|Oh no, they're talking about|
|In a global context:|
“”Neoliberalism is the dominant ideology permeating the public policies of many governments in developed and developing countries and of international agencies such as the World Bank, International Monetary Fund, World Trade Organization, and many technical agencies of the United Nations, including the World Health Organization.
|—Vicente Navarro, International Journal of Health Services, vol. 37|
Neoliberalism advocates a deregulated, capitalist, globalist market economy, reifies individual greed, and markets a watered-down version of Austrian economics to left-liberals. This ideology manifests as a hybrid between right-and-left liberalism, where the social ideals of left-liberals (particularly, social equality) is attacked via economics and a worldview which views people as only making choices for themselves. Among the original, enthusiastic proponents of neoliberalism were figureheads of the Austrian school of economics, such as Ludwig von Mises and Friedrich Hayek. Another neoliberal figurehead included fellow Austrian exile Karl Popper. Neoliberals sometimes appear similar to left-liberals, especially when they tout their social liberalism to promote their reactionary economic agenda. But like American conservatism, neoliberalism developed partially as a negative reaction to social welfare programs contained in Roosevelt’s New Deal.
Neoliberal theory was originally created by Alexander Rüstow, a "like-mind" to Hayek, in 1938. This original neoliberal theory was an attempt to sell laissez-faire capitalism to advocates of a welfare state and laid the foundation of Ordoliberalism.
Economic neoliberalism-in-action (on a mass scale) partially started with neoliberals selling monetarism to left-leaning governments in the 1970s. This, along with a neoliberal advocation of union busting, was a response among "free market thinkers" to economic woes in the 1970s, including inflation in the USA. Nowadays, self-identified "neoliberals" outside academia tend to be right-libertarian think tanks trying to rebrand like the Adam Smith Institute, or small-government Democrats feeling the need to "take on the enemies labeling" after being called 'neoliberal' by progressives (for example, the "Neoliberal Podcast"). Self-described neoliberals and fellow travelers tend to defend the status quo, whether it be in academia, politics, or finance.
“”There's no such thing as good money or bad money. There's just money.
|—Charles "Lucky" Luciano, economist|
Economic neoliberalism typically refers to "free market" economics, though not in the 19th-century sense of an economy which was free from wasteful "economic rent" (such as literal property rents, monopoly privileges, and financial speculation), but rather in a new and Orwellian sense of an economy in which rich people are free to maximize economic rents and the concept of economic rent itself is denied ('no good or bad money', regardless of whether it comes from cheaply vaccinating children or trafficking heroin, etc). After the fall of the Soviet bloc, the new definition was embraced by ex-communists and ex-social democrats alike.
Economist Milton Friedman is seen as a neoliberal, but it is also sometimes coupled with brutal authoritarianism. Former Chilean dictator Augusto Pinochet is an example of the kind of monster who would literally kill for the free market. Other proponents include (or have included) Tony Blair, Bill Clinton, Margaret Thatcher, Ronald Reagan, and Colombian President Alvaro Uribe.
The word liberal in Neoliberalism refers to the liberalization or easing of labor and trade laws meant to reduce regulations which are seen as counterproductive. 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.[note 1]
Neoliberalism portrays political decisions like free trade and economic globalization as inevitable forces of nature, like the weather, rather than the work of human agency. George Monbiot writes that "So pervasive has neoliberalism become that we seldom even recognize it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. But the philosophy arose as a conscious attempt to reshape human life and shift the locus of power."
Monetarism is the belief that the money supply itself regulates inflation and economic growth, and that developed countries who tighten their budgets benefit during times of economic distress. Believers in monetarism are known for scaremongering about "money printing".
While neoliberalism arguably became popular partially due to charismatic monetarists in the 1970s, monetarism and neoliberalism are theoretically separate and overlapping. One can be a neoliberal and not a monetarist, but popular neoliberal thinkers tend to be monetarists. Additionally, "neoliberal" political programs also tend to involve "money tightening" using monetarism as a justification.
Historical development in the United States
The most important value in neoliberal planning was alleged empiricism. Outcomes needed to be presented as measurable, and measured, to provide a scientific veneer to watered down Austrian economics. This emphasis on presenting measurable results while politicking created a symbiosis between neoliberals and some technocrats.
Under the Jimmy Carter administration, many neoliberals were given a chance to put their ideas into practice. What this meant was deregulation of the economy. Many economists were brought in for their purported technical expertise, such as Paul Volcker, who was appointed as the chairmand of the Fed and Alfred E. Kahn, who claimed that "the superiority of open markets ... lies in the fact that the optimum outcome cannot be predicted", an argument that is similar to Friedrich Hayek's famous paper The Use of Knowledge in Society. Under Carter's government, many pieces of deregulatory passed, such as the the National Gas Policy Act, the Regulatory Flexibility Act, the Depository Institutions Deregulation and Monetary Control Act, and, more famously, the Airline Deregulation Act. There were many nominal and real successes of globalist free-market capitalism, with overall economic growth in US and many other countries as well.
Prominent neoliberals like Robert Rubin acknowledge neoliberalism's issue with creating income inequality within developed countries. 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.
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, even though almost every economist on the left and on the right agree that protectionism has a negative effect on welfare and on the economy as a whole.
Many, if not most, modern American politicians have been criticized as neoliberal by anti-neoliberals, including both prominent Republicans and Democrats.
Despite neoliberalism being a common ideology in Republican Party circles, prominent elected Republicans such as Dick Cheney and Donald Trump have vocally eschewed large portions of neoliberalism. Both vocally advocated against monetarism, rejected the idea that America can default on its debt, and spoke of little concern for "balanced budgets". While some have characterized Trump as neoliberal, most journalists seem to portray Trump as an anti-neoliberal. One reason for this is Trump's repeated attacks on international free trade. On the other hand, Trump was seen by many Republican neoliberals as an inspirational example of Hayek's "independent", ie a beneficiary of inherited wealth whose lack of concern for conventional morality could steer America into new paths.
Modern Democratic figureheads such as Bill Clinton, Barack Obama, Joe Biden, and Hillary Clinton have all been criticized as neoliberal due to their support for free trade agreements, their promotion of a selfish technocracy, and their interest in preserving private enterprise in essential needs like health insurance and housing.
Recent elected Democratic presidents like Obama and Biden have made quite a few speeches about the need to balance America's budgets. Biden has also explicitly said American prosperity should only belong to those who make enough individual, selfish effort to become educated.
Other modern, domestic neoliberals in the United States include Michael Kinsley and Michael Bloomberg.
Self-described neoliberal organizations
The right-wing-libertarian Adam Smith Institute has branded itself as neoliberal, previously describing themselves as "Libertarian". It defines neoliberalism partly as people who believe that mainstream politics/society/academia etc is actually the best it has ever been.
The Neoliberal Podcast is a podcast run by self-described "moderate democrats" who oppose what they call the Bernie/AOC wing of the Democratic Party, who they fear have an increasingly outsized influence in Democratic Party politics. Guests of their podcast include Vox writers, members of Clinton's political entourage, Washington DC policy wonks (for example, members of the "Progressive" Policy Institute), and Democratic Congressman.
The Neoliberal Project is a neoliberal political advocacy group which holds local chapter meetings.
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. Both neorealists and neoliberalists in IR believe that individual states are egoists which seek to advance self-interests primarily.
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 neoclassical supply-side economics. (The main thing tying both domestic neoliberalism and international neoliberalism is the heavy reliance on axiomatic economics.) Neoliberals today believe that by tying states together in institutions, it can decrease the signal noise that prevents communication between them and 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. 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 history, politics, economics, and political economy. Realists often claim that because neoliberals ignore power, they are fooling themselves as to what usually causes war and struggle. They do, however, acknowledge that neoliberal claims and predictions can be seen to have come true in some cases. Constructivists claim that neoliberals are ignoring the structure behind the norms they espouse, pointing to China as an example of a country that can follow the trade advice of the neoliberals without following their economic or political advice by privatizing its SOEs or democratizing.
Social inequality and decreased community cohesion
Critics of neoliberalism typically claim that inequality increased around the globe since Jimmy Carter, Margaret Thatcher, and Ronald Reagan ushered an era of global privatization and deregulation. They argue that capitalism does not in fact increase the economic prospects of the (very) poorest in the world, that hyper-individualism is destroying our social fabric, and that business deregulation creates economic inequality. Critics of economic inequality argue it causes social atomization through a wide living disparity between individual people, families, neighbors, and neighborhoods within a locality. However, the period between 1988 and 2008 might have witnessed the first decline in global inequality between world citizens since the Industrial Revolution, with mean incomes between countries converging. However, inequality within countries has also been rising.
Basic resource insecurity and inaccessibility
Neoliberalism is also criticized as leaving the price of basic resources (housing, healthcare, etc) to monopolists and/or the market. Opponents of neoliberalism argue that the "free capitalist market" has no interest in guaranteeing basic human needs, and instead will only offer such goods/services at extortionate costs to buyers. Despite successes of neoliberalism, with overall wealth increasing in many segments of society, basic resource insecurity (outside processed food) in the USA is high. And the percentage of grown adults who are geographically independent of their immediate families has been decreasing since the 1980s in the USA, with the exception of a brief reversal of course during the private debt mania of the dot-com boom.
Adequate healthcare insecurity and inaccessibility
The US healthcare industry was heavily privatized in the 1980s under the Ronald Reagan administration.
The Reagan administration was not oblivious to the negatives of privatization. They once notably tried to offset some of the social insecurities of lack of healthcare access by forcing emergency rooms in the USA to accept patients priced out from the healthcare market. Millions of Americans who do not know about Medicaid, who have health problems (or entire body parts) not covered by modern Medicaid, or who are experiencing the churning from Obamacare, (a set of policies also criticized as neoliberal) now seek healthcare primarily through emergency room visits or charity setups.
Today's adult generations in the USA, Generation X and millennials (the first generations to experience their teens and young adulthood during a neoliberal era), are projected to experience more years of ill health than the prior "baby boomer" generation. The current young adult and middle-aged adult generations in the US also projects they will not live as long as the current adult senior generation in the US.
Capitalist globalism and slavery of third world peoples
Neoliberalism in IR is often inextricably linked to neoliberalism in economics. A central tenant of economic neoliberalism is that global cooperation and expansion of capitalist market economies will unleash a river of prosperity to third world countries and first world countries alike to due to increased market efficiency. Critics of neoliberal globalization say the utopian sounding marketing of globalization is a cover for something else — namely, providing further practical opportunity for wealthy interests around the globe to enter and enslave poor countries to produce raw materials for them. Critics point to increases in slavery found when Africans provided raw materials to Europe via the Colombian exchange, for example.
While neoliberals say capitalist globalization increases the living standards of developing countries, critics claim this does not apply to the the most extremely poor countries, who they point out lose economic growth from capitalist globalization. Empirical evidence shows, however, that poor countries tend to catch up with rich countries if the poor countries have high human capital per person (in relation to their level of per capita GDP), but not otherwise, and developing countries are set to account for nearly 60% of world GDP by 2030, with trade being one of the main factors behind this growth. However, as stated above, inequality within countries has also risen just as inequality between countries has declined.
Vocal, individual critics
Prominent critics of neoliberalism include the linguist Noam Chomsky (who often focuses on neoliberalism's imposition on poorer countries by the IMF and others in the form of the "Washington Consensus"), the philosopher Slavoj Žižek, the environmentalist George Monbiot, and the left-wing commentator Paul Mason. More modern critics of neoliberalism include the Modern Monetary Theory school of economics, which includes Bernie Sanders' former economic advisor Stephanie Kelton, and Glen Weyl, a former Ayn Rand fan who seeks to take the best neoliberal ideas and discard the worst ones, and to combine ideas from the left and right in radical new ways.
Other vocal critics of neoliberalism include:
- Economist Joseph Stiglitz
- Author David Harvey
- Author Naomi Klein
- Early Michel Foucault (before becoming an advocate of neoliberalism)
- Professor Jane Kelsey
- Doctor and politician Jill Stein
- Politician Jeremy Corbyn
- Historian Philip Mirowski
- Mexican president Andrés Manuel López Obrador
- Journalist and author David Graeber
- Sociologist Pierre Bourdieu
- George Monbiot, Neoliberalism – the ideology at the root of all our problems. The Guardian, Apr. 15, 2016
- In particular, the attempts in Russia to introduce this kind of shock therapy, without corresponding cleanup 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. Heckofajob, guys!
- In fact, Friedman's Lexus and the Olive Tree is a good summation of neoliberal thought, if a bit overly simplistic.
- Navarro, Vicente. “NEOLIBERALISM AS A CLASS IDEOLOGY; OR, THE POLITICAL CAUSES OF THE GROWTH OF INEQUALITIES.” International Journal of Health Services, vol. 37, no. 1, 2007, pp. 47–62. JSTOR, http://www.jstor.org/stable/45138405. Accessed 20 Jun. 2022.
- George Monbiot, Neoliberalism – the ideology at the root of all our problems, The Guardian, Apr. 15, 2016.
- "Chapter 1: Overview/Background" (in en). 2015-06-25.
- Barro, Robert J. (1996-08). Determinants of Economic Growth: A Cross-Country Empirical Study.
- "Fast-Track Authority".
- Mankiw, N. Gregory (24 April 2015). "Economists Actually Agree on This: The Wisdom of Free Trade". The New York Times. Retrieved 19 May 2022. "Economists are famous for disagreeing with one another.... But economists reach near unanimity on some topics, including international trade."
- Keohane & Martin: 1995: 39
- Branko, Milanovic, (2012-11) (in en-US). Global Income Inequality by the Numbers : In History and Now.
- "People in Economics: Branko Milanovic – IMF Finance & Development Magazine | March 2019" (in en).
- Inequality: bridging the divide - UN
- Barro, Robert J. (1991). "Economic Growth in a Cross Section of Countries". The Quarterly Journal of Economics 106 (2): 407–443. doi:10.2307/2937943. ISSN 0033-5533.
- "Economy : Developing countries set to account for nearly 60% of world GDP by 2030, according to new estimates - OECD".