(THE CONVERSATION) Neoliberalism is a complex concept that many people use – and abuse – in different and often conflicting ways.
So what is it, really?
When I talk about neoliberalism with my students at the University of Southern California, I explain the phenomenon’s origins in political thought, its ambitious claims to promote freedom, and its troubled global trajectory.
‘Markets work; governments don’t”
Neoliberalism defends that markets allocate scarce resources, promote efficient growth, and ensure individual freedom better than governments.
According to the progressive journalist Robert Kuttner“the core argument of neoliberalism can fit on a bumper sticker. Markets work; governments don’t.”
From this perspective, government represents bureaucratic inflation and political imposition. The government is wasteful. The verve of capitalism, along with limited democratic politics, is neoliberalism’s balm for all that ails humanity.
Rounding out his bumper sticker mantra, Kuttner continues: “There are two corollaries: Markets embody human freedom. And with markets, people basically get what they deserve; alter market outcomes is to spoil the poor and punish the productive.”
Evolution of neoliberalism
The moniker “neoliberalism” was coined by the Austrian economists Friedrich von Hayek and Ludwig Von Mises in 1938. Each elaborated their own version of the notion in books from 1944: “The path of servitude” and “Bureaucracy”, respectively.
Neoliberalism was opposed to the prevailing economic strategies promoted by John Maynard Keynes, which encourage governments to stimulate economic demand. It was the opposite of big government socialism, whether in its Soviet manifestation or in its European social democratic version. Advocates of neoliberalism agreed classical liberal principles such as laissez-faire – the policy of not intervening in the markets.
By the 1970s, Keynesian policies were faltering. Hayek’s organization, the Mont Pelerin Societyhad attracted wealthy European and American benefactors to its ranks and financed powerful think tanks such as the American Enterprise Institute and the Cato Institute. These groups refined the message of neoliberalism, turning it into a viable and attractive ideology.
By the 1980s, neoliberalism had gained ascendancy Republicans like President Ronald Reagan. Senior officials in the Democratic presidential administrations of Jimmy Carter and later bill clinton he also embraced neoliberalism.
Neoliberalism was also defended by conservatives such as British Prime Minister Margaret Thatcher and by international institutions such as the World Bank and the International Monetary Fund.
But the deregulation of free markets had some unfortunate political consequences. Promoted financial and labor crisis in the US and UK and exacerbated poverty and political instability. The crisis was felt from the Global South to the American Northwest, manifesting itself in protests against the World Trade Organization, often known as the “The Battle of Seattle.” To critics like Franz Fanon i David Harvey, neoliberalism is more similar to neo-imperialism or neo-colonialism. Basically, they claim, it achieves old ends – exploiting the global working class – through new means.
This criticism feeds another argument: which harbors neoliberalism anti-democratic sentiments. What if citizens prefer government regulation and oversight? History shows that neoliberal die-hards still would pushing market orthodoxy over popular opinion.
An extreme example of this was Hayek’s support for the repressive Pinochet regime in Chile. Augusto Pinochet overthrew the popular socialist government of Salvador Allende in 1973. Pinochet was carefully received by the Nixon administration and looked favorably by Reagan i thatcher. According to them, Pinochet’s commitment to neoliberalism overcame his anti-democratic character.
This story helps explain the election last year of Gabriel Boric, the 36-year-old president of Chile. Boric he had an agenda for profound change after a period of agitation due to the policies of the Pinochet era. His campaign slogan was “If Chile was the cradle of neoliberalism, it will also be its grave.”
A flawed and contradictory ideology
Beginning in the 1980s and for a long time afterward, neoliberalism for many Americans evoked individual freedom, consumer sovereignty, and corporate efficiency. Many Democrats and Republicans championed it to justify their policies and attract voters.
But, in my view, this was only the popular facade of a deeply flawed ideology.
Just consider the consequences of US bank deregulation afterwards the global financial crisis of 2008 let’s see what happens when the government allows the markets to work themselves. american key economic indicators like class inequality also explain the sad history of uncontrolled markets.
For many Americans, however, the mythology of individual freedom stay strong American politicians who hint at restricting it, for example by proposing more regulation or increased social spending, are often labeled as “socialist.”
In short, neoliberalism was a child of its time. It is a grand narrative born of the Cold War era, which claims to have the solution to society’s ills through the power of capitalist markets and government deregulation.
There is no shortage of articles that show that he has not fulfilled his promise. He certainly has made things worse.