ideas which would later form the foundation Neoliberalism and permeate the globe

Characteristics of neoliberalism[change | change source]

Privatization, Deregulation, Free Markets, Individualization

Privatization - Neoliberalism posits that the state should not be involved in business and industry. Any assets, resources, industries, services etc. are better run by private interests. The state will sell off assets for a short term gain, resulting in an economy controlled by private owners, because neoliberals argue that privatization introduces efficiencies in their business operation. Since businesses seek to maximize profit through efficiencies, a private company would do a better job than a publicly owned company, which, neoliberals argue, are bloated with bureaucracy and red tape.

Deregulation - Neoliberal policies seek to remove any regulatory framework from the operation of the economy. Regulations, it is argued, only obstruct the efficient running of a business. The less regulations that a business has to deal with, the smoother the operation of said business. For example, if there is an environmental regulation that designates the bald eagle as a protected species because they face extinction, a forestry company might not be able to cut down the trees in an area where the bald eagle lives. But if we deregulate, then we may remove the bald eagle from a list of protected species. This deregulation will then allow the forestry company to destroy the habitat of the bald eagle by logging the area where the bird lives. Deregulation allows industries to operate efficiently and maximize productivity by removing obstructive legislation.

Free Markets - Both privatization and deregulation contribute to the creation of free markets. A free market is one that is unhindered by regulations, and is operated by private entities rather than State (public) owners. Other policies help to create free markets on a global scale. Goods and capital (money) should be able to flow freely, with little restriction across borders. This means the removal of tariffs and subsidies and other State imposed taxes on imports and exports. This creates more freedom for the economy. Commodities (products, goods, food staples) and Capital (money, investment and other financial products) should be allowed to flow as freely as possible around the globe. Labour (people, workers, etc.), however, are very restricted in their movement around the globe, they have many regulations on their movement and their action. Some critics of neoliberalism* argue that this is one of the many contradictions of the global neoliberal economy.

Individuation - Neoliberalism is antithetical to the protection of group interests, and rather has a hyper focus at the level of the individual - as Margaret Thatcher famously put it "There is no such thing as society, only individuals". The transformation of society in the mid-20th Century Welfare State to emphasize the individual, beginning in the late 20th century and continuing to the present, has had dramatic societal consequences. For example the individual is modeled in neoliberal economic theory as "homo economicus" - a self interested person who makes economic decisions based on the optimization of their own personal outcome. Theorists refer to this individual as "homo economicus" or, the Neoliberal subject. The neoliberal subject is one who acts individually - on a supposedly level economic playing field - to optimize their own economic interest, rather than someone who works with others to organize for the social and economic interests of the group[3]. As a result, any success or failure in life is seen as the consequence of one's own personal choices. I.e the poor choose to be poor through laziness, or have come to poverty through personal failure, a lack of ambition, or bad decisions. At the height of the welfare state the poor were cared for through state institutions and were sympathized with as community members who had fallen on hard times. Under the rubric of neoliberalism, the poor are contemptible individuals who have not only chosen poverty, but also deserve it. Since, as Thatcher posits, society does not exist, then social forces cannot be contributing factors to destitution - only the individual and their poor judgement have caused the impoverishment they necessarily deserve. This is an example of the discourse of neoliberalism impacting they way we view others.


Contemporary use[change | change source]

In the late 80s and early-mid 90s neoliberalism was not in common parlance. Instead there were protestors, activists and some academics and politicians who were against free trade deals (corner stones of neoliberal economics) such as NAFTA - which they viewed as exploitative and anti-democratic - and their protest movement was referred to commonly as "anti-globalization". It is important to note that protestors were not against a globalizing world that was becoming more connected through technological advances. Rather, they were opposed specifically to the global spread of a particularly virulent strain of Capitalism that put profits well ahead of people and the planet. Therefore, "anti-globalization" meant at the time "anti-globalization of neoliberal capitalism" [4]

In the late 90s early 2000s the term gained popularity in academia in reference to the transition from state social protections and government economic intervention (the Welfare State) to laissez faire economic management, particularly associated with the promotion of free market ideals in the late 1980s by Margaret Thatcher in the UK and Ronald Reagan in the US.

Examples of neoliberal regimes of Government[change | change source]


References[change | change source]

  1. See The Road to Serfdom by Friedrich Hayek.
  2. David Harvey, A Brief History of Neoliberalism.
  3. Wendy Larner, Neoliberalism and the end of liberal democracy. Theory and Event,2005
  4. Klein, Naomi. collected works. https://www.youtube.com/watch?v=sKTmwu3ynOY.