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"Neoliberalism" refers to two different, but related, threads of political discourse. One is an ideology of domestic governance, and the other is a theory of international relations. It also refers to an extremely deregulated economy — this definition is most frequently used outside of the United States.
In short it is the naive belief that if we all let the market run things, ate McDonald's every day, spoke American English and traded with each other that we would all get along and never go to war.
 International Relations Neoliberalism
In the academic field of International relations, neoliberalism refers to a school most closely associated with Harvard and Princeton. The neoliberal school of IR arose in the 1970s as a response to the hegemony of the "realism" school.
In IR, "liberalism" refers to the orientation of Woodrow Wilson and other people who hoped to reshape the world, through the use of war and international organizations. The goal of the early liberals was democratization and an end to war. Neoliberals took these same goals, but rejected the unscientific applications that had come before. Instead, neoliberals decided to apply rigorous mathematical and scientific techniques.
Most neoliberal analyses relied heavily on rational choice and game theoretic models, borrowed extensively from economics. (The main thing tying both domestic neoliberalism and international neoliberalism is the heavy reliance on economics.) Neoliberals today believe that tying states together in institutions, it can decrease the signal noise that prevents communication between them. Moreover, it can increase the costs associated with provocation and aggression.
The best formulation of neoliberal hopes can be found in the "democratic peace" theory. According to this, no two mature democracies have ever fought a war against each other. Therefore, promoting liberal democracy around the world will have the side-effect of decreasing war. Moreover, since a vibrant middle class has long been recognized as a necessary condition for liberal democracy, neoliberals have focused on helping nations choose policies that would promote the creation of middle classes and democracy.
Criticism of neoliberalism often comes from both the right and the left. Realists often claim that because neoliberals ignore power, they are fooling themselves as to what really causes war and struggle. This is despite the fact that neoliberal claims and predictions have come true at least as often as those made by realists. From the left, constructivists claim that neoliberals are ignoring the structure behind the norms they espouse. Moreover, they point to China as an example of a country that can follow the economic advice of the neoliberals without democratizing.
 Usage in Foreign Policy
Neoliberalism also refers to free market economics, which during the 1990s was the consensus opinion of most world leaders.
It is sometimes espoused from right-wing libertarians such as Presidential candidate Ron Paul or economist Milton Friedman but it is also sometimes coupled with brutal Authoritarianism. Former Chilean dictator Augusto Pinochet is an example of the kind of monster who would kill for the free market. Other proponents include (or have included) George W. Bush, Dick Cheney, Bill Clinton and Colombian President Alvaro Uribe.
The word liberal in Neoliberalism refers to the liberalization or easing of labour and trade laws meant to protect the population from the tyranny of unrestrained capitalism. Much of this deregulation ends up benefiting the parasitic elites and bureaucracy, rather than the poor. (A classic example of this is the kleptocracy of India.) Formerly, it was considered a good idea for "shock therapy" after a state came out of a command economy, but the results have been less than encouraging. Neoliberalsm is almost universally accepted by conservatives as desirable and inevitable (Patrick Buchanan is an exception, he opposes neoliberalism and is an example of a paleo-conservative).
The Neo-Cons, for the most part, universally accept neoliberalism, although they bend the rules by allowing for full-press corruption. Conservapedia and most of its users are strongly pro-neoliberal and they demonstrate this by their disdain for public health care, public education, welfare, nationalization of any kind, and their criticism of welfare capitalist economies as "dictatorships".
 Domestic Neoliberalism
In its use in United States domestic politics, the term seems to have been created by Michael Kinsley of the traditionally liberal magazine, The New Republic. In its original meaning, neoliberalism is the idea that, while traditional liberalism had many flaws, the government could still work to help ordinary people. Neoliberalism also attempted to do away with the narrow interest politics that were seen to damage the Democratic Party, by instead creating a vision of how to run the country that was internally consistent and could vie with the laissez-faire capitalist model that many in the Republican Party espoused.
The most important value in neoliberal planning was empiricism. Outcomes needed to be measurable, and measured, to make sure that ideology was not blinding the policy makers. This emphasis on results over other factors led to the creation of the term "technocratic" to describe this approach.
Under the Bill Clinton administration, many neoliberals were given a chance to put their ideas into practice. What this meant was a focus on education, balanced budgets, and assistance to non-profits, alongside a restructuring of those government bureaucracies that did work. Moreover, many economists were brought in for their technical expertise. There were many successes, and overall real incomes grew at a faster rate than any time in recent history, at all levels.
However, there are some criticisms of neoliberalism. One of the most common, even espoused by some prominent neoliberals like Robert Rubin, was that it was too concerned with raising incomes and less with overall income equality, that is, that most of the increase in income reported as a result of neoliberalism around the world goes into the hands of a small elite. Many traditional liberals worry that the increasing gap between the lower class and the mega-rich is undermining democracy as we know it. This reflects the prediction of James Madison, the 'Father of the Constitution', that "We are free today substantially but the day will come when our Republic will be an impossibility. It will be an impossibility because wealth will be concentrated in the hands of a few." He then goes on to say that we must then rely on the "best elements in society" to readjust the laws of the country to the changed conditions. Of course, many neoliberals also like to defend themselves as 'constitutionalists'.
The other major criticism of domestic neoliberals is their support for free trade. Many people on all sides of the political spectrum (in every country) worry about the effects of free trade on everything from wages to sovereignty, but so far empirical evidence for its deleterious effects is still scant.
Prominent domestic neoliberals in the United States include Paul Krugman, Michael Kinsley, and Bill Clinton.
- ↑ In fact, Friedman's Lexus and the Olive Tree is a good summation of neoliberal thought, if a bit overly simplistic.
- ↑ In particular, the attempts in Russia to introduce this kind of shock therapy, without corresponding clean-up of the government officials, led to the creation of the "new Russian" oligarchs, the very kind of parasites neoliberalism was supposed to do away with.