Neoliberalism
Neoliberalism, also neo-liberalism,[1] is a term used to signify the late-20th century political reappearance of 19th-century ideas associated with free-market capitalism.[2][3][4][5][6] The term has multiple, competing definitions, and is often used pejoratively.[7][8] In scholarly use, the term is frequently undefined or used to characterize a vast variety of phenomena,[9][10][11] but is primarily used to describe the transformation of society due to market-based reforms.[12]
For neoliberalism in international relations, see Liberal institutionalism.
As an economic philosophy, neoliberalism emerged among European liberal scholars during the 1930s as they attempted to revive and renew central ideas from classical liberalism as they saw these ideas diminish in popularity, overtaken by a desire to control markets, following the Great Depression and manifested in policies designed with the intention to counter the volatility of free markets.[13] One impetus for the formulation of policies to mitigate capitalist free-market volatility was a desire to avoid repeating the economic failures of the early 1930s, failures sometimes attributed principally to the economic policy of classical liberalism. In policymaking, neoliberalism often refers to what was part of a paradigm shift that followed the perceived failure of the post-war consensus and neo-Keynesian economics to address the stagflation of the 1970s.[14][15] The collapse of the USSR and the end of the Cold War also made possible the triumph of neoliberalism in the United States and around the world.[16][17]
The term neoliberalism has become more prevalent in recent decades.[18][19][20][21][22][23] A prominent factor in the rise of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them,[24][25] neoliberalism is often associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, monetarism, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society.[26][27][28][29][30] The neoliberal project is also focused on designing institutions and is political in character rather than only economic.[31][32][33][34]
The term is rarely used by proponents of free-market policies.[35] When the term entered into common academic use during the 1980s in association with Augusto Pinochet's economic reforms in Chile, it quickly acquired negative connotations and was employed principally by critics of market reform and laissez-faire capitalism. Scholars tended to associate it with the theories of economists working with the Mont Pelerin Society, including Friedrich Hayek, Milton Friedman, Ludwig von Mises and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan and Alan Greenspan.[9][36][37] Once the new meaning of neoliberalism became established as a common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy.[9] By 1994, with the passage of NAFTA and with the Zapatistas' reaction to this development in Chiapas, the term entered global circulation. Scholarship on the phenomenon of neoliberalism has grown over the last few decades.[19][20]
Terminology[edit]
Origins[edit]
An early use of the term in English was in 1898 by the French economist Charles Gide to describe the economic beliefs of the Italian economist Maffeo Pantaleoni,[38] with the term néo-libéralisme previously existing in French;[39] the term was later used by others, including the classical liberal economist Milton Friedman in his 1951 essay "Neo-Liberalism and its Prospects".[40] In 1938 at the Colloque Walter Lippmann, the term neoliberalism was proposed, among other terms, and ultimately chosen to be used to describe a certain set of economic beliefs.[41][42] The colloquium defined the concept of neoliberalism as involving "the priority of the price mechanism, free enterprise, the system of competition, and a strong and impartial state".[43] According to attendees Louis Rougier and Friedrich Hayek, the competition of neoliberalism would establish an elite structure of successful individuals that would assume power in society, with these elites replacing the existing representative democracy acting on the behalf of the majority.[44][45] To be neoliberal meant advocating a modern economic policy with state intervention.[46] Neoliberal state interventionism brought a clash with the opposing laissez-faire camp of classical liberals, like Ludwig von Mises.[47] Most scholars in the 1950s and 1960s understood neoliberalism as referring to the social market economy and its principal economic theorists such as Walter Eucken, Wilhelm Röpke, Alexander Rüstow and Alfred Müller-Armack. Although Hayek had intellectual ties to the German neoliberals, his name was only occasionally mentioned in conjunction with neoliberalism during this period due to his more pro-free market stance.[9]
During the military rule under Augusto Pinochet (1973–1990) in Chile, opposition scholars took up the expression to describe the economic reforms implemented there and its proponents (the Chicago Boys).[9] Once this new meaning was established among Spanish-speaking scholars, it diffused into the English-language study of political economy.[9] According to one study of 148 scholarly articles, neoliberalism is almost never defined but used in several senses to describe ideology, economic theory, development theory, or economic reform policy. It has become used largely as a term of abuse and/or to imply a laissez-faire market fundamentalism virtually identical to that of classical liberalism – rather than the ideas of those who attended the 1938 colloquium. As a result, there is controversy as to the precise meaning of the term and its usefulness as a descriptor in the social sciences, especially as the number of different kinds of market economies have proliferated in recent years.[9]
Unrelated to the economic philosophy described in this article, the term "neoliberalism" is also used to describe a centrist political movement from modern American liberalism in the 1970s. According to political commentator David Brooks, prominent neoliberal politicians included Al Gore and Bill Clinton of the Democratic Party of the United States.[48] The neoliberals coalesced around two magazines, The New Republic and the Washington Monthly,[49] and often supported Third Way policies. The "godfather" of this version of neoliberalism was the journalist Charles Peters,[50] who, in 1983, published "A Neoliberal's Manifesto".[51]
Current usage[edit]
Historian Elizabeth Shermer argued that the term gained popularity largely among left-leaning academics in the 1970s to "describe and decry a late twentieth-century effort by policymakers, think-tank experts, and industrialists to condemn social-democratic reforms and unapologetically implement free-market policies";[52] economic historian Phillip W. Magness notes its reemergence in academic literature in the mid-1980s, after French philosopher Michel Foucault brought attention to it.[53]
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.[9] It is also commonly associated with the economic policies introduced by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States.[29] Some scholars note it has a number of distinct usages in different spheres:[54]
There is debate over the meaning of the term. Sociologists Fred L. Block and Margaret Somers claim there is a dispute over what to call the influence of free-market ideas which have been used to justify the retrenchment of New Deal programs and policies since the 1980s: neoliberalism, laissez-faire or "free market ideology".[55] Other academics such as Susan Braedley and Med Luxton assert that neoliberalism is a political philosophy which seeks to "liberate" the processes of capital accumulation.[56] In contrast, Frances Fox Piven sees neoliberalism as essentially hyper-capitalism.[57] Robert W. McChesney, while defining neoliberalism similarly as "capitalism with the gloves off", goes on to assert that the term is largely unknown by the general public, particularly in the United States.[58] Lester Spence uses the term to critique trends in Black politics, defining neoliberalism as "the general idea that society works best when the people and the institutions within it work or are shaped to work according to market principles".[59] According to Philip Mirowski, neoliberalism views the market as the greatest information processor, superior to any human being. It is hence considered as the arbiter of truth. Adam Kotsko describes neoliberalism as political theology, as it goes beyond simply being a formula for an economic policy agenda and instead infuses it with a moral ethos that "aspires to be a complete way of life and a holistic worldview, in a way that previous models of capitalism did not."[60]
Neoliberalism is distinct from liberalism insofar as it does not advocate laissez-faire economic policy, but instead is highly constructivist and advocates a strong state to bring about market-like reforms in every aspect of society.[61] Anthropologist Jason Hickel also rejects the notion that neoliberalism necessitates the retreat of the state in favor of totally free markets, arguing that the spread of neoliberalism required substantial state intervention to establish a global 'free market'.[62] Naomi Klein states that the three policy pillars of neoliberalism are "privatization of the public sphere, deregulation of the corporate sector, and the lowering of income and corporate taxes, paid for with cuts to public spending".[63]
According to some scholars, neoliberalism is commonly used as a pejorative by critics, outpacing similar terms such as monetarism, neoconservatism, the Washington Consensus and "market reform" in much scholarly writing.[9] The Handbook of Neoliberalism, for instance, posits that the term has "become a means of identifying a seemingly ubiquitous set of market-oriented policies as being largely responsible for a wide range of social, political, ecological and economic problems".[12] Its use in this manner has been criticized by those who advocate for policies characterized as neoliberal.[64] The Handbook, for example, further argues that "such lack of specificity [for the term] reduces its capacity as an analytic frame. If neoliberalism is to serve as a way of understanding the transformation of society over the last few decades, then the concept is in need of unpacking".[12] Historian Daniel Stedman Jones has similarly said that the term "is too often used as a catch-all shorthand for the horrors associated with globalization and recurring financial crises".[65]
Several writers have criticized the term "neoliberal" as an insult or slur used by leftists against liberals and varieties of liberalism that leftists disagree with.[66][67] British journalist Will Hutton called neoliberal "an unthinking leftist insult" that "stifle[s] debate."[68] On the other hand, many scholars believe it retains a meaningful definition. Writing in The Guardian, Stephen Metcalf posits that the publication of the 2016 IMF paper "Neoliberalism: Oversold?"[69] helps "put to rest the idea that the word is nothing more than a political slur, or a term without any analytic power".[70] Gary Gerstle argues that neoliberalism is a legitimate term,[71] and describes it as "a creed that calls explicitly for unleashing capitalism's power."[72] He distinguishes neoliberalism from traditional conservatism, as the latter values respect for traditions and bolstering the institutions which reinforce them, whereas the former seeks to disrupt and overcome any institutions which stand in the way.[72]
Radhika Desai, director of the Geopolitical Economy Research Group at the University of Manitoba, argues that global capitalism reached its peak in 1914, just prior to the two great wars, anti-capitalist revolutions and Keynesian reforms, and the purpose of neoliberalism was to restore capitalism to the preeminence it once enjoyed. She argues that this process has failed as contemporary neoliberal capitalism has fostered a "slowly unfolding economic disaster" and bequeathed to the world increased inequalities, societal divisions, economic misery and a lack of meaningful politics.[73]