What exactly is neoliberalism? (2022)

I struggle with neoliberalism – as a problematic economic system we might want to change – and as an analytical term people increasingly use to describe that system.

I’ve been reading and writing about the concept for more than a decade. But the more I read, the more I think that neoliberalism is losing its analytical edge.

As a result of its growing popularity in academia, media and popular discussions, it’s crucial to understand neoliberalism as a concept. We need to know its origins and its definition in order to understand our current political and economic mess, including the rise of nativism that played a part in Brexit and Donald Trump’s election a year ago.

Neoliberalism is regularly used in popular debate around the world to define the last 40 years. It’s used to refer to an economic system in which the “free” market is extended to every part of our public and personal worlds. The transformation of the state from a provider of public welfare to a promoter of markets and competition helps to enable this shift.

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Neoliberalism is generally associated with policies like cutting trade tariffs and barriers. Its influence has liberalized the international movement of capital, and limited the power of trade unions. It’s broken up state-owned enterprises, sold off public assets and generally opened up our lives to dominance by market thinking.

As a term, neoliberalism is increasingly used across popular media, including The New York Times, The Times (of London) and The Daily Mail. It’s also used within international institutions like the World Economic Forum, the Organisation for Economic Co-operation and Development and the International Monetary Fund.

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Neoliberalism is criticized for giving markets too much power over our lives. Yet in light of the rise of Donald Trump and other nativist, anti-trade populists, there is a growing chorus of people extolling the virtues of neoliberalism.

What’s most evident from this growing popular debate about neoliberalism – whether from left-leaning critics or right-leaning advocates – is that there are many different views of neoliberalism; not just what it means politically, but just as critically, what it means analytically.

This raises an important question: How do we use a term like “neoliberalism” when so many people have such different understandings of what it means?

I wrestled with this question when writing my book, A Research Agenda for Neoliberalism, in which I examine the intellectual history of neoliberalism. I do so in order to examine the different conceptions of the term and to expose the contradictions underlying our daily use of it.

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The term “neoliberalism” has a fascinating intellectual history. It appears as long ago as 1884 in an article by R.A. Armstrong for The Modern Review in which he defined liberals who promoted state intervention in the economy as “neo-liberal” — almost the exact opposite meaning from its popular and academic use today.

Another early appearance is in an 1898 article for The Economic Journal by Charles Gide in which he used the term to refer to an Italian economist, Maffeo Pantaleoni, who argued that we need to promote a “hedonistic world … in which free competition will reign absolutely” — somewhat closer to our current conception.

Adopted by liberal thinkers

As the 20th century dawned and the world moved through one World War and onto the next, the term was appropriated by a range of liberal thinkers who felt sidelined by the ascendance of state planning and socialism.

The conventional narrative is that “neo-liberalism” was first proposed as a term to describe a rebooted liberalism in the 1930s after the so-called Walter Lippman Colloquium held in Paris in 1938.

However, its history is not as clear cut as this narrative might imply. According to Arnaud Brennetot, for example, the term was subsequently mainly used to refer to French and other liberals associated with a publishing house called La Libraire de Medicis at least until the early 1950s. By then, the term was increasingly used to refer to German Ordoliberalism, which was a “neoliberal” school based on the idea that markets need a strong state in order to protect competition — ideas that are a major forerunner of the European Union’s framework conditions.

Famously, Milton Friedman even referred to himself as a “neoliberal” in a 1951 article for the Norwegian magazine Farmand, although he subsequently dropped the term.

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By the 1970s, Brennetot and others argued that neoliberalism was a term primarily associated with a shifting emphasis in Latin America away from import-substitution policies towards open economies, influenced by Chicago School thinkers like Friedman.

It was around this time that neoliberalism increasingly took on negative overtones, especially after the violent overthrow of Salvador Allende’s government in Chile in 1973. As the 1980s dawned, along with the generally accepted birth of the modern neoliberal era, the term “neoliberalism” became indelibly linked to the Chicago School of Economics (as well as Law and Business).

Neoliberalism has several ‘schools’

When we use the term today, it’s generally with this Chicago inflection, rather than its other previous and alternative histories and associations.

But it’s important to remember that there were and are at least seven schools of neoliberalism. Some of the older schools, like the First Chicago School (of Frank Knight, Henry Simons, Jacob Viner), disappeared or were subsumed in later schools – in this case, the Second Chicago School (of Milton Friedman, Aaron Director, George Stigler).

Other old schools, like the Italian or Bocconi School (of Maffeo Pantaleoni, Luigi Einaudi) faded into academia before being resurrected as the legitimization for current austerity policies. Other more marginal schools, like the Virginia School (of James Buchanan, Gordon Tullock) – itself influenced by the Italian school – have existed under the radar until recent critiques by historians like Nancy MacLean.

As these various schools of neoliberal thought have evolved and mutated over time, so too have our understandings of them and their influence on us. It’s therefore tricky to identify neoliberalism with any one particular school of thought without missing out on a whole lot of the story.

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Three contradictions

That’s a major reason why I identify three core contradictions in our current understandings of neoliberalism in my new book.

First, too little has been done analytically to address the contradiction between the supposed extension of “free” markets under neoliberalism and the growth in market power and dominance of corporate entities and monopolies like Google and Microsoft.

Second, there has been too much emphasis on the idea that our lives, identities and subjectivities under neoliberalism are framed by “entrepreneurial” beliefs, attitudes and thinking.

In contrast, my view is that our lives, societies, and economies are dominated by diverse forms of rentiership — for example home ownership, intellectual property monopolies and market control. According to British academic Guy Standing, rentiership can be defined as the extraction of income from the “ownership, possession or control of assets that are scarce or artificially made scarce.”

Finally, there has been little interest in trying to understand the important role of contract and contract law – as opposed to “markets” – in the organization of neoliberal capitalism.

All these areas need addressing in order to better understand our future, but neoliberalism has perhaps run its course in providing us with the necessary analytical tools to do this work. It’s time to find new ways to think about our world.

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FAQs

What does neoliberalism mean in simple terms? ›

Neoliberalism is contemporarily used to refer to market-oriented reform policies such as "eliminating price controls, deregulating capital markets, lowering trade barriers" and reducing, especially through privatization and austerity, state influence in the economy.

What kind of ideology is neoliberalism? ›

Liberalism is a political and moral philosophy based on the rights of the individual, liberty, consent of the governed, political equality and equality before the law. Liberals espouse various views depending on their understanding of these principles.

What are the core assumption of neoliberalism? ›

Neoliberalism prioritizes economic growth and minimal government intervention, because its core principle is a belief in the productivity of market competition and free trade.

What is the opposite of neoliberalism? ›

Post-neoliberalism, also known as anti-neoliberalism, is a set of ideals characterized by its rejection of neoliberalism and the economic policies embodied by the Washington Consensus.

How is neoliberalism harmful? ›

Austerity-driven financial policies leading to an increase in unemployment and poverty; reduced labour costs. Higher rates of poverty; less protection against poverty, unemployment, and healthcare risks; social exclusion; increased prevalence of mental illness.

Is neoliberalism moral? ›

Rather than altering our morality, neoliberalism "individualises" ethics, making us personally responsible for dealing with and resolving its moral failings. In doing so, individuals end up perpetuating the very market system that they morally oppose and feel powerless to ultimately change.

What is the opposite of a liberal? ›

Conservatives tend to reject behavior that does not conform to some social norm. Modern conservative parties often define themselves by their opposition to liberal or labor parties. The United States usage of the term "conservative" is unique to that country.

What are the effects of neoliberalism? ›

Globally, the rolling out of neoliberal policies has led to a plethora of harmful socioeconomic consequences, including increased poverty, unemployment, and deterioration of income distribution (Rotarou and Sakellariou 2017; Collins et al. 2015). Hartmann (2016, p.

Why is neoliberalism an ideology? ›

This ideology postulates that the reduction of state interventions in economic and social activities and the deregulation of labor and financial markets, as well as of commerce and investments, have liberated the enormous potential of capitalism to create an unprecedented era of social well-being in the world's ...

What is fascism the opposite of? ›

Opposed to anarchism, democracy, pluralism, liberalism, socialism and Marxism, fascism is placed on the far-right wing within the traditional left–right spectrum.

What do conservatives stand for? ›

They advocate low taxes, free markets, deregulation, privatization, and reduced government spending and government debt. Social conservatives see traditional social values, often rooted in familialism and religion, as being threatened by secularism and moral relativism.

What is it called when you are conservative and liberal? ›

Conservative liberalism or right-liberalism is a variant of liberalism, combining liberal values and policies with conservative stances, or simply representing the right-wing of the liberal movement.

What are the assumptions of economic liberalism? ›

Economic liberals commonly adhere to a political and economic philosophy that advocates a restrained fiscal policy and a balanced budget through measures such as low taxes, reduced government spending, and minimized government debt.

What are the basic principles of neoliberal approaches to development? ›

Neoliberalism involves the belief that greater economic freedom leads to greater economic and social progress for individuals. It supports: Free enterprise, competition, deregulation, and the importance of individual responsibility. Opposition to the expansion of government power, state welfare, inflation.

What are the main assumptions of realism? ›

The first assumption of realism is that the nation-state (usually abbreviated to 'state') is the principle actor in international relations. Other bodies exist, such as individuals and organisations, but their power is limited. Second, the state is a unitary actor.

What are the basic assumptions of international relations? ›

complex interdependence sometimes comes closer to reality than does realism." In explaining this, Keohane and Nye cover the three assumptions in realist thought: First, states are coherent units and are the dominant actors in international relations; second, force is a usable and effective instrument of policy; and ...

Who is the father of economic liberalism? ›

Adam Smith FRSA

What are the 3 economic ideologies? ›

The main ones that exist today are mixed economies, where the state intervenes in market activity and provides some services; laissez faire, where the state only supplies a court, a military, and police; and state capitalism, where the state engages in commercial business activity itself.

Is the US a liberal market economy? ›

The prime example of a liberal market economy is the USA, but the label is also applied to the form of capitalist economy found in Australia, Britain, Canada, Ireland and New Zealand.

Is NATO neoliberal? ›

Because alliances are products of processes at the systemic level of analysis, NATO is an ideal subject for neorealist and neoliberal institutionalist theory.

What is a main weakness of realism? ›

First, Realism has typically relied on a gloomy view of humans derived from assuming a supposedly unchanging conflict-prone 'human nature. ' This leads to the second weakness, a tendency to treat politics both within and between states as involving unending competition for advantage.

What is the opposite of realism? ›

In anti-realism, this external reality is hypothetical and is not assumed. Anti-realism in its most general sense can be understood as being in contrast to a generic realism, which holds that distinctive objects of a subject-matter exist and have properties independent of one's beliefs and conceptual schemes.

What are the 4 types of realism? ›

The four propositions of realism are as follows.
  • State-centrism: States are the most important actors.
  • Anarchy: The international system is anarchic. ...
  • Egoism: All states within the system pursue narrow self-interests. ...
  • Power politics: The primary concern of all states is power and security.

Which is better realism or liberalism? ›

Compared with liberalism, realism is a more reliable theory that accurately demonstrates the reality of world politics.

Who are the dominant players in the international system? ›

The field of international relations has long focused on states as the most important actors in global politics. 2 Examples of states include the United States, Germany, China, India, Bolivia, South Africa, Brazil, Saudi Arabia, and Vietnam.

What are the three great debates in international relations? ›

These disputes throughout IR's short history have come to be known as 'The Great Debates', and though disputed it is generally felt there have been four, namely 'Realism/Liberalism', 'Traditionalism/Behaviouralism', 'Neorealism/Neoliberalism' and the most recent 'Rationalism/Reflectivism'.

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