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Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with
free-market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
after it fell into decline following the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...
. A prominent factor in the rise of
conservative Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
and
libertarian Libertarianism (from french: libertaire, "libertarian"; from la, libertas, "freedom") is a political philosophy that upholds liberty as a core value. Libertarians seek to maximize autonomy and political freedom, and minimize the state's en ...
organizations,
political parties A political party is an organization that coordinates candidates to compete in a particular country's elections. It is common for the members of a party to hold similar ideas about politics, and parties may promote specific political ideology ...
, and
think tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-govern ...
s, and predominantly advocated by them, it is generally associated with policies of
economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical liber ...
, including
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
,
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
,
globalization Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...
,
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
,
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
,
austerity Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
, and reductions in
government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual ...
in order to increase the role of the
private sector The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The ...
in the
economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
and
society A society is a group of individuals involved in persistent social interaction, or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations. Soc ...
. The defining features of neoliberalism in both thought and practice have been the subject of substantial scholarly debate. As an
economic philosophy An economic ideology is a set of views forming the basis of an ideology on how the economy should run. It differentiates itself from economic theory in being normative rather than just explanatory in its approach, whereas the aim of economic theo ...
, neoliberalism emerged among European liberal scholars in the 1930s as they attempted to revive and renew central ideas from
classical liberalism Classical liberalism is a political tradition and a branch of liberalism that advocates free market and laissez-faire economics; civil liberties under the rule of law with especial emphasis on individual autonomy, limited government, e ...
as they saw these ideas diminish in popularity, overtaken by a desire to control markets, following the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
and manifested in policies designed with the intention to counter the volatility of free markets. One impetus for the formulation of policies to mitigate free-market volatility was a desire to avoid repeating the economic failures of the early 1930s, failures sometimes attributed principally to the
economic policy The economy of governments covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the labour market, national ownership, and many other areas of government interventions into the ec ...
of classical liberalism. In policymaking, neoliberalism often refers to what was part of a
paradigm shift A paradigm shift, a concept brought into the common lexicon by the American physicist and philosopher Thomas Kuhn, is a fundamental change in the basic concepts and experimental practices of a scientific discipline. Even though Kuhn restricted ...
that followed the failure of the Keynesian consensus in economics to address the
stagflation In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actio ...
of the 1970s. The collapse of the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...
and the end of the
Cold War The Cold War is a term commonly used to refer to a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term '' cold war'' is used because t ...
also made possible the triumph of neoliberalism in the United States and around the world. The term has multiple, competing definitions, and a pejorative valence. English speakers have used the term since the start of the 20th century with different meanings, but it became more prevalent in the 1960s, 1970s and 1980s, used by scholars in a wide variety of
social science Social science is one of the branches of science, devoted to the study of societies and the relationships among individuals within those societies. The term was formerly used to refer to the field of sociology, the original "science of s ...
s as well as by critics; "Friedman and Hayek are identified as the original thinkers and Thatcher and Reagan as the archetypal politicians of Western neoliberalism. Neoliberalism here has a pejorative connotation". to describe the transformation of society in recent decades due to market-based reforms. The term is rarely used by proponents of free-market policies. Some scholars reject the idea that neoliberalism is a monolithic ideology and have described the term as meaning different things to different people as neoliberalism has "mutated" into multiple, geopolitically distinct hybrids as it travelled around the world. Neoliberalism shares many attributes with other concepts that have contested meanings, including
representative democracy Representative democracy, also known as indirect democracy, is a type of democracy where elected people represent a group of people, in contrast to direct democracy. Nearly all modern Western-style democracies function as some type of represe ...
. When the term entered into common use in the 1980s in connection with
Augusto Pinochet Augusto José Ramón Pinochet Ugarte (, , , ; 25 November 1915 – 10 December 2006) was a Chilean general who ruled Chile from 1973 to 1990, first as the leader of the Military Junta of Chile from 1973 to 1981, being declared President of ...
's economic reforms in
Chile Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the eas ...
, it quickly took on negative connotations and was employed principally by critics of market reform and
laissez-faire capitalism ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. ...
. Scholars tended to associate it with the theories of
Mont Pelerin Society The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders.Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the E ...
economists
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
,
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
,
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
and
James M. Buchanan James McGill Buchanan Jr. (; October 3, 1919 – January 9, 2013) was an American economist known for his work on public choice theory originally outlined in his most famous work co-authored with Gordon Tullock in 1962, ''The Calculus of Consen ...
, along with politicians and policy-makers such as
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
,
Ronald Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
and
Alan Greenspan Alan Greenspan (born March 6, 1926) is an American economist who served as the 13th chairman of the Federal Reserve from 1987 to 2006. He works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. ...
. 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 Political economy is the study of how economic systems (e.g. markets and national economies) and political systems (e.g. law, institutions, government) are linked. Widely studied phenomena within the discipline are systems such as labour ...
. By 1994, with the passage of
NAFTA The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
and with the
Zapatistas Zapatista(s) may refer to: * Liberation Army of the South, formed 1910s, a Mexican insurgent group involved in the Mexican Revolution * Zapatista Army of National Liberation (EZLN), formed 1983, a Mexican indigenous armed revolutionary group based ...
' reaction to this development in
Chiapas Chiapas (; Tzotzil and Tzeltal: ''Chyapas'' ), officially the Free and Sovereign State of Chiapas ( es, Estado Libre y Soberano de Chiapas), is one of the states that make up the 32 federal entities of Mexico. It comprises 124 municipalities ...
, the term entered global circulation. Scholarship on the phenomenon of neoliberalism has grown over the last few decades.


Terminology


Origins

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 Maffeo Pantaleoni (; Frascati, 2 July 1857Milan, 29 October 1924) was an Italian economist. At first he was a notable proponent of neoclassical economics. Later in his life, before and during World War I, he became an ardent nationalist and synd ...
, with the term previously existing in French, and the term was later used by others including the classical liberal economist
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
in his 1951 essay "Neo-Liberalism and its Prospects". In 1938 at the
Colloque Walter Lippmann The Colloque Walter Lippmann ( English: Walter Lippmann Colloquium), was a conference of intellectuals organized in Paris in August 1938 by French philosopher Louis Rougier. After interest in classical liberalism had declined in the 1920s and 19 ...
, the term ''neoliberalism'' was proposed, among other terms, and ultimately chosen to be used to describe a certain set of economic beliefs. 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". According to attendees
Louis Rougier Louis Auguste Paul Rougier (; 10 April 1889 – 14 October 1982) was a French philosopher. Rougier made many important contributions to epistemology, philosophy of science, political philosophy and the history of Christianity. Early life Rougie ...
and
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. 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 Representative democracy, also known as indirect democracy, is a type of democracy where elected people represent a group of people, in contrast to direct democracy. Nearly all modern Western-style democracies function as some type of represe ...
acting on the behalf of the majority. To be ''neoliberal'' meant advocating a modern economic policy with
state intervention Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare o ...
. Neoliberal state interventionism brought a clash with the opposing ''laissez-faire'' camp of classical liberals, like
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
. 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 Wilhelm Röpke (October 10, 1899 – February 12, 1966) was a German economist and social critic, best known as one of the spiritual fathers of the social market economy. A Professor of Economics, first in Jena, then in Graz, Marburg, Is ...
,
Alexander Rüstow Alexander Rüstow (8 April 1885 – 30 June 1963) was a German sociologist and economist. In 1938 he originated the term neoliberalism at the Colloque Walter Lippmann. He was one of the fathers of the " Social Market Economy" that shaped the eco ...
and
Alfred Müller-Armack Alfred Müller-Armack (28 June 1901 – 16 March 1978) was a German economist and politician. He coined the term " social market economy" in 1946. Müller-Armack was professor of economics at University of Münster and University of Cologne. H ...
. 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. 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 The Chicago Boys were a group of Chilean economists prominent around the 1970s and 1980s, the majority of whom were educated at the Department of Economics of the University of Chicago under Milton Friedman and Arnold Harberger, or at its affiliat ...
). Once this new meaning was established among Spanish-speaking scholars, it diffused into the English-language study of political economy. 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 A pejorative or slur is a word or grammatical form expressing a negative or a disrespectful connotation, a low opinion, or a lack of respect toward someone or something. It is also used to express criticism, hostility, or disregard. Sometimes, a ...
and/or to imply a ''laissez-faire''
market fundamentalism Market fundamentalism, also known as free-market fundamentalism, is a term applied to a strong belief in the ability of unregulated ''laissez-faire'' or free-market capitalist policies to solve most economic and social problems. It is often used ...
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 science Social science is one of the branches of science, devoted to the study of societies and the relationships among individuals within those societies. The term was formerly used to refer to the field of sociology, the original "science of s ...
s, especially as the number of different kinds of market economies have proliferated in recent years. Unrelated to the economic philosophy described in this article, the term "neoliberalism" is also used to describe a center-left political movement from
modern American liberalism Modern liberalism in the United States, often simply referred to in the United States as liberalism, is a form of social liberalism found in American politics. It combines ideas of civil liberty and equality with support for social justice and ...
in the 1970s. According to political commentator David Brooks, prominent neoliberal politicians included
Al Gore Albert Arnold Gore Jr. (born March 31, 1948) is an American politician, businessman, and environmentalist who served as the 45th vice president of the United States from 1993 to 2001 under President Bill Clinton. Gore was the Democratic ...
and
Bill Clinton William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and again ...
of the Democratic Party of the United States. The neoliberals coalesced around two magazines, ''
The New Republic ''The New Republic'' is an American magazine of commentary on politics, contemporary culture, and the arts. Founded in 1914 by several leaders of the progressive movement, it attempted to find a balance between "a liberalism centered in hu ...
'' and the ''
Washington Monthly ''Washington Monthly'' is a bimonthly, nonprofit magazine of United States politics and government that is based in Washington, D.C. The magazine is known for its annual ranking of American colleges and universities, which serves as an alternat ...
'', and often supported
Third Way The Third Way is a centrist political position that attempts to reconcile right-wing and left-wing politics by advocating a varying synthesis of centre-right economic policies with centre-left social policies. The Third Way was born from ...
policies. The "godfather" of this version of neoliberalism was the journalist
Charles Peters Charles Peters (born December 22, 1926) is an American journalist, editor, and author. He was the founder and editor-in-chief of the ''Washington Monthly'' magazine and the author of ''We Do Our Part: Toward A Fairer and More Equal America'' ( R ...
, who in 1983 published "A Neoliberal's Manifesto".


Current usage

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 policy makers, think-tank experts, and industrialists to condemn social-democratic reforms and unapologetically implement free-market policies"; economic historian Phillip W. Magness notes its reemergence in academic literature in the mid-1980s, after French philosopher
Michel Foucault Paul-Michel Foucault (, ; ; 15 October 192625 June 1984) was a French philosopher, historian of ideas, writer, political activist, and literary critic. Foucault's theories primarily address the relationship between power and knowledge, and ho ...
brought attention to it. ''Neoliberalism'' is contemporarily used to refer to market-oriented reform policies such as "eliminating
price control Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...
s,
deregulating Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
capital markets A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers ...
, lowering
trade barriers Trade barriers are government-induced restrictions on international trade. According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work ...
" and reducing, especially through
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
and
austerity Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
, state influence in the economy. It is also commonly associated with the economic policies introduced by
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
in the United Kingdom and
Ronald Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
in the United States. Some scholars note it has a number of distinct usages in different spheres: * As a development model, it refers to the rejection of
structuralist economics Structuralist economics is an approach to economics that emphasizes the importance of taking into account structural features (typically) when undertaking economic analysis. The approach originated with the work of the Economic Commission for Lati ...
in favor of the
Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Mone ...
. * As an
ideology An ideology is a set of beliefs or philosophies attributed to a person or group of persons, especially those held for reasons that are not purely epistemic, in which "practical elements are as prominent as theoretical ones." Formerly applied pri ...
, it denotes a conception of freedom as an overarching social value associated with reducing state functions to those of a minimal state. * As a
public policy Public policy is an institutionalized proposal or a decided set of elements like laws, regulations, guidelines, and actions to solve or address relevant and real-world problems, guided by a conception and often implemented by programs. Public ...
, it involves the privatization of public economic sectors or services, the deregulation of private corporations, sharp decrease of
government budget deficit The government budget balance, also alternatively referred to as general government balance, public budget balance, or public fiscal balance, is the overall difference between government revenues and spending. A positive balance is called a ''g ...
s and reduction of spending on
public works Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
. There is, however, debate over the meaning of the term. Sociologists
Fred L. Block Fred L. Block (born June 28, 1947) is an American sociologist, and Research Professor of Sociology at UC-Davis. Block is widely regarded as one of the world’s leading economic and political sociologists. His interests are wide ranging. He has ...
and
Margaret Somers Margaret R. Somers is an American sociologist and Professor of Sociology and History at the University of Michigan She is the recipient of the inaugural Lewis A. Coser Award for Innovation and Theoretical Agenda-Setting in Sociology, Somers's wor ...
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 The New Deal was a series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1939. Major federal programs agencies included the Civilian Con ...
programs and policies since the 1980s: neoliberalism, ''
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
'' or "free market ideology". 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 Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form ...
.Susan Braedley and Meg Luxton,
Neoliberalism and Everyday Life
'' ( McGill-Queen's University Press, 2010),
p. 3
/ref> In contrast, Frances Fox Piven sees neoliberalism as essentially hyper-capitalism. However, 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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
. Chomsky, Noam and McChesney, Robert W. (Introduction). '' Profit over People: Neoliberalism and Global Order.''
Seven Stories Press Seven Stories Press is an independent American publishing company. Based in New York City, the company was founded by Dan Simon in 1995, after establishing Four Walls Eight Windows in 1984 as an imprint at Writers and Readers, and then incorpo ...
, 2011.

/ref>
Lester Spence Lester K. Spence (born June 5, 1969), Professor of Political Science and Africana studies at Johns Hopkins University is known for his academic critiques of neoliberalism and his media commentary and research on race, urban politics, and police v ...
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". According to
Philip Mirowski Philip Mirowski (born 21 August 1951 in Jackson, Michigan) is a historian and philosopher of economic thought at the University of Notre Dame. He received a PhD in Economics from the University of Michigan in 1979. Career In his 1989 book ''More ...
, 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 Adam Kotsko (born 1980) is an American theologian, religious scholar, culture critic, and translator, working in the field of political theology. He served as an Assistant Professor of Humanities at Shimer College in Chicago, which was absorbed in ...
describes neoliberalism as
political theology Political theology is a term which has been used in discussion of the ways in which theological concepts or ways of thinking relate to politics. The term ''political theology'' is often used to denote religious thought about political principled qu ...
, as it goes beyond simply being a formula for 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." 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. Anthropologist
Jason Hickel Jason Edward Hickel (born 1982) is an economic anthropologist whose research focuses on ecological economics, global inequality, imperialism and political economy. He is known for his books ''The Divide: A Brief Guide to Global Inequality and ...
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'.
Naomi Klein Naomi A. Klein (born May 8, 1970) is a Canadian author, social activist, and filmmaker known for her political analyses, support of ecofeminism, organized labour, left-wing politics and criticism of corporate globalization, fascism, ecofascism ...
states that the three policy pillars of neoliberalism are "
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of the public sphere,
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
of the corporate sector, and the lowering of
income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. Fo ...
and
corporate taxes A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed ...
, paid for with cuts to public spending". Neoliberalism is also, according to some scholars, commonly used as a
pejorative A pejorative or slur is a word or grammatical form expressing a negative or a disrespectful connotation, a low opinion, or a lack of respect toward someone or something. It is also used to express criticism, hostility, or disregard. Sometimes, a ...
by critics, outpacing similar terms such as
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
,
neoconservatism Neoconservatism is a political movement that began in the United States during the 1960s among liberal hawks who became disenchanted with the increasingly pacifist foreign policy of the Democratic Party and with the growing New Left and co ...
, the
Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Mone ...
and "market reform" in much scholarly writing. ''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". Its use in this manner has been criticized by those who advocate for policies characterized as neoliberal.David M Kotz,
The Rise and Fall of Neoliberal Capitalism
'' (
Harvard University Press Harvard University Press (HUP) is a publishing house established on January 13, 1913, as a division of Harvard University, and focused on academic publishing. It is a member of the Association of American University Presses. After the retir ...
, 2015),
The ''Handbook'', for example, further argues that "such lack of specificity or the termreduces 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". 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". On the other hand, many scholars believe it retains a meaningful definition. Writing in ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers '' The Observer'' and '' The Guardian Weekly'', ''The Guardian'' is part of the ...
'', Stephen Metcalf posits that the publication of the 2016
IMF The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glob ...
paper "Neoliberalism: Oversold?" helps "put to rest the idea that the word is nothing more than a political slur, or a term without any analytic power". Gary Gerstle argues that neoliberalism is a legitimate term, and describes it as "a creed that calls explicitly for unleashing capitalism's power." 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.


Early history


Walter Lippmann Colloquium

The
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
in the 1930s, which severely decreased
economic output Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country", whether consumed or used for further production. The concept of national output is essential in the field of macroecono ...
throughout the world and produced high
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refe ...
and widespread
poverty Poverty is the state of having few material possessions or little income. Poverty can have diverse
, was widely regarded as a failure of
economic liberalism Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic libera ...
. To renew the damaged ideology, a group of 25 liberal intellectuals, including a number of prominent academics and journalists like
Walter Lippmann Walter Lippmann (September 23, 1889 – December 14, 1974) was an American writer, reporter and political commentator. With a career spanning 60 years, he is famous for being among the first to introduce the concept of Cold War, coining the te ...
,
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
,
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
,
Wilhelm Röpke Wilhelm Röpke (October 10, 1899 – February 12, 1966) was a German economist and social critic, best known as one of the spiritual fathers of the social market economy. A Professor of Economics, first in Jena, then in Graz, Marburg, Is ...
,
Alexander Rüstow Alexander Rüstow (8 April 1885 – 30 June 1963) was a German sociologist and economist. In 1938 he originated the term neoliberalism at the Colloque Walter Lippmann. He was one of the fathers of the " Social Market Economy" that shaped the eco ...
, and
Louis Rougier Louis Auguste Paul Rougier (; 10 April 1889 – 14 October 1982) was a French philosopher. Rougier made many important contributions to epistemology, philosophy of science, political philosophy and the history of Christianity. Early life Rougie ...
, organized the Walter Lippmann Colloquium, named in honor of Lippman to celebrate the publication of the French translation of Lippmann's pro- market book ''An Inquiry into the Principles of the Good Society''. Meeting in Paris in August 1938, they called for a new liberal project, with "neoliberalism" one name floated for the fledgling movement. Oliver Marc Hartwich
Neoliberalism: The Genesis of a Political Swearword
Centre for Independent Studies, 2009,
They further agreed to develop the Colloquium into a permanent think tank based in Paris called the Centre International d'Études pour la Rénovation du Libéralisme. While most agreed that the ''
status quo is a Latin phrase meaning the existing state of affairs, particularly with regard to social, political, religious or military issues. In the sociological sense, the ''status quo'' refers to the current state of social structure and/or values. ...
'' liberalism promoting ''
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
'' economics had failed, deep disagreements arose around the proper role of the
state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, United States * ''Our S ...
. A group of "true (third way) neoliberals" centered around Rüstow and Lippmann advocated for strong state supervision of the economy while a group of old school liberals centered around Mises and Hayek continued to insist that the only legitimate role for the state was to abolish barriers to market entry. Rüstow wrote that Hayek and Mises were relics of the liberalism that caused the Great Depression while Mises denounced the other faction, complaining that the
ordoliberalism Ordoliberalism is the German variant of economic liberalism that emphasizes the need for government to ensure that the free market produces results close to its theoretical potential but does not advocate for a welfare state. Ordoliberal ideals ...
they advocated really meant "ordo-interventionism". Divided in opinion and short on funding, the Colloquium was mostly ineffectual; related attempts to further neoliberal ideas, such as the effort by Colloque-attendee
Wilhelm Röpke Wilhelm Röpke (October 10, 1899 – February 12, 1966) was a German economist and social critic, best known as one of the spiritual fathers of the social market economy. A Professor of Economics, first in Jena, then in Graz, Marburg, Is ...
to establish a journal of neoliberal ideas, mostly floundered. Fatefully, the efforts of the Colloquium would be overwhelmed by the outbreak of
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
and were largely forgotten. However, the Colloquium did serve as the first meeting of the nascent "neoliberal" movement and would serve as the precursor to the
Mont Pelerin Society The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders.Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the E ...
, a far more successful effort created after the war by many of those who had been present at the Colloquium.


Mont Pelerin Society

Neoliberalism began accelerating in importance with the establishment of the
Mont Pelerin Society The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders.Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the E ...
in 1947, whose founding members included
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
,
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
,
Karl Popper Sir Karl Raimund Popper (28 July 1902 – 17 September 1994) was an Austrian-British philosopher, academic and social commentator. One of the 20th century's most influential philosophers of science, Popper is known for his rejection of the ...
,
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist. He was the 1982 laureate in Nobel Memorial Prize in Economic Sciences and is considered a key leader of the Chicago school of economics. Early life and e ...
and
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
. Meeting annually, it became a "kind of international 'who's who' of the classical liberal and neo-liberal intellectuals." While the first conference in 1947 was almost half American, the Europeans dominated by 1951. Europe would remain the epicenter of the community as Europeans dominated the leadership roles. Established during a time when
central planning A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, pa ...
was in the ascendancy worldwide and there were few avenues for neoliberals to influence policymakers, the society became a "rallying point" for neoliberals, as Milton Friedman phrased it, bringing together isolated advocates of liberalism and
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
. They were united in their belief that individual freedom in the developed world was under threat from collectivist trends, which they outlined in their statement of aims:
The central values of civilization are in danger. Over large stretches of the Earth's surface the essential conditions of human dignity and freedom have already disappeared. In others, they are under constant menace from the development of current tendencies of policy. The position of the individual and the voluntary group are progressively undermined by extensions of arbitrary power. Even that most precious possession of Western Man, freedom of thought and expression, is threatened by the spread of creeds which, claiming the privilege of tolerance when in the position of a minority, seek only to establish a position of power in which they can suppress and obliterate all views but their own...The group holds that these developments have been fostered by the growth of a view of history which denies all absolute moral standards and by the growth of theories which question the desirability of the rule of law. It holds further that they have been fostered by a decline of belief in private property and the competitive market... his group'sobject is solely, by facilitating the exchange of views among minds inspired by certain ideals and broad conceptions held in common, to contribute to the preservation and improvement of the free society.
The society set out to develop a neoliberal alternative to, on the one hand, the
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
economic consensus that had collapsed with the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
and, on the other,
New Deal The New Deal was a series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1939. Major federal programs agencies included the Civilian Con ...
liberalism and British
social democracy Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote s ...
, collectivist trends which they believed posed a threat to individual freedom. They believed that classical liberalism had failed because of crippling conceptual flaws which could only be diagnosed and rectified by withdrawing into an intensive discussion group of similarly minded intellectuals; however, they were determined that the liberal focus on
individualism Individualism is the moral stance, political philosophy, ideology and social outlook that emphasizes the intrinsic worth of the individual. Individualists promote the exercise of one's goals and desires and to value independence and self-reli ...
and
economic freedom Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from the l ...
must not be abandoned to collectivism.


Post–World War II neoliberal currents

For decades after the formation of the
Mont Pelerin Society The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders.Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the E ...
, the ideas of the society would remain largely on the fringes of political policy, confined to a number of think-tanks and universities and achieving only measured success with the ordoliberals in
Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...
, who maintained the need for strong state influence in the economy. It would not be until a succession of economic downturns and crises in the 1970s that neoliberal policy proposals would be widely implemented. By this time, however, neoliberal thought had evolved. The early neoliberal ideas of the
Mont Pelerin Society The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders.Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the E ...
had sought to chart a middle way between the trend of increasing government intervention implemented after the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
and the
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
economics many in the society believed had produced the Great Depression.
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
, for instance, wrote in his early essay "Neo-liberalism and Its Prospects" that "Neo-liberalism would accept the nineteenth-century liberal emphasis on the fundamental importance of the individual, but it would substitute for the nineteenth century goal of ''
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
'' as a means to this end, the goal of the competitive order", which requires limited state intervention to "police the system, establish conditions favorable to competition and prevent monopoly, provide a stable monetary framework, and relieve acute misery and distress". But by the 1970s, neoliberal thought—including Friedman's—focused almost exclusively on
market liberalization Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econo ...
and was adamant in its opposition to nearly all forms of state interference in the economy. One of the earliest and most influential turns to neoliberal reform occurred in
Chile Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the eas ...
after an economic crisis in the early 1970s. After several years of
socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the ...
economic policies under president
Salvador Allende Salvador Guillermo Allende Gossens (, , ; 26 June 1908 – 11 September 1973) was a Chilean physician and socialist politician who served as the 28th president of Chile from 3 November 1970 until his death on 11 September 1973. He was the fir ...
, a 1973 ''coup d'état'', which established a
military junta A military junta () is a government led by a committee of military leaders. The term ''junta'' means "meeting" or "committee" and originated in the national and local junta organized by the Spanish resistance to Napoleon's invasion of Spain in ...
under dictator
Augusto Pinochet Augusto José Ramón Pinochet Ugarte (, , , ; 25 November 1915 – 10 December 2006) was a Chilean general who ruled Chile from 1973 to 1990, first as the leader of the Military Junta of Chile from 1973 to 1981, being declared President of ...
, led to the implementation of a number of sweeping neoliberal economic reforms that had been proposed by the
Chicago Boys The Chicago Boys were a group of Chilean economists prominent around the 1970s and 1980s, the majority of whom were educated at the Department of Economics of the University of Chicago under Milton Friedman and Arnold Harberger, or at its affiliat ...
, a group of Chilean economists educated under
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
. This "neoliberal project" served as "the first experiment with neoliberal state formation" and provided an example for neoliberal reforms elsewhere. Beginning in the early 1980s, the
Reagan administration Ronald Reagan's tenure as the 40th president of the United States began with his first inauguration on January 20, 1981, and ended on January 20, 1989. Reagan, a Republican from California, took office following a landslide victory over ...
and Thatcher government implemented a series of neoliberal economic reforms to counter the chronic
stagflation In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actio ...
the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
and
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...
had each experienced throughout the 1970s. Neoliberal policies continued to dominate American and British politics until the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
. Following British and American reform, neoliberal policies were exported abroad, with countries in
Latin America Latin America or * french: Amérique Latine, link=no * ht, Amerik Latin, link=no * pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived ...
, the
Asia-Pacific Asia-Pacific (APAC) is the part of the world near the western Pacific Ocean. The Asia-Pacific region varies in area depending on context, but it generally includes East Asia, Russian Far East, South Asia, Southeast Asia, Australia and Paci ...
, the
Middle East The Middle East ( ar, الشرق الأوسط, ISO 233: ) is a geopolitical region commonly encompassing Arabian Peninsula, Arabia (including the Arabian Peninsula and Bahrain), Anatolia, Asia Minor (Asian part of Turkey except Hatay Pro ...
, and even
communist Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society, ...
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...
implementing significant neoliberal reform. Additionally, the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
and
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
encouraged neoliberal reforms in many
developing countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
by placing reform requirements on loans, in a process known as
structural adjustment Structural adjustment programs (SAPs) consist of loans (structural adjustment loans; SALs) provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their purpose is to adjust the co ...
.


Germany

Neoliberal ideas were first implemented in
West Germany West Germany is the colloquial term used to indicate the Federal Republic of Germany (FRG; german: Bundesrepublik Deutschland , BRD) between its formation on 23 May 1949 and the German reunification through the accession of East Germany on 3 ...
. The economists around
Ludwig Erhard Ludwig Wilhelm Erhard (; 4 February 1897 – 5 May 1977) was a German politician affiliated with the Christian Democratic Union (CDU), and chancellor of West Germany from 1963 until 1966. He is known for leading the West German postwar economic ...
drew on the theories they had developed in the 1930s and 1940s and contributed to West Germany's reconstruction after the Second World War. Erhard was a member of the Mont Pelerin Society and in constant contact with other neoliberals. He pointed out that he is commonly classified as neoliberal and that he accepted this classification. The ordoliberal
Freiburg School __notoc__ The Freiburg school (german: Freiburger Schule) is a school of History of economic thought, economic thought founded in the 1930s at the University of Freiburg. It builds somewhat on the earlier historical school of economics but stresse ...
was more pragmatic. The German neoliberals accepted the classical liberal notion that competition drives economic prosperity, but they argued that a laissez-faire state policy stifles competition, as the strong devour the weak since monopolies and cartels could pose a threat to freedom of competition. They supported the creation of a well-developed legal system and capable regulatory apparatus. While still opposed to full-scale Keynesian employment policies or an extensive
welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...
, German neoliberal theory was marked by the willingness to place
humanistic Humanism is a philosophical stance that emphasizes the individual and social potential and agency of human beings. It considers human beings the starting point for serious moral and philosophical inquiry. The meaning of the term "human ...
and social values on par with economic efficiency.
Alfred Müller-Armack Alfred Müller-Armack (28 June 1901 – 16 March 1978) was a German economist and politician. He coined the term " social market economy" in 1946. Müller-Armack was professor of economics at University of Münster and University of Cologne. H ...
coined the phrase "social market economy" to emphasize the
egalitarian Egalitarianism (), or equalitarianism, is a school of thought within political philosophy that builds from the concept of social equality, prioritizing it for all people. Egalitarian doctrines are generally characterized by the idea that all hu ...
and humanistic bent of the idea. According to Boas and Gans-Morse, Walter Eucken stated that "social security and social justice are the greatest concerns of our time". Erhard emphasized that the market was inherently social and did not need to be made so. He hoped that growing prosperity would enable the population to manage much of their social security by self-reliance and end the necessity for a widespread welfare state. By the name of ''Volkskapitalismus'', there were some efforts to foster private savings. However, although average contributions to the public old age insurance were quite small, it remained by far the most important old age income source for a majority of the German population, therefore despite liberal rhetoric the 1950s witnessed what has been called a "reluctant expansion of the welfare state". To end widespread poverty among the elderly the pension reform of 1957 brought a significant extension of the German welfare state which already had been established under
Otto von Bismarck Otto, Prince of Bismarck, Count of Bismarck-Schönhausen, Duke of Lauenburg (, ; 1 April 1815 – 30 July 1898), born Otto Eduard Leopold von Bismarck, was a conservative German statesman and diplomat. From his origins in the upper class of ...
. Rüstow, who had coined the label "neoliberalism", criticized that development tendency and pressed for a more limited welfare program. Hayek did not like the expression "social market economy", but stated in 1976 that some of his friends in Germany had succeeded in implementing the sort of social order for which he was pleading while using that phrase. However, in Hayek's view the social market economy's aiming for both a market economy and
social justice Social justice is justice in terms of the distribution of wealth, opportunities, and privileges within a society. In Western and Asian cultures, the concept of social justice has often referred to the process of ensuring that individuals ...
was a muddle of inconsistent aims. Despite his controversies with the German neoliberals at the Mont Pelerin Society,
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
stated that Erhard and Müller-Armack accomplished a great act of liberalism to restore the German economy and called this "a lesson for the US". However, according to different research Mises believed that the ordoliberals were hardly better than socialists. As an answer to Hans Hellwig's complaints about the interventionist excesses of the Erhard ministry and the ordoliberals, Mises wrote: "I have no illusions about the true character of the politics and politicians of the social market economy". According to Mises, Erhard's teacher
Franz Oppenheimer Franz Oppenheimer (March 30, 1864 – September 30, 1943) was a German Jewish sociologist and political economist, who published also in the area of the fundamental sociology of the state. Life and career After studying medicine in Freiburg and ...
"taught more or less the
New Frontier The term ''New Frontier'' was used by Democratic presidential candidate John F. Kennedy in his acceptance speech in the 1960 United States presidential election to the Democratic National Convention at the Los Angeles Memorial Coliseum as the ...
line of" President Kennedy's "Harvard consultants (
Schlesinger Schlesinger is a German surname (in part also Jewish) meaning "Silesian" from the older regional term ''Schlesinger''; someone from ''Schlesing'' (Silesia); in modern Standard German (or Hochdeutsch) a '' Schlesier'' is someone from '' Schlesien'' ...
, Galbraith, etc.)". In Germany, neoliberalism at first was synonymous with both ordoliberalism and social market economy. But over time the original term neoliberalism gradually disappeared since social market economy was a much more positive term and fit better into the ''
Wirtschaftswunder The ''Wirtschaftswunder'' (, "economic miracle"), also known as the Miracle on the Rhine, was the rapid reconstruction and development of the economies of West Germany and Austria after World War II (adopting an ordoliberalism-based social ma ...
'' (economic miracle) mentality of the 1950s and 1960s.


Latin America

In the 1980s, numerous governments in Latin America adopted neoliberal policies.


Chile

Chile was among the earliest nations to implement neoliberal reform.
Marxist Marxism is a left-wing to far-left method of socioeconomic analysis that uses a materialist interpretation of historical development, better known as historical materialism, to understand class relations and social conflict and a dialecti ...
economic geographer
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his P ...
has described the substantial neoliberal reforms in Chile beginning in the 1970s as "the first experiment with neoliberal state formation", which would provide "helpful evidence to support the subsequent turn to neoliberalism in both Britain... and the United States." Similarly,
Vincent Bevins Vincent Bevins is an American journalist and writer. From 2011 to 2016, he worked as a foreign correspondent based in Brazil for the ''Los Angeles Times'', after working previously in London for the ''Financial Times''. In 2017 he moved to Jakart ...
says that Chile under
Augusto Pinochet Augusto José Ramón Pinochet Ugarte (, , , ; 25 November 1915 – 10 December 2006) was a Chilean general who ruled Chile from 1973 to 1990, first as the leader of the Military Junta of Chile from 1973 to 1981, being declared President of ...
"became the world's first test case for 'neoliberal' economics." The turn to neoliberal policies in Chile originated with the
Chicago Boys The Chicago Boys were a group of Chilean economists prominent around the 1970s and 1980s, the majority of whom were educated at the Department of Economics of the University of Chicago under Milton Friedman and Arnold Harberger, or at its affiliat ...
, a select group of Chilean students who, beginning in 1955, were invited to the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
to pursue postgraduate studies in economics. They studied directly under
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
and his disciple,
Arnold Harberger Arnold Carl Harberger (born July 27, 1924) is an American economist. His approach to the teaching and practice of economics is to emphasize the use of analytical tools that are directly applicable to real-world issues. His influence on academic ec ...
, and were exposed to
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
. Upon their return to Chile, their neoliberal policy proposals—which centered on widespread
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
,
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
, reductions to government spending to counter high inflation, and other free-market policies—would remain largely on the fringes of Chilean economic and political thought for a number of years, as the
presidency of Salvador Allende Salvador Allende was the president of Chile from 1970 until his 1973 suicide, and head of the Popular Unity government; he was a Socialist and Marxist elected to the national presidency of a liberal democracy in Latin America.Don MabryAllend ...
(1970–1973) brought about a
socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the ...
reorientation of the economy. During the Allende presidency, Chile experienced a severe economic crisis, in which inflation peaked near 150%. Following an extended period of social unrest and political tension, as well as diplomatic, economic, and covert pressure from the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, the Chilean armed forces and national police overthrew the Allende government in a
coup d'état A coup d'état (; French for 'stroke of state'), also known as a coup or overthrow, is a seizure and removal of a government and its powers. Typically, it is an illegal seizure of power by a political faction, politician, cult, rebel group, m ...
. They established a repressive military ''junta'', known for its violent suppression of opposition, and appointed army chief Augusto Pinochet Supreme Head of the nation. His rule was later given legal legitimacy through a controversial 1980 plebiscite, which approved a new
constitution A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organisation or other type of entity and commonly determine how that entity is to be governed. When these pr ...
drafted by a government-appointed commission that ensured Pinochet would remain as President for a further eight years—with increased powers—after which he would face a re-election referendum. The Chicago Boys were given significant political influence within the
military dictatorship A military dictatorship is a dictatorship in which the military exerts complete or substantial control over political authority, and the dictator is often a high-ranked military officer. The reverse situation is to have civilian control of the ...
, and they implemented sweeping economic reform. In contrast to the extensive
nationalization Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to p ...
and centrally planned economic programs supported by Allende, the Chicago Boys implemented rapid and extensive privatization of state enterprises, deregulation, and significant reductions in trade barriers during the latter half of the 1970s. In 1978, policies that would further reduce the role of the state and infuse competition and individualism into areas such as labor relations, pensions, health and education were introduced. Additionally, the central bank raised interest rates from 49.9% to 178% to counter high inflation. These policies amounted to a
shock therapy Electroconvulsive therapy (ECT) is a psychiatric treatment where a generalized seizure (without muscular convulsions) is electrically induced to manage refractory mental disorders.Rudorfer, MV, Henry, ME, Sackeim, HA (2003)"Electroconvulsive the ...
, which rapidly transformed Chile from an economy with a protected market and strong government intervention into a liberalized, world-integrated economy, where market forces were left free to guide most of the economy's decisions. Inflation was tempered, falling from over 600% in 1974, to below 50% by 1979, to below 10% right before the economic crisis of 1982. GDP growth spiked (see chart) to 10%. However, inequality widened as wages and benefits to the working class were reduced. In 1982, Chile again experienced a severe economic recession. The cause of this is contested, however most scholars believe the
Latin American debt crisis The Latin American debt crisis ( es, Crisis de la deuda latinoamericana; pt, Crise da dívida latino-americana) was a financial crisis that originated in the early 1980s (and for some countries starting in the 1970s), often known as ''La Déca ...
—which swept nearly all of Latin America into financial crisis—was a primary cause.''Historia contemporánea de Chile III. La economía: mercados empresarios y trabajadores''. 2002.
Gabriel Salazar Gabriel Salazar Vergara (born 31 January 1936) is a Chilean historian. He is known in his country for his study of social history and interpretations of social movements, particularly the recent student protests of 2006 and 2011–12. Salazar ...
and
Julio Pinto Julio Pinto Vallejos (born 1956) is a Chilean historian. He is known in Chile for his study of social history and interpretations of social movements. In 2016 he won the Chilean National History Award. He is a member of the editorial board of LOM ...
. pp. 49–-62.
Some scholars argue the neoliberal policies of the Chicago boys heightened the crisis (for instance, percent GDP decrease was higher than in any other Latin American country) or even caused it; for instance, some scholars criticize the high interest rates of the period which—while stabilizing inflation—hampered investment and contributed to widespread bankruptcy in the banking industry. Other scholars fault governmental departures from the neoliberal agenda; for instance, the government pegged the Chilean peso to the US dollar, against the wishes of the Chicago Boys, which economists believe led to an overvalued peso. After the recession, Chilean economic growth rose quickly, eventually hovering between 5% and 10% and significantly outpacing the Latin American average (see chart). Additionally, unemployment decreased and the percent of the population below the poverty line declined from 50% in 1984 to 34% by 1989. This led
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
to call the period the "
Miracle of Chile The "Miracle of Chile" was a term used by economist Milton Friedman to describe the reorientation of the Chilean economy in the 1980s and the effects of the economic policies applied by a large group of Chilean economists who collectively came ...
", and he attributed the successes to the neoliberal policies of the Chicago boys. Some scholars, however, attribute the successes to the re-regulation of the banking industry and a number of targeted social programs designed to alleviate poverty. Others note that while the economy had stabilized and was growing by the late 1980s, inequality widened: nearly 45% of the population had fallen into poverty while the wealthiest 10% had seen their incomes rise by 83%. According to Chilean economist
Alejandro Foxley Alejandro Tomás Foxley Rioseco (born 26 May 1939 in Viña del Mar) is a Chilean economist and politician. He was the Foreign Minister of Chile from 2006 to 2009 and previously served as Minister of Finance from 1990 to 1994 and leader of the Ch ...
, when Pinochet finished his 17-year term by 1990, around 44% of Chilean families were living below the poverty line. Despite years of suppression by the Pinochet junta, in 1988 a presidential election was held, as dictated by the 1980 constitution (though not without Pinochet first holding another plebiscite in an attempt to amend the constitution). In 1990,
Patricio Aylwin Patricio Aylwin Azócar (; 26 November 1918 – 19 April 2016) was a Chilean politician from the Christian Democratic Party, lawyer, author, professor and former senator. He was the first president of Chile after dictator Augusto Pinochet, a ...
was democratically elected, bringing an end to the military dictatorship. The reasons cited for Pinochet's acceptance of democratic transition are numerous. Hayek, echoing arguments he had made years earlier in ''
The Road to Serfdom ''The Road to Serfdom'' (German: ''Der Weg zur Knechtschaft'') is a book written between 1940 and 1943 by Austrian-British economist and philosopher Friedrich Hayek. Since its publication in 1944, ''The Road to Serfdom'' has been popular among ...
,''
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
, ''
The Road to Serfdom ''The Road to Serfdom'' (German: ''Der Weg zur Knechtschaft'') is a book written between 1940 and 1943 by Austrian-British economist and philosopher Friedrich Hayek. Since its publication in 1944, ''The Road to Serfdom'' has been popular among ...
'', University of Chicago Press; 50th Anniversary edition (1944), p. 95
argued that the increased economic freedom he believed the neoliberal reforms had brought had put pressure on the dictatorship over time, resulting in a gradual increase in political freedom and, ultimately, the restoration of democracy. The Chilean scholars Javier Martínez and Alvaro Díaz, however, reject this argument, pointing to the long tradition of democracy in Chile. They assert that the defeat of the Pinochet regime and the return of democracy came primarily from large-scale mass rebellion that eventually forced party
elite In political and sociological theory, the elite (french: élite, from la, eligere, to select or to sort out) are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group. ...
s to use existing institutional mechanisms to restore democracy. In the 1990s, neoliberal economic policies broadened and deepened, including unilateral tariff reductions and the adoption of free trade agreements with a number of Latin American countries and Canada. However, the decade also brought increases in government expenditure on social programs to tackle poverty and poor quality housing. Throughout the 1990s, Chile maintained high growth, averaging 7.3% from 1990 to 1998. Eduardo Aninat, writing for the IMF journal ''Finance & Development'', called the period from 1986 to 2000 "the longest, strongest, and most stable period of growth in hile'shistory." In 1999 there was a brief recession brought about by the
Asian financial crisis The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998– ...
, with growth resuming in 2000 and remaining near 5% until the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
. In sum, the neoliberal policies of the 1980s and 1990s—initiated by a repressive authoritarian government—transformed the Chilean economy from a protected market with high
barriers to trade Trade barriers are government-induced restrictions on international trade. According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work o ...
and hefty
government intervention Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare of ...
into one of the world's most
open Open or OPEN may refer to: Music * Open (band), Australian pop/rock band * The Open (band), English indie rock band * Open (Blues Image album), ''Open'' (Blues Image album), 1969 * Open (Gotthard album), ''Open'' (Gotthard album), 1999 * Open (C ...
free-market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...
economies. Chile experienced the worst economic bust of any Latin American country during the
Latin American debt crisis The Latin American debt crisis ( es, Crisis de la deuda latinoamericana; pt, Crise da dívida latino-americana) was a financial crisis that originated in the early 1980s (and for some countries starting in the 1970s), often known as ''La Déca ...
(several years into neoliberal reform), but also had one of the most robust recoveries, rising from the poorest Latin American country in terms of
GDP per capita Lists of countries by GDP per capita list the countries in the world by their gross domestic product (GDP) per capita. The lists may be based on nominal or purchasing power parity GDP. Gross national income (GNI) per capita accounts for inflo ...
in 1980 (along with Peru) to the richest in 2019. Average annual economic growth from the mid-1980s to the Asian crisis in 1997 was 7.2%, 3.5% between 1998 and 2005, and growth in per capita real income from 1985 to 1996 averaged 5%—all outpacing Latin American averages. Inflation was brought under control. Between 1970 and 1985 the
infant mortality Infant mortality is the death of young children under the age of 1. This death toll is measured by the infant mortality rate (IMR), which is the probability of deaths of children under one year of age per 1000 live births. The under-five morta ...
rate in Chile fell from 76.1 per 1000 to 22.6 per 1000, the lowest in Latin America. Unemployment from 1980 to 1990 decreased, but remained higher than the South American average (which was stagnant). And despite public perception among Chileans that economic inequality has increased, Chile's Gini coefficient has in fact dropped from 56.2 in 1987 to 46.6 in 2017. However, while this is near the Latin American average, Chile still has one of the highest Gini coefficients in the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
, an organization of mostly
developed countries A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...
that includes Chile but not most other Latin American countries. Furthermore, the Gini coefficient measures only
income inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
; Chile has more mixed inequality ratings in the OECD's
Better Life Index The OECD Better Life Index, created in May 2011 by the Organisation for Economic Co-operation and Development, is an initiative pioneering the development of economic indicators which better capture multiple dimensions of economic and social progr ...
, which includes indexes for more factors than only income, like
housing Housing, or more generally, living spaces, refers to the construction and assigned usage of houses or buildings individually or collectively, for the purpose of shelter. Housing ensures that members of society have a place to live, whether ...
and
education Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty ...
. Additionally, the percentage of the Chilean population living in poverty rose from 17% in 1969 to 45% in 1985 at the same time government budgets for education, health and housing dropped by over 20% on average. The era was also marked by economic instability. Overall, scholars have mixed opinions on the effects of the neoliberal reforms. The
CIA World Factbook ''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of the world. The official print version is available ...
states that Chile's "sound economic policies", maintained consistently since the 1980s, "have contributed to steady economic growth in Chile and have more than halved poverty rates,"Chile
''
The World Factbook ''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of the world. The official print version is availabl ...
''.
Central Intelligence Agency The Central Intelligence Agency (CIA ), known informally as the Agency and historically as the Company, is a civilian foreign intelligence service of the federal government of the United States, officially tasked with gathering, processing, ...
.
and some scholars have even called the period the "
Miracle of Chile The "Miracle of Chile" was a term used by economist Milton Friedman to describe the reorientation of the Chilean economy in the 1980s and the effects of the economic policies applied by a large group of Chilean economists who collectively came ...
". Other scholars, however, have called it a failure that led to extreme inequalities in the distribution of income and resulted in severe socioeconomic damage. It is also contested how much these changes were the result of neoliberal economic policies and how much they were the result of other factors; in particular, some scholars argue that after the Crisis of 1982 the "pure" neoliberalism of the late 1970s was replaced by a focus on fostering a
social market economy The social market economy (SOME; german: soziale Marktwirtschaft), also called Rhine capitalism, Rhine-Alpine capitalism, the Rhenish model, and social capitalism, is a socioeconomic model combining a free-market capitalist economic system alon ...
that mixed neoliberal and social welfare policies. As a response to the 2019–20 Chilean protests, a national plebiscite was held on 25 October 2020 to decide whether the
Chilean constitution The Political Constitution of the Republic of Chile of 1980 () is the fundamental law in force in Chile. It was approved and promulgated under the military dictatorship headed by Augusto Pinochet, being ratified by the Chilean citizenry throug ...
would be rewritten. The "approve" option for a new constitution to replace the Pinochet-era constitution, which entrenched certain neoliberal principles into the country's basic law, won with 78% of the vote. On 11 April 2021 another referendum will be held to decide the makeup of the convention that will rewrite the constitution. The new constitution is expected to shift away from the neoliberal economic structure laid out in the current constitution and to address the country's economic inequality.


Peru

Peruvian economist
Hernando de Soto Hernando de Soto (; ; 1500 – 21 May, 1542) was a Spanish explorer and ''conquistador'' who was involved in expeditions in Nicaragua and the Yucatan Peninsula. He played an important role in Francisco Pizarro's conquest of the Inca Empire ...
, the founder of one of the first neoliberal organizations in Latin America, Institute for Liberty and Democracy (ILD), began to receive assistance from
Ronald Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
's administration, with the
National Endowment for Democracy The National Endowment for Democracy (NED) is an organization in the United States that was founded in 1983 for promoting democracy in other countries by promoting political and economic institutions such as political groups, trade unions, ...
's Center for International Private Enterprise (CIPE) providing his ILD with funding. The economic policy of
President President most commonly refers to: *President (corporate title) * President (education), a leader of a college or university * President (government title) President may also refer to: Automobiles * Nissan President, a 1966–2010 Japanese ...
Alan García Alan Gabriel Ludwig García Pérez (; 23 May 1949 – 17 April 2019) was a Peruvian politician who served as President of Peru for two non-consecutive terms from 1985 to 1990 and from 2006 to 2011. He was the second leader of the Peruvian Apri ...
distanced Peru from international markets, resulting in lower foreign investment in the country. Under García, Peru experienced
hyperinflation In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as t ...
and increased confrontations with the guerrilla group
Shining Path The Shining Path ( es, Sendero Luminoso), officially the Communist Party of Peru (, abbr. PCP), is a communist guerrilla group in Peru following Marxism–Leninism–Maoism and Gonzalo Thought. Academics often refer to the group as the Commu ...
, leading the country towards high levels of instability. The Peruvian armed forces grew frustrated with the inability of the García administration to handle the nation's crises and began to draft an operation – Plan Verde – to overthrow his government. The military's Plan Verde involved the " total extermination" of impoverished and indigenous Peruvians perceived as a drain on the economy, the control or
censorship Censorship is the suppression of speech, public communication, or other information. This may be done on the basis that such material is considered objectionable, harmful, sensitive, or "inconvenient". Censorship can be conducted by governments ...
of media in the nation and the establishment of a
neoliberal Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent f ...
economy in Peru. During his campaigning for the
1990 Peruvian general election General elections were held in Peru on 8 April 1990, with a second round of the presidential elections on 10 June.Dieter Nohlen (2005) ''Elections in the Americas: A data handbook, Volume II'', p454 The run-off was between favorite, novelist Mari ...
,
Alberto Fujimori Alberto Kenya Fujimori Inomoto ( or ; born 28 July 1938) is a Peruvian politician, professor and former engineer who was President of Peru from 28 July 1990 until 22 November 2000. Frequently described as a dictator, * * * * * * he remains a ...
initially expressed concern against the proposed neoliberal policies of his opponent
Mario Vargas Llosa Jorge Mario Pedro Vargas Llosa, 1st Marquess of Vargas Llosa (born 28 March 1936), more commonly known as Mario Vargas Llosa (, ), is a Peruvian novelist, journalist, essayist and former politician, who also holds Spanish citizenship. Vargas Ll ...
. Peruvian magazine ''Oiga'' reported that, following the election, the armed forces were unsure of Fujimori's willingness to fulfill the plan's objectives, though they planned to convince Fujimori to agree to the operation prior to his inauguration. After taking office, Fujimori abandoned his campaign's economic platform, adopting more aggressive neoliberal policies than those espoused by his election competitor Vargas Llosa. With Fujimori's compliance, plans for a coup as designed in Plan Verde were prepared for two years and finally executed during the
1992 Peruvian coup d'état A self-coup, sometimes known as the ''Fujimorazo'', was performed in Peru in 1992 after President Alberto Fujimori dissolved the Congress as well as the judiciary and assumed full legislative and judicial powers. With the collaboration of the mi ...
, which ultimately established a civilian-military regime. Shortly after the inauguration of Fujimori, his government received a $715 million grant from United States Agency for International Development (USAID) on 29 September 1990 for the Policy Analysis, Planning and Implementation Project (PAPI) that was developed "to support economic policy reform in the country". De Soto proved to be influential to Fujimori, who began to repeat de Soto's advocacy for deregulating the Peruvian economy. Under Fujimori, de Soto served as "the President's personal representative", with ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' describing de Soto as an "overseas salesman", while others dubbed de Soto as the "informal president" for Fujimori. In a recommendation to Fujimori, de Soto called for a "shock" to Peru's economy. The policies included a 300% tax increase, unregulated prices and privatizing two-hundred and fifty state-owned entities. The policies of de Soto led to the immediate suffering of poor Peruvians who saw unregulated prices increase rapidly. Those living in poverty saw prices increase so much that they could no longer afford food. ''The New York Times'' wrote that de Soto advocated for the collapse of Peru's society, with the economist saying that a civil crisis was necessary to support the policies of Fujimori. Fujimori and de Soto would ultimately break their ties after de Soto recommended increased involvement of citizens within the government, which was received with disapproval by Fujimori. USAID would go on to assist the Fujimori government with rewriting the 1993 Peruvian constitution, with the agency concluding in 1997 that it helped with the "preparation of legislative texts" and "contributed to the emergence of a private sector advisory role". The policies promoted by de Soto and implemented by Fujimori eventually caused macroeconomic stability and a reduction in the rate of
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
, though Peru's poverty rate remained largely unchanged with over half of the population living in poverty in 1998. According to the
Foundation for Economic Education The Foundation for Economic Education (FEE) is an American conservative, libertarian economic think tank. Founded in 1948 in New York City, FEE is now headquartered in Atlanta, Georgia. It is a member of the State Policy Network. FEE offers ...
, USAID, the United Nations Population Fund (UNFPA) and the
Nippon Foundation of Tokyo, Japan, is a private, non-profit grant-making organization. It was established in 1962 by Ryoichi Sasakawa. The foundation's mission is to direct Japanese motorboat racing revenue into philanthropic activities, it uses this money ...
also supported the sterilization efforts of the Fujimori government. E. Liagin reported that from 1993 to 1998, USAID "basically took charge of the national health system of Peru" during the period of forced sterilizations. At least 300,000 Peruvians were victims of forced sterilization by the Fujimori government in the 1990s, with the majority being affected by the PNSRPF. The policy of sterilizations resulted in a generational shift that included a smaller younger generation that could not provide economic stimulation to rural areas, making such regions more impoverished. Though economic statistics show improved economic data in Peru in recent decades, the wealth earned between 1990 and 2020 was not distributed throughout the country; living standards showed disparities between the more-developed capital city of Lima and similar coastal regions while rural provinces remained impoverished. Sociologist Maritza Paredes of the
Pontifical Catholic University of Peru Pontifical Catholic University of Peru ( es, link=no, Pontificia Universidad Católica del Perú, PUCP) is a private university in Lima, Peru. It was founded in 1917 with the support and approval of the Catholic Church, being the oldest private ...
stated, "People see that all the natural resources are in the countryside but all the benefits are concentrated in Lima." In 2020, the
COVID-19 pandemic in Peru The COVID-19 pandemic in Peru has resulted in confirmed cases of COVID-19 and deaths. The virus spread to Peru on 6 March 2020, when a 25-year-old man who had travelled to Spain, France, and the Czech Republic tested positive. On 15 Marc ...
compounded these disparities, with political scientist Professor Farid Kahhat of the Pontifical Catholic University of Peru stating that, "market reforms in Peru have yielded positive results in terms of reducing poverty ... But what the pandemic has laid bare, particularly in Peru, is that poverty was reduced while leaving the miserable state of public services unalteredmost clearly in the case of health services." The candidacy of
Pedro Castillo José Pedro Castillo Terrones (; born 19 October 1969) is a Peruvian politician, former elementary school teacher, and union leader who served as the President of Peru from 28 July 2021 to 7 December 2022. On 7 December 2022, he was impeached a ...
in the
2021 Peruvian general election General elections were held in Peru on 11 April 2021. The presidential election, which determined the president and the vice presidents, required a run-off between the two top candidates, which was held on 6 June. The congressional elections det ...
brought attention to the disparities between urban and rural Peruvians, with much of his support being earned in the exterior portions of the country. Castillo ultimately won the election, with ''The New York Times'' reporting his victory as the "clearest repudiation of the country's establishment".


Argentina

In the 1960s,
Latin America Latin America or * french: Amérique Latine, link=no * ht, Amerik Latin, link=no * pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived ...
n intellectuals began to notice the ideas of
ordoliberalism Ordoliberalism is the German variant of economic liberalism that emphasizes the need for government to ensure that the free market produces results close to its theoretical potential but does not advocate for a welfare state. Ordoliberal ideals ...
; they often used the Spanish term "neoliberalismo" to refer to this school of thought. They were particularly impressed by the
social market economy The social market economy (SOME; german: soziale Marktwirtschaft), also called Rhine capitalism, Rhine-Alpine capitalism, the Rhenish model, and social capitalism, is a socioeconomic model combining a free-market capitalist economic system alon ...
and the
Wirtschaftswunder The ''Wirtschaftswunder'' (, "economic miracle"), also known as the Miracle on the Rhine, was the rapid reconstruction and development of the economies of West Germany and Austria after World War II (adopting an ordoliberalism-based social ma ...
("economic miracle") in Germany and speculated about the possibility of accomplishing similar policies in their own countries. Note that neoliberalism in 1960s Argentina meant a philosophy that was more moderate than entirely
Laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
free-market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
and favored using state policy to temper
social inequality Social inequality occurs when resources in a given society are distributed unevenly, typically through norms of allocation, that engender specific patterns along lines of socially defined categories of persons. It posses and creates gender c ...
and counter a tendency towards monopoly. In 1976, the
military dictatorship A military dictatorship is a dictatorship in which the military exerts complete or substantial control over political authority, and the dictator is often a high-ranked military officer. The reverse situation is to have civilian control of the ...
's economic plan led by José Alfredo Martínez de Hoz was the first attempt at establishing a neoliberal program in Argentina. They implemented a fiscal
austerity Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
plan that reduced money printing in an attempt to counter inflation. In order to achieve this, salaries were frozen. However, they were unable to reduce inflation, which led to a drop in the real salary of the working class. They also liberalized trade policy so that foreign goods could freely enter the country. Argentina's industry, which had been on the rise for 20 years after the economic policies of former president
Arturo Frondizi Arturo Frondizi Ércoli (October 28, 1908 – April 18, 1995) was an Argentine lawyer, journalist, teacher and politician, who was elected President of Argentina and ruled between May 1, 1958 and March 29, 1962, when he was overthrown by a ...
, rapidly declined as it was not able to compete with foreign goods. The deregulation of the financial sector, however, lead to short-term economic growth, before rapid decline after capital fled to the United States. Following the measures, there was an increase in poverty from 9% in 1975 to 40% at the end of 1982. From 1989 to 2001, more neoliberal policies were implemented by Domingo Cavallo. This time, the privatization of public services was the main focus, although financial deregulation and free trade with foreign nations were also re-implemented. Along with an increased
labour market flexibility The degree of labour market flexibility is the speed with which labour markets adapt to fluctuations and changes in society, the economy or production. This entails enabling labour markets to reach a continuous equilibrium determined by the inter ...
, the unemployment rate dropped to 18.3%. Public perception of the policies was mixed; while some of the privatization was welcomed, much of it was criticized for not being in the people's best interests. Protests resulted in the death of 29 people at the hands of police, as well as the resignation of president
Fernando de la Rúa Fernando de la Rúa (15 September 19379 July 2019) was an Argentine politician and a member of the Radical Civic Union (UCR) political party who served as President of Argentina from 10 December 1999 to 21 December 2001. De la Rúa was born in ...
two years before the full completion of his term.


Mexico

Along with many other Latin American countries in the early 1980s,
Mexico Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
experienced a
debt crisis Debt crisis is a situation in which a government (nation, state/province, county, or city etc.) loses the ability of paying back its governmental debt. When the expenditures of a government are more than its tax revenues for a prolonged period, th ...
. In 1983 the Mexican government ruled by the PRI, the Institutional Revolutionary Party, accepted loans from the IMF. Among the conditions set by the IMF were requirements for Mexico to privatize state-run industries, devalue their currency, decrease
trade barrier Trade barriers are government-induced restrictions on international trade. According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work o ...
s, and restrict governmental spending. These policies were aimed at stabilizing Mexico's economy in the short run. Later, Mexico tried to expand these policies to encourage growth and
foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct c ...
(FDI). The decision to accept the IMF's neoliberal reforms split the PRI between those on the right who wanted to implement neoliberal policies and those the left who did not.
Carlos Salinas de Gortari Carlos Salinas de Gortari CYC DMN (; born 3 April 1948) is a Mexican economist and politician who served as 60th president of Mexico from 1988 to 1994. Affiliated with the Institutional Revolutionary Party (PRI), earlier in his career he wor ...
, who took power in 1988, doubled down on neoliberal reforms. His policies opened up the financial sector by deregulating the banking system and privatizing commercial banks. Though these policies did encourage a small amount of growth and FDI, the growth rate was below what it had been under previous governments in Mexico, and the increase in foreign investment was largely from existing investors. On 1 January 1994 the Zapatista Army of National Liberation, named for
Emiliano Zapata Emiliano Zapata Salazar (; August 8, 1879 – April 10, 1919) was a Mexican revolutionary. He was a leading figure in the Mexican Revolution of 1910–1920, the main leader of the people's revolution in the Mexican state of Morelos, and the ins ...
, a leader in the Mexican revolution, launched an armed rebellion against the Mexican government in the Chiapas region. Among their demands were rights for indigenous Mexicans as well as opposition to the
North American Free Trade Agreement The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(NAFTA), which solidified a strategic alliance between state and business.  NAFTA, a trade agreement between the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
,
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
, and Mexico, significantly aided in Mexico's efforts to liberalize trade. In 1994, the same year of the Zapatista rebellion and the enactment of NAFTA, Mexico faced a
financial crisis A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and man ...
. The crisis, also known as the "Tequila Crisis" began in December 1994 with the devaluation of the peso. When investors' doubts led to negative speculation they fled with their capital. The central bank was forced to raise
interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, t ...
s which in turn collapsed the banking system as borrowers could no longer pay back their loans. After Salinas,
Ernesto Zedillo Ernesto Zedillo Ponce de León (; born 27 December 1951) is a Mexican economist and politician. He was 61st president of Mexico from 1 December 1994 to 30 November 2000, as the last of the uninterrupted 71-year line of Mexican presidents from t ...
(1995–2000) maintained similar economic policies to his predecessor. Despite the crisis, Zedillo continued to enact neoliberal policies and signed new agreements with the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
and the IMF. As a result of these policies and the 1994 recession, Mexico's economy did gain stability. Neither the 2001 or
2008 File:2008 Events Collage.png, From left, clockwise: Lehman Brothers went bankrupt following the Subprime mortgage crisis; Cyclone Nargis killed more than 138,000 in Myanmar; A scene from the opening ceremony of the 2008 Summer Olympics in Beijing; ...
recessions were caused by internal economic forces in Mexico. Trade increased dramatically, as well as FDI. However, as Mexico's
business cycle Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examin ...
synced with that of the United States, it was much more vulnerable to external economic pressures. FDI benefited the Northern and Central regions of Mexico while the Southern region was largely excluded from the influx of investment. The crisis also left the banks mainly in the hands of foreigners. The PRI's 71 year rule ended when
Vicente Fox Vicente Fox Quesada (; born 2 July 1942) is a Mexican businessman and politician who served as the 62nd president of Mexico from 1 December 2000 to 30 November 2006. After campaigning as a right-wing populist, Fox was elected president on the ...
of the PAN, the National Action Party, won the election in 2000. However, Fox and his successor Calderon did not significantly diverge from the economic policies of the PRI governments. They continued to privatize the financial system and encourage foreign investment. Despite significant opposition,
Enrique Peña Nieto Enrique Peña Nieto (; born 20 July 1966), commonly referred to by his initials EPN, is a Mexican politician who served as the 64th president of Mexico from 1 December 2012 to 30 November 2018. A member of the Institutional Revolutionary Party ...
, president from 2012 to 2018, pushed through legislation that would privatize the
oil An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
and electricity industries. These reforms marked the conclusion to the neoliberal goals that had been envisioned in Mexico in the 1980s.


Brazil

Brazil adopted neoliberal policies in the late 1980s, with support from the worker's party on the left. For example, tariff rates were cut from 32% in 1990 to 14% in 1994. During this period, Brazil effectively ended its policy of maintaining a closed economy focused on
import substitution industrialization Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production.''A Comprehensive Dictionary of Economics'' p.88, ed. Nelson Brian 2009. It is based on the premise that ...
in favor of a more open economic system with a much higher degree of privatization. The market reforms and trade reforms ultimately resulted in price stability and a faster inflow of capital, but had little effect on income inequality and poverty. Consequently, mass protests continued during the period.


United Kingdom

During her tenure as
Conservative Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
Prime Minister,
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
oversaw a number of neoliberal reforms, including tax reduction,
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...
reform,
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
, and
privatisation Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
. These reforms were continued and supported by her successor
John Major Sir John Major (born 29 March 1943) is a British former politician who served as Prime Minister of the United Kingdom and Leader of the Conservative Party from 1990 to 1997, and as Member of Parliament (MP) for Huntingdon, formerly Hunting ...
. Although opposed by the Labour Party, the reforms were, according to some scholars, largely accepted and left unaltered when Labour returned to power in 1997 under
Tony Blair Sir Anthony Charles Lynton Blair (born 6 May 1953) is a British former politician who served as Prime Minister of the United Kingdom from 1997 to 2007 and Leader of the Labour Party from 1994 to 2007. He previously served as Leader of t ...
. The
Adam Smith Institute The Adam Smith Institute (ASI) is a neoliberal UK-based think tank and lobbying group, named after Adam Smith, a Scottish moral philosopher and classical economist. The libertarian label was officially changed to neoliberal on 10 October 201 ...
, a United Kingdom–based free-market think tank and lobbying group formed in 1977 which was a major driver of the aforementioned neoliberal reforms, officially changed its libertarian label to neoliberal in October 2016. According to economists Denzau and Roy, the "shift from Keynesian ideas toward neoliberalism influenced the fiscal policy strategies of New Democrats and New Labour in both the White House and Whitehall.... Reagan, Thatcher, Clinton, and Blair all adopted broadly similar neoliberal beliefs."


United States

While a number of recent histories of neoliberalism in the United States have traced its origins back to the urban renewal policies of the 1950s,
Marxist Marxism is a left-wing to far-left method of socioeconomic analysis that uses a materialist interpretation of historical development, better known as historical materialism, to understand class relations and social conflict and a dialecti ...
economic geographer
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his P ...
argues the rise of neoliberal policies in the United States occurred during the
1970s energy crisis The 1970s energy crisis occurred when the Western world, particularly the United States, Canada, Western Europe, Australia, and New Zealand, faced substantial petroleum shortages as well as elevated prices. The two worst crises of this period wer ...
, and traces the origin of its political rise to Lewis Powell's 1971 confidential memorandum to the
Chamber of Commerce A chamber of commerce, or board of trade, is a form of business network. For example, a local organization of businesses whose goal is to further the interests of businesses. Business owners in towns and cities form these local societies to ...
in particular. A call to arms to the business community to counter criticism of the free enterprise system, it was a significant factor in the rise of conservative and libertarian organizations and think-tanks which advocated for neoliberal policies, such as the
Business Roundtable The Business Roundtable (BRT) is a nonprofit lobbyist association based in Washington, D.C. whose members are chief executive officers of major United States companies. Unlike the U.S. Chamber of Commerce, whose members are entire businesses, B ...
,
The Heritage Foundation The Heritage Foundation (abbreviated to Heritage) is an American conservative think tank based in Washington, D.C. that is primarily geared toward public policy. The foundation took a leading role in the conservative movement during the presi ...
, the
Cato Institute The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of Koch Industries.Koch Ind ...
,
Citizens for a Sound Economy Citizens for a Sound Economy (CSE) (1984–2004) was a conservative political group operating in the United States. It was established in 1984 by Charles and David Koch of Koch Industries. Ron Paul was appointed as the first chairman of the ...
, Accuracy in Academia and the
Manhattan Institute for Policy Research The Manhattan Institute for Policy Research (renamed in 1981 from the International Center for Economic Policy Studies) is a conservative American think tank focused on domestic policy and urban affairs, established in Manhattan in 1978 by Anto ...
. For Powell, universities were becoming an ideological battleground, and he recommended the establishment of an intellectual infrastructure to serve as a counterweight to the increasingly popular ideas of
Ralph Nader Ralph Nader (; born February 27, 1934) is an American political activist, author, lecturer, and attorney noted for his involvement in consumer protection, environmentalism, and government reform causes. The son of Lebanese immigrants to the Un ...
and other opponents of big business. The original neoliberals on the left included, among others,
Michael Kinsley Michael E. Kinsley (born March 9, 1951) is an American political journalist and commentator. Primarily active in print media as both a writer and editor, he also became known to television audiences as a co-host on ''Crossfire''. Early life and e ...
,
Charles Peters Charles Peters (born December 22, 1926) is an American journalist, editor, and author. He was the founder and editor-in-chief of the ''Washington Monthly'' magazine and the author of ''We Do Our Part: Toward A Fairer and More Equal America'' ( R ...
,
James Fallows James Mackenzie Fallows (born August 2, 1949) is an American writer and journalist. He is a former national correspondent for '' The Atlantic.'' His work has also appeared in '' Slate'', '' The New York Times Magazine'', ''The New York Review of B ...
,
Nicholas Lemann Nicholas Berthelot Lemann is an American writer and academic, the Joseph Pulitzer II and Edith Pulitzer Moore Professor of Journalism and Dean Emeritus of the Faculty of Journalism at the Columbia University Graduate School of Journalism. He has be ...
,
Bill Bradley William Warren Bradley (born July 28, 1943) is an American politician and former professional basketball player. He served three terms as a Democratic U.S. senator from New Jersey (1979–1997). He ran for the Democratic Party's nomination f ...
,
Bruce Babbitt The English language name Bruce arrived in Scotland with the Normans, from the place name Brix, Manche in Normandy, France, meaning "the willowlands". Initially promulgated via the descendants of king Robert the Bruce (1274−1329), it has be ...
,
Gary Hart Gary Warren Hart (''né'' Hartpence; born November 28, 1936) is an American politician, diplomat, and lawyer. He was the front-runner for the 1988 Democratic presidential nomination until he dropped out amid revelations of extramarital affairs. ...
, and
Paul Tsongas Paul Efthemios Tsongas (; February 14, 1941 – January 18, 1997) was an American politician who represented Massachusetts in the United States Senate from 1979 until 1985 and in the United States House of Representatives from 1975 until 197 ...
. Sometimes called "
Atari Democrat In 1980s and 1990s US politics, the phrase Atari Democrat referred to Democratic legislators who suggested that the support and development of high tech and related businesses would stimulate the economy and create jobs. The term refers to the Atar ...
s", these were the men who helped to remake American liberalism into neoliberalism, culminating in the election of
Bill Clinton William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and again ...
in 1992. These new liberals disagreed with the policies and programs of mid-century liberals like
Walter Reuther Walter Philip Reuther (; September 1, 1907 – May 9, 1970) was an American leader of organized labor and civil rights activist who built the United Automobile Workers (UAW) into one of the most progressive labor unions in American history. He ...
or
John Kenneth Galbraith John Kenneth Galbraith (October 15, 1908 – April 29, 2006), also known as Ken Galbraith, was a Canadian-American economist, diplomat, public official, and intellectual. His books on economic topics were bestsellers from the 1950s through t ...
or even Arthur Schlesinger. Early roots of neoliberalism were laid in the 1970s during the
Carter administration Jimmy Carter's tenure as the 39th president of the United States began with his inauguration on January 20, 1977, and ended on January 20, 1981. A  Democrat from Georgia, Carter took office after defeating incumbent Republican Preside ...
, with deregulation of the
trucking Road transport or road transportation is a type of transport using roads. Transport on roads can be roughly grouped into the transportation of goods and transportation of people. In many countries licensing requirements and safety regulations e ...
, banking and airline industries, as well as the appointment of
Paul Volcker Paul Adolph Volcker Jr. (September 5, 1927 – December 8, 2019) was an American economist who served as the 12th chairman of the Federal Reserve from 1979 to 1987. During his tenure as chairman, Volcker was widely credited with having ended th ...
to chairman of the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
. This trend continued into the 1980s under the
Reagan administration Ronald Reagan's tenure as the 40th president of the United States began with his first inauguration on January 20, 1981, and ended on January 20, 1989. Reagan, a Republican from California, took office following a landslide victory over ...
, which included
tax cuts A tax cut represents a decrease in the amount of money taken from taxpayers to go towards government revenue. Tax cuts decrease the revenue of the government and increase the disposable income of taxpayers. Tax cuts usually refer to reductions in ...
, increased defense spending, financial deregulation and
trade deficit The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balanc ...
expansion. Likewise, concepts of
supply-side economics Supply-side economics is a Macroeconomics, macroeconomic theory that postulates economic growth can be most effectively fostered by Tax cuts, lowering taxes, Deregulation, decreasing regulation, and allowing free trade. According to supply-sid ...
, discussed by the Democrats in the 1970s, culminated in the 1980
Joint Economic Committee The Joint Economic Committee (JEC) is one of four standing joint committees of the U.S. Congress. The committee was established as a part of the Employment Act of 1946, which deemed the committee responsible for reporting the current economic c ...
report "Plugging in the Supply Side". This was picked up and advanced by the Reagan administration, with Congress following Reagan's basic proposal and cutting federal income taxes across the board by 25% in 1981. The
Clinton administration Bill Clinton's tenure as the 42nd president of the United States began with his first inauguration on January 20, 1993, and ended on January 20, 2001. Clinton, a Democrat from Arkansas, took office following a decisive election victory over ...
embraced neoliberalism by supporting the passage of the
North American Free Trade Agreement The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
(NAFTA), continuing the deregulation of the financial sector through passage of the Commodity Futures Modernization Act and the repeal of the Glass–Steagall Act and implementing cuts to the
welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...
through passage of the Personal Responsibility and Work Opportunity Act. The American historian Gary Gerstle writes that while Reagan was the ideological architect of the neoliberal order which was formulated in the 1970s and 1980s, it was Clinton who was its key facilitator, and as such this order achieved dominance in the 1990s and early 2000s. The neoliberalism of the Clinton administration differs from that of Reagan as the Clinton administration purged neoliberalism of
neoconservative Neoconservatism is a political movement that began in the United States during the 1960s among liberal hawks who became disenchanted with the increasingly pacifist foreign policy of the Democratic Party and with the growing New Left and count ...
positions on
militarism Militarism is the belief or the desire of a government or a people that a state should maintain a strong military capability and to use it aggressively to expand national interests and/or values. It may also imply the glorification of the mili ...
, family values, opposition to
multiculturalism The term multiculturalism has a range of meanings within the contexts of sociology, political philosophy, and colloquial use. In sociology and in everyday usage, it is a synonym for " ethnic pluralism", with the two terms often used interchang ...
and neglect of ecological issues. Writing in ''
New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * '' ...
'', journalist
Jonathan Chait Jonathan Benjamin Chait () (born May 1, 1972) is an American pundit and writer for ''New York'' magazine. He was previously a senior editor at '' The New Republic'' and an assistant editor of ''The American Prospect''. He writes a periodic co ...
disputed accusations that the Democratic Party had been hijacked by neoliberals, saying that its policies have largely stayed the same since the New Deal. Instead, Chait suggested these accusations arose from arguments that presented a
false dichotomy A false dilemma, also referred to as false dichotomy or false binary, is an informal fallacy based on a premise that erroneously limits what options are available. The source of the fallacy lies not in an invalid form of inference but in a false ...
between free-market economics and socialism, ignoring mixed economies. American feminist philosopher
Nancy Fraser Nancy Fraser (; born May 20, 1947) is an American philosopher, critical theorist, feminist, and the Henry A. and Louise Loeb Professor of Political and Social Science and professor of philosophy at The New School in New York City.Jadžić, Milo� ...
says the modern Democratic Party has embraced a "progressive neoliberalism", which she describes as a "progressive-neoliberal alliance of financialization plus emancipation". Historian Walter Scheidel says that both parties shifted to promote free-market capitalism in the 1970s, with the Democratic Party being "instrumental in implementing financial deregulation in the 1990s". Historians Andrew Diamond and Thomas Sugrue argue that neoliberalism became a "'dominant rationality' precisely because it could not be confined to a single partisan identity." Economic and political inequalities in schools, universities, and libraries and an undermining of democratic and civil society institutions influenced by neoliberalism has been explored by Buschman.


Asia-Pacific

Scholars who emphasized the key role of the developmental state in the early period of fast industrialization in East Asia in the late 19th century now argue that South Korea, Taiwan and Singapore have transformed from developmental to close-to-neoliberal states. Their arguments are matter of scholarly debate.


China

Following the death of
Mao Zedong Mao Zedong pronounced ; also Romanization of Chinese, romanised traditionally as Mao Tse-tung. (26 December 1893 – 9 September 1976), also known as Chairman Mao, was a Chinese communist revolutionary who was the List of national founde ...
in 1976,
Deng Xiaoping Deng Xiaoping (22 August 1904 – 19 February 1997) was a Chinese revolutionary leader, military commander and statesman who served as the paramount leader of the China, People's Republic of China (PRC) from December 1978 to November 1989. Aft ...
led the country through far ranging market-centered reforms, with the slogan of Xiǎokāng, that combined neoliberalism with centralized
authoritarianism Authoritarianism is a political system characterized by the rejection of political plurality, the use of strong central power to preserve the political ''status quo'', and reductions in the rule of law, separation of powers, and democratic voti ...
. These focused on agriculture, industry, education and science/defense. Experts debate the extent to which traditional Maoist communist doctrines have been transformed to incorporate the new neoliberal ideas. In any case, the Chinese Communist Party remains a dominant force in setting economic and business policies. Throughout the 20th century, Hong Kong was the outstanding neoliberal exemplar inside China.


Taiwan

Taiwan exemplifies the impact of neoliberal ideas. The policies were pushed by the United States but were not implemented in response to a failure of the national economy, as in numerous other countries.


Japan

Neoliberal policies were at the core of the leading party in Japan, the Liberal Democratic Party (LDP), after 1980. These policies had the effect of abandoning the traditional rural base and emphasizing the central importance of the Tokyo industrial-economic region. Neoliberal proposals for Japan's agricultural sector called for reducing state intervention, ending the protection of high prices for rice and other farm products, and exposing farmers to the global market. The 1993
Uruguay Round The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1993 and embracing 123 countries as "contracting parties". The R ...
of the General Agreement on Tariffs and Trade negotiations opened up the rice market. Neoconservative leaders called for the enlargement, diversification, intensification, and corporatization of the farms receiving government subsidies. In 2006, the ruling LDP decided to no longer protect small farmers with subsidies. Small operators saw this as favoritism towards big corporate agriculture and reacted politically by supporting the
Democratic Party of Japan The was a centristThe Democratic Party of Japan was widely described as centrist: * * * * * * * to centre-left liberal or social-liberal political party in Japan from 1998 to 2016. The party's origins lie in the previous Democratic ...
(DPJ), helping to defeat the LDP in nationwide elections.


South Korea

In South Korea, neoliberalism had the effect of strengthening the national government's control over economic policies. These policies were popular to the extent that they weakened the historically very powerful
chaebol A chaebol (, ; ) is a large industrial South Korean conglomerate run and controlled by an individual or family. A chaebol often consists of multiple diversified affiliates, controlled by a person or group whose power over the group often exc ...
family-owned conglomerates.


India

In India, Prime Minister
Narendra Modi Narendra Damodardas Modi (; born 17 September 1950) is an Indian politician serving as the 14th and current Prime Minister of India since 2014. Modi was the Chief Minister of Gujarat from 2001 to 2014 and is the Member of Parliament from ...
took office in 2014 with a commitment to implement neoliberal economic policies. This commitment would shape national politics and foreign affairs, and put India in a race with China and Japan for economic supremacy in East Asia.


Australia

In Australia, neoliberal economic policies (known at the time as "
economic rationalism Economic rationalism is an Australian term often used in the discussion of macroeconomic policy, applicable to the economic policy of many governments around the world, in particular during the 1980s and 1990s. Economic rationalists tend to favour ...
" or "economic fundamentalism") have been embraced by governments of both the Labor Party and the
Liberal Party The Liberal Party is any of many political parties around the world. The meaning of ''liberal'' varies around the world, ranging from liberal conservatism on the right to social liberalism on the left. __TOC__ Active liberal parties This is a li ...
since the 1980s. The Labor governments of
Bob Hawke Robert James Lee Hawke (9 December 1929 – 16 May 2019) was an Australian politician and union organiser who served as the 23rd prime minister of Australia from 1983 to 1991, holding office as the leader of the Australian Labor Party (A ...
and
Paul Keating Paul John Keating (born 18 January 1944) is an Australian former politician and unionist who served as the 24th prime minister of Australia from 1991 to 1996, holding office as the leader of the Australian Labor Party (ALP). He previously serv ...
from 1983 to 1996 pursued a program of economic reform focused on economic liberalisation. These governments privatised government corporations, deregulated factor markets, floated the
Australian dollar The Australian dollar ( sign: $; code: AUD) is the currency of Australia, including its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is officially used as currency by three independent Pacific Is ...
and reduced trade protections. Another key policy was the accords which was an agreement with unions to agree to a reduction in strikes, wage demands and a real wage cut in exchange for the implementation of social policies, such as Medicare and
superannuation A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payment ...
. The Howard government continued these policies, whilst also acting to reduce union power, cut welfare and reduce government spending. Keating, building on policies he had introduced while federal treasurer, implemented a compulsory superannuation guarantee system in 1992 to increase national savings and reduce future government liability for old age pensions. The financing of universities was deregulated, requiring students to contribute to Tertiary education fees in Australia, university fees through a repayable loan system known as the Higher Education Contribution Scheme (HECS) and encouraging universities to increase income by admitting full-fee-paying students, including foreign students. The admission of domestic full-fee-paying students to public universities was abolished in 2009 by the Rudd Government (2007–10), Rudd Labor government. Immigration to the mainland capitals by refugees have seen capital flows follow soon after, such as from war-torn Lebanon and Vietnam. Later economic-migrants from mainland
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...
also, up to recent restrictions, had invested significantly in the property markets. Australia was one of few developed countries not to go through a recession during the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
; Australia's last recession before the COVID-19 recession occurred in 1991.


New Zealand

In New Zealand, neoliberal economic policies were implemented under the Fourth Labour Government of New Zealand, Fourth Labour Government led by Prime Minister David Lange. These neoliberal policies are commonly referred to as Rogernomics, a portmanteau of "Roger" and "economics", after Lange appointed Roger Douglas minister of finance in 1984. Lange's government had inherited a severe balance of payments crisis as a result of the deficits from the previously implemented two-year freeze on wages and prices by preceding Prime Minister Robert Muldoon, who had also maintained an
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...
many economists now believe was unsustainable. The inherited economic conditions lead Lange to remark "We ended up being run very similarly to a Polish shipyard." On 14 September 1984, Lange's government held an Economic Summit to discuss the underlying problems with Economy of New Zealand, New Zealand's economy, which lead to calls for dramatic economic reforms previously proposed by the New Zealand Treasury, Treasury Department. A reform program consisting of
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
and the removal of tariffs and subsidies was put in place. This had an immediate effect on New Zealand's agricultural community, who were hit hard by the loss of subsidies to farmers. A superannuation surcharge was introduced, despite having promised not to reduce superannuation, resulting in Labour Party (New Zealand), Labour losing support from the elderly. The financial markets were also deregulated, removing restrictions on interest rate, interests rates, lending and foreign exchange. In March 1985, the New Zealand dollar was Floating exchange rate, floated. Additionally, a number of government departments were converted into state-owned enterprises, which lead to significant job losses: 3,000 within the Electricity Corporation; 4,000 within the Coal Corporation; 5,000 within the Forestry Corporation; and 8,000 within the New Zealand Post. New Zealand became a part of the global economy. The focus in the economy shifted from the productive sector to finance as a result of zero restrictions on overseas money coming into the country. Finance capital outstripped industrial capital and the manufacturing industry suffered approximately 76,000 job losses.


Middle East

Beginning in the late 1960s, a number of neoliberal reforms were implemented in the Middle East. Egypt is frequently linked to the implementation of neoliberal policies, particularly with regard to the 'open-door' policies of President Anwar Sadat throughout the 1970s, and Hosni Mubarak's successive economic reforms between 1981 and 2011. These measures, known as ''Infitah, al-Infitah'', were later diffused across the region. In Tunisia, neoliberal economic policies are associated with former president and ''de facto'' dictator Zine El Abidine Ben Ali; his reign made it clear that economic neoliberalism can coexist and even be encouraged by authoritarianism, authoritarian states. Responses to globalisation and economic reforms in the Gulf Cooperation Council, Gulf have also been approached via a neoliberal analytical framework.


International organizations

The adoption of neoliberal policies in the 1980s by international institutions such as the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) and the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
had a significant impact on the spread of neoliberal reform worldwide. To obtain loans from these institutions, developing or crisis-wracked countries had to agree to institutional reforms, including
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
, trade liberalization, enforcement of strong private property rights, and reductions to
government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual ...
. This process became known as
structural adjustment Structural adjustment programs (SAPs) consist of loans (structural adjustment loans; SALs) provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their purpose is to adjust the co ...
, and the principles underpinning it the
Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Mone ...
.


European Union

The European Union (EU), created in 1992, is sometimes considered a neoliberal organization, as it facilitates
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
and freedom of movement, erodes national protectionism and limits national subsidies. Others underline that the EU is not completely neoliberal as it leaves the development of welfare , welfare policies to its constituent states.


Traditions


Austrian School

The Austrian School is a school of economic thought originating in late-19th and early-20th century Vienna which bases its study of economic phenomena on the interpretation and analysis of methodological individualism, the purposeful actions of individuals.Ludwig von Mises. Human Action, p. 11, "r. Purposeful Action and Animal Reaction". Referenced 2011-11-23. In the 21st century, the term has increasingly been used to denote the free-market economics of Austrian economists
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
and
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
, including their criticisms of government intervention in the economy, which has tied the school to neoliberal thought. Economists associated with the school, including Carl Menger, Eugen Böhm von Bawerk, Friedrich von Wieser,
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
, and
Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is ...
, have been responsible for many notable contributions to economic theory, including the subjective theory of value, marginalism in price theory, Friedrich von Wieser's theories on opportunity cost, Eugen von Böhm-Bawerk's theories on time preference, the formulation of the economic calculation problem, as well as a number of criticisms of Marxian economics. Former Federal Reserve System, Federal Reserve Chairman
Alan Greenspan Alan Greenspan (born March 6, 1926) is an American economist who served as the 13th chairman of the Federal Reserve from 1987 to 2006. He works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. ...
, speaking of the originators of the School, said in 2000 that "the Austrian School have reached far into the future from when most of them practiced and have had a profound and, in my judgment, probably an irreversible effect on how most mainstream economists think in [the United States]".


Chicago School

The Chicago school of economics is a Neoclassical economics, neoclassical school of thought within the academic community of economists, with a strong focus around the faculty of the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
. Chicago macroeconomic theory rejected Keynesianism in favor of
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations. The school is strongly associated with University of Chicago economists such as
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
,
George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist. He was the 1982 laureate in Nobel Memorial Prize in Economic Sciences and is considered a key leader of the Chicago school of economics. Early life and e ...
, Ronald Coase and Gary Becker. In the 21st century, economists such as Mark Skousen refer to
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
as a key economist who influenced this school in the 20th century having started his career in Vienna and the Austrian school of economics. The school emphasizes non-intervention from government and generally rejects regulation in markets as inefficient, with the exception of the regulation of the money supply by central banks (in the form of
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
). Although the school's association with neoliberalism is sometimes resisted by its proponents, its emphasis on reduced government intervention in the economy and a ''
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
'' ideology have brought about an affiliation between the Chicago school and neoliberal economics.


Washington Consensus

The Washington Consensus is a set of standardized policy prescriptions often associated with neoliberalism that were developed by the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF), the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, and the US Department of Treasury for crisis-wracked developing countries. These prescriptions, often attached as conditions for loans from the IMF and World Bank, focus on market liberalization, and in particular on lowering
barriers to trade Trade barriers are government-induced restrictions on international trade. According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work o ...
, controlling
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
, privatizing state-owned enterprises, and reducing government budget deficits. However, Williamson has emphatically rejected any association with Neoliberalism and has publicly stated his regret with the term itself, saying that the original 10 points were supposed to be a model for fiscal discipline and macroeconomic stabilization, not monetarism, supply-side economics, or a minimal state (which Williamson argues are the important elements of the Neoliberal model).Williamson J. (2002)
''Did the Washington Consensus Fail?''
/ref>


Political policy aspects

Neoliberal policies center around
economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical liber ...
, including reductions to
trade barriers Trade barriers are government-induced restrictions on international trade. According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work ...
and other policies meant to increase
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...
,
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
of industry,
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of state-owned enterprises, reductions in
government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual ...
, and
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
. Neoliberal theory contends that free markets encourage economic efficiency, economic growth, and technological innovation. State intervention, even if aimed at encouraging these phenomena, is generally believed to worsen economic performance.


Economic and political freedom

Many neoliberal thinkers advance the view that economic and political freedom are inextricably linked.
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
argued in his book ''Capitalism and Freedom'' that
economic freedom Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from the l ...
, while itself an extremely important component of freedom, absolute freedom, is also a necessary condition for political freedom. He claimed that centrally planned economy, centralized control of economic activities is always accompanied by political repression. In his view, the voluntary character of all transactions in an unregulated market economy and the wide diversity of choices that it permits pose fundamental threats to repressive political leaders by greatly diminishing their power to coerce people economically. Through the elimination of centralized control of economic activities, economic power is separated from political power and each can serve as a counterbalance to the other. Friedman feels that competitive capitalism is especially important to minority groups since impersonal market forces protect people from discrimination in their economic activities for reasons unrelated to their productivity.Milton Friedman. ''Capitalism and freedom''. (2002). The University of Chicago. pp. 8–21 In ''
The Road to Serfdom ''The Road to Serfdom'' (German: ''Der Weg zur Knechtschaft'') is a book written between 1940 and 1943 by Austrian-British economist and philosopher Friedrich Hayek. Since its publication in 1944, ''The Road to Serfdom'' has been popular among ...
'',
Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
offered a similar argument: "Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends". Amplifying their arguments, it has often been pointed out that increasing economic freedoms tends to raise expectations on political freedoms, eventually leading to democracy.


Free trade

A central feature of neoliberalism is the support of free trade, and policies that enable free trade, like the
North American Free Trade Agreement The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
, are often associated with neoliberalism. Neoliberals argue that free trade promotes economic growth, reduces
poverty Poverty is the state of having few material possessions or little income. Poverty can have diverse
, produces gains of trade like lower prices as a result of comparative advantage, maximizes consumer choice, and is essential to freedom, as they believe voluntary trade between two parties should not be prohibited by government. Relatedly, neoliberals argue that protectionism is harmful to consumers, who will be forced to pay higher prices for goods; incentivizes individuals to misuse resources; distorts investment; stifles innovation; and props up certain industries at the expense of consumers and other industries.


Monetarism

Monetarism is an economic theory commonly associated with neoliberalism. Formulated by
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
, it focuses on the macroeconomic aspects of the supply of money, paying particular attention to the effects of central banking. It argues that excessive expansion of the money supply is inherently inflationary and that monetary authorities should focus primarily on maintaining price stability, even at the cost of other macroeconomic factors like economic growth. Monetarism is often associated with the policies of the Federal Reserve System, US Federal Reserve under the Chair of the Federal Reserve, Chairmanship of economist
Paul Volcker Paul Adolph Volcker Jr. (September 5, 1927 – December 8, 2019) was an American economist who served as the 12th chairman of the Federal Reserve from 1979 to 1987. During his tenure as chairman, Volcker was widely credited with having ended th ...
, which centered around high interest rates that are widely credited with ending the high levels of inflation seen in the United States during the 1970s and early 1980s as well as contributing to the Early 1980s recession in the United States, 1980–1982 recession. Monetarism had particular force in Chile, whose central bank raised interest rates to counter inflation that had spiraled to over 600%. This helped to successfully reduce inflation to below 10%, but also resulted in job losses.


Criticism

Neoliberalism has faced criticism by academics, journalists, religious leaders, and activists from both the left-wing politics, political left and right-wing politics, right. Notable critics of neoliberalism in theory or practice include economists Joseph Stiglitz, Amartya Sen, Michael Hudson (economist), Michael Hudson, Ha-Joon Chang, Robert Pollin, Julie Matthaei, and Richard D. Wolff; linguist Noam Chomsky; geographer and anthropologist David Harvey (geographer), David Harvey; Slovenian continental philosopher Slavoj Žižek, political activist and public intellectual Cornel West; Marxist feminist Gail Dines; British musician and political activist Billy Bragg; author, activist and filmmaker
Naomi Klein Naomi A. Klein (born May 8, 1970) is a Canadian author, social activist, and filmmaker known for her political analyses, support of ecofeminism, organized labour, left-wing politics and criticism of corporate globalization, fascism, ecofascism ...
; head of the Catholic Church Pope Francis; journalist and environmental activist George Monbiot; Belgian psychologist Paul Verhaeghe; journalist and activist Chris Hedges; conservative philosopher Roger Scruton; and the alter-globalization movement, including groups such as ATTAC. The impact of the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
in 2008 has given rise to a surge in new scholarship that criticizes neoliberalism.


Market fundamentalism

Neoliberal thought has been criticized for supposedly having an undeserved "faith" in the efficiency of markets, in the superiority of markets over Economic planning, centralized economic planning, in the ability of markets to self-correct, and in the market's ability to deliver economic and political freedom. Economist Paul Krugman has argued that the "
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
absolutism" promoted by neoliberals "contributed to an intellectual climate in which faith in markets and disdain for government often trumps the evidence". Political theorist Wendy Brown (political theorist), Wendy Brown has gone even further and asserted that the overriding objective of neoliberalism is "the economization of all features of life". A number of scholars have argued that, in practice, this "market fundamentalism" has led to a neglect of social goods not captured by economic indicators, an erosion of democracy, an unhealthy promotion of unbridled
individualism Individualism is the moral stance, political philosophy, ideology and social outlook that emphasizes the intrinsic worth of the individual. Individualists promote the exercise of one's goals and desires and to value independence and self-reli ...
and social Darwinism, and economic inefficiency. Some critics contend neoliberal thinking prioritizes economic indicators like economic growth, GDP growth and
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
over social factors that might not be easy to quantify, like labor rights and access to higher education. This focus on economic efficiency can compromise other, perhaps more important, factors, or promote Exploitation of labour, exploitation and social injustice. For example, anthropologist Mark Fleming argues that when the performance of a public transport, transit system is assessed purely in terms of economic efficiency, social goods such as strong labor rights, workers' rights are considered impediments to maximum performance. He supports this assertion with a case study of the San Francisco Municipal Railway (Muni), which is one of the slowest major urban transit systems in the US and has one of the worst on-time performance rates. This poor performance, he contends, stems from structural problems including an aging fleet and maintenance issues. However, he argues that the neoliberal worldview singled out transit drivers and their trade union, labor unions, blaming drivers for failing to meet impossible transit schedules and considering additional costs to drivers as lost funds that reduce system speed and performance. This produced vicious attacks on the drivers' union and brutal public smear campaigns, ultimately resulting in the passing of Proposition G, which severely undermined the powers of the Muni drivers' union. American scholar and cultural critic Henry Giroux alleges that neoliberal market fundamentalism fosters a belief that market forces should organize every facet of society, including economic and social life, and promotes a social Darwinist ethic that elevates self-interest over social needs. Marxist economic geographer
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his P ...
argues that neoliberalism promotes an unbridled individualism that is harmful to social solidarity. While proponents of
economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical liber ...
have often pointed out that increasing
economic freedom Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from the l ...
tends to raise expectations on political freedom, some scholars see the existence of non-democracy, democratic yet free market, market-liberal regimes and the seeming undermining of democratic control by market processes as evidence that this characterization is ahistorical. Some scholars contend that neoliberal focuses may even undermine the basic elements of democracy. Kristen Ghodsee, ethnographer at the University of Pennsylvania, asserts that the triumphalist attitudes of Western world, Western powers at the end of the
Cold War The Cold War is a term commonly used to refer to a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term '' cold war'' is used because t ...
and the fixation on linking all left-wing politics, leftist political ideals with the excesses of Stalinism, permitted neoliberal, free-market capitalism to fill the void, which undermined democratic institutions and reforms, leaving a trail of economic misery,
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refe ...
and rising economic inequality throughout the former Eastern Bloc and much of the West that fueled a resurgence of extremist nationalism. Costas Panayotakis has argued that the economic inequality engendered by neoliberalism creates inequality of political power, undermining democracy and the citizen's ability to meaningfully participate. Despite the focus on economic efficiency, some critics allege that neoliberal policies actually produce economic inefficiency, economic inefficiencies. The replacement of a government-owned monopoly with privately held company, privately owned companies might reduce the efficiencies associated with economies of scale. Structurally, some economists argue that neoliberalism is a system that social ownership, socializes costs and private property, privatizes profit (economics), profits. They argue this results in an abdication of private responsibility for socially destructive economic choices and may result in regressive governmental controls on the economy to reduce damages by private individuals. American political theologian
Adam Kotsko Adam Kotsko (born 1980) is an American theologian, religious scholar, culture critic, and translator, working in the field of political theology. He served as an Assistant Professor of Humanities at Shimer College in Chicago, which was absorbed in ...
argues that contemporary right-wing populism, exemplified by Brexit and the Trump Administration, represent a "heretical" variant of neoliberalism, which accepts its core tenets but pushes them to new, almost "parodic" extremes.


Inequality

Critics have argued that neoliberal policies have increased economic inequality and exacerbated global
poverty Poverty is the state of having few material possessions or little income. Poverty can have diverse
. The Center for Economic and Policy Research , Center for Economic and Policy Research's (CEPR) Dean Baker argued in 2006 that the driving force behind rising inequality in the United States has been a series of deliberate neoliberal policy choices, including anti-
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
ary bias, anti-Trade union, unionism and profiteering in the healthcare industry. The economists David Howell and Mamadou Diallo contend that neoliberal policies have contributed to a Economy of the United States, United States economy in which 30% of workers earn low wages (less than two-thirds the median wage for full-time workers) and 35% of the labor force is underemployment, underemployed while only 40% of the working-age population in the country is adequately employed. The globalization of neoliberalism has been blamed for the emergence of a "precariat", a new social class facing acute socio-economic insecurity and alienation. In the United States, the "neoliberal transformation" of industrial relations, which considerably diminished the power of trade union, unions and increased the power of employers, has been blamed by many for increasing precarity, which could be responsible for as many as 120,000 excess deaths per year. In Venezuela, prior to the Crisis in Venezuela, Venezuelan crisis, deregulation of the labor economics, labor market resulted in greater informal economy, informal employment and a considerable increase in work accident, industrial accidents and occupational diseases. Even in Sweden, in which only 6% of workers are beset with wages the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
considers low, some scholars argue that the adoption of neoliberal reforms—in particular the privatization of public services and the reduction of state benefits—is the reason it has become the nation with the fastest growing income inequality in the OECD. A 2016 report by researchers at the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) was critical of neoliberal policies for increasing economic inequality. While the report included praise for neoliberalism, saying "there is much to cheer in the neoliberal agenda," it noted that certain neoliberal policies, particularly freedom of capital and fiscal consolidation, resulted in "increasing economic inequality, inequality", which "in turn jeopardized durable [economic] expansion". The report contends that the implementation of neoliberal policies by economic and political
elite In political and sociological theory, the elite (french: élite, from la, eligere, to select or to sort out) are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group. ...
s has led to "three disquieting conclusions": * The benefits in terms of increased economic growth, growth seem fairly difficult to establish when looking at a broad group of countries. * The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity (economics), equity effects of some aspects of the neoliberal agenda. * Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects. A number of scholars see increasing inequality arising out of neoliberal policies as a deliberate effort, rather than a consequence of ulterior motives like increasing economic growth.
Marxist Marxism is a left-wing to far-left method of socioeconomic analysis that uses a materialist interpretation of historical development, better known as historical materialism, to understand class relations and social conflict and a dialecti ...
economic geographer David Harvey (geographer), David Harvey describes neoliberalism as a "social class, class project" "carried out by the corporate capitalist class", and argued in his book ''A Brief History of Neoliberalism'' that neoliberalism is designed to increase the class power of economic
elite In political and sociological theory, the elite (french: élite, from la, eligere, to select or to sort out) are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group. ...
s.Archived a
Ghostarchive
and th
Wayback Machine
Also see .
Economists Gérard Duménil and Dominique Lévy posit that "the restoration and increase of the power, income, and wealth of the upper classes" are the primary objectives of the neoliberal agenda. Economist David M. Kotz contends that neoliberalism "is based on the thorough domination of working class, labor by Bourgeoisie, capital". Sociologist Thomas Volscho argues that the imposition of neoliberalism in the United States arose from a conscious political mobilization by capitalist
elite In political and sociological theory, the elite (french: élite, from la, eligere, to select or to sort out) are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group. ...
s in the 1970s, who faced two self-described crises: the legitimacy of capitalism and a falling rate of profit (economics), profitability in industry. SSRN Pre-publication is free access ; SAGE Journals doi publication is closed access . In ''The Global Gamble'', Peter Gowan argued that "neoliberalism" was not only a free-market ideology but "a social engineering project". Globally, it meant opening a state's political economy to products and financial flows from the core countries. Domestically, neoliberalism meant the remaking of social relations "in favour of creditor and rentier interests, with the subordination of the productive sector to financial sectors, and a drive to shift wealth, power and security away from the bulk of the working population."


Corporatocracy

Some organizations and economists believe neoliberal policies increase the power of corporations and shift wealth to the upper classes. For instance, Jamie Peck and Adam Tickell argue that urban citizens are increasingly deprived of the power to shape the basic conditions of daily life, which are instead shaped by companies involved in the competitive economy. The
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) and
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, two major international organizations which often espouse neoliberal views, have been criticized for advancing neoliberal policies around the world. Sheldon Richman, editor of the libertarian journal ''The Freeman'', argues that the IMF has imposed a "corporatist-flavored 'neoliberalism' on the troubled countries of the world." He contends that IMF policies of spending cuts and tax increases, as well as subjection to paternalistic supranational bureaucrats, have fostered "long-term dependency, perpetual indebtedness, moral hazard, and politicization" in the developing world, which has undermined "real market reform" and "set back the cause of genuine liberalism." Ramaa Vasudevan, associate professor of economics at Colorado State University, states that trade policies and treaties fostered by the United States in the neoliberal era, along with bailouts brokered by the World Bank and the IMF, have allowed corporate capital to expand around the world unimpeded by trade protections or national borders, "sucking countries in different regions of the world into global corporations' logic of accumulation." This expansion of global corporate capital, Vasudevan says, has buttressed its ability to "orchestrate a global division of labor most conducive to the demands of profitability" which in turn has facilitated "a brutal, global race to the bottom". Mark Arthur, a Senior Fellow at the Center for Global Development Research in Denmark, has written that the influence of neoliberalism has given rise to an "anti-corporatists, anti-corporatist" movement in opposition to it. This "anti-corporatist" movement is articulated around the need to reclaim the power that corporations and global institutions have stripped from governments. He says that Adam Smith's "rules for mindful markets" served as a basis for the anti-corporate movement, "following government's failure to restrain corporations from hurting or disturbing the happiness of the neighbor [Smith]".


Mass incarceration

Several scholars have linked Incarceration in the United States, mass incarceration of the poor in the United States with the rise of neoliberalism. Sociologist Loïc Wacquant and Marxist economic geographer
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his P ...
have argued that the criminalization of poverty and mass incarceration is a neoliberal policy for dealing with social instability among economically marginalized populations. According to Wacquant, this situation follows the implementation of other neoliberal policies, which have allowed for the retrenchment of the social
welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...
and the rise of punitive workfare, whilst increasing gentrification of urban areas,
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of public functions, the shrinking of collective protections for the working class via economic
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
and the rise of underpaid, precarity, precarious wage labor. By contrast, it is extremely lenient in dealing with those in the upper echelons of society, in particular when it comes to economic crimes of the upper class and corporations such as fraud, embezzlement, insider trading, credit and insurance fraud, money laundering and violation of commerce and labor codes. According to Wacquant, neoliberalism does not shrink government, but instead sets up a "centaur state" with little governmental oversight for those at the top and strict control of those at the bottom. In expanding upon Wacquant's thesis, sociologist and political economist John L. Campbell of Dartmouth College suggests that through Private prison, privatization the prison system exemplifies the centaur state. He states that "on the one hand, it punishes the lower class, which populates the prisons; on the other hand, it profits the upper class, which owns the prisons, and it employs the middle class, which runs them." In addition, he argues that the prison system benefits corporations through outsourcing, as inmates are "slowly becoming a source of low-wage labor for some US corporations". Both through privatization and outsourcing, Campbell argues, the penal state reflects neoliberalism. Campbell also argues that while neoliberalism in the United States established a penal state for the poor, it also put into place a debtor state for the middle class and that "both have had perverse effects on their respective targets: increasing rates of incarceration among the lower class and increasing rates of indebtedness—and recently home foreclosure—among the middle class." David McNally (professor), David McNally, Professor of Political Science at York University, argues that while expenditures on social welfare , welfare programs have been cut, expenditures on prison construction have increased significantly during the neoliberal era, with California having "the largest prison-building program in the history of the world". The scholar Bernard Harcourt contends the neoliberal concept that the state is inept when it comes to economic regulation, but efficient in policing and punishing "has facilitated the slide to mass incarceration". Both Wacquant and Harcourt refer to this phenomenon as "Neoliberal Penality".


Financialization

The implementation of neoliberal policies and the acceptance of neoliberal economic theories in the 1970s are seen by some academics as the root of financialization, with the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
as one of its results. In particular, various neoliberal ideologies that had long been advocated by elites, such as
monetarism Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on nati ...
and
supply-side economics Supply-side economics is a Macroeconomics, macroeconomic theory that postulates economic growth can be most effectively fostered by Tax cuts, lowering taxes, Deregulation, decreasing regulation, and allowing free trade. According to supply-sid ...
, were translated into government policy by the
Reagan administration Ronald Reagan's tenure as the 40th president of the United States began with his first inauguration on January 20, 1981, and ended on January 20, 1989. Reagan, a Republican from California, took office following a landslide victory over ...
, which resulted in decreased government regulation and a shift from a tax-financed state to a debt-financed one. While the profitability of industry and the rate of economic growth never recovered to the heyday of the 1960s, the political and economic power of Wall Street and finance capital vastly increased due to debt-financing by the state. A 2016
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) report blames certain neoliberal policies for exacerbating financial crises around the world, causing them to grow bigger and more damaging.


Globalization

Neoliberalism is commonly viewed by scholars as encouraging of
globalization Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...
, which is the subject of much Anti-globalization movement, criticism. The emergence of the "precariat", a new class facing acute socio-economic insecurity and alienation, has been attributed to the globalization of neoliberalism.


Imperialism

A number of scholars have alleged neoliberalism encourages or covers for imperialism. For instance, Ruth J Blakeley, Professor of Politics and International Relations at the University of Sheffield, accuses the United States and its allies of fomenting state terrorism and mass killings during the
Cold War The Cold War is a term commonly used to refer to a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term '' cold war'' is used because t ...
as a means to buttress and promote the expansion of
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
and neoliberalism in the developing world. As an example of this, Blakeley says the case of Indonesia demonstrates that the U.S. and the UK put the interests of capitalist
elite In political and sociological theory, the elite (french: élite, from la, eligere, to select or to sort out) are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group. ...
s over the human rights of hundreds of thousands of Indonesians by supporting the Indonesian Army as it waged a Indonesian mass killings of 1965–66, campaign of mass killings, which resulted in the annihilation of the Communist Party of Indonesia and its civilian supporters. Historian Bradley R. Simpson posits that this campaign of mass killings was "an essential building block of the neoliberal policies that the West would attempt to impose on Indonesia after Sukarno's ouster." Geographer
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his P ...
argues neoliberalism encourages an indirect form of imperialism that focuses on the extraction of resources from developing countries via financial mechanisms. This is practiced through international institutions like the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) and
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
who negotiate debt relief with developing nations. He alleges that these institutions prioritize the financial institutions that grant the loans over the debtor countries and place requirements on loans that, in effect, act as financial flows from debtor countries to developed countries (for example, to receive a loan a state must have sufficient foreign exchange reserves—requiring the debtor state to buy US Treasury bonds, which have interest rates lower than those on the loan). Economist Joseph Stiglitz has said of this: "What a peculiar world in which poor countries are in effect subsidizing the richest."


Global health

The neoliberal approach to global health advocates
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of the healthcare industry and deregulation, reduced government interference in the market, and focuses on non-governmental organizations (NGOs) and international organizations like the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
(IMF) and the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
rather than government. This approach has faced considerable criticism. James Pfeiffer, Professor of Global Health at the University of Washington, has criticised the use of Structural adjustment, Structural Adjustment Programs (SAPs) by the World Bank and IMF in Mozambique, which resulted in reduced government health spending, leading international NGOs to fill service holes previously filled by government. Rick Rowden, a Senior Economist at Global Financial Integrity, has criticised the IMF's monetarism, monetarist approach of prioritising price stability and fiscal restraint, which he alleges was unnecessarily restrictive and prevented developing countries from scaling up long-term investment in public health infrastructure. Within the developed capitalist world, according to Dylan Sullivan and
Jason Hickel Jason Edward Hickel (born 1982) is an economic anthropologist whose research focuses on ecological economics, global inequality, imperialism and political economy. He is known for his books ''The Divide: A Brief Guide to Global Inequality and ...
, neoliberal countries like the United States have inferior health outcomes and more poverty compared to Social democracy, social democracies with universalist welfare states, in particular the Nordic model, Nordics. Some commentators have blamed neoliberalism for various social ills, including mass shootings, and deaths of despair in the United States.


Environmental impact

It has been argued that trade-led, unregulated economic activity and lax state regulation of pollution have led to environmental degradation. Furthermore, modes of production encouraged under neoliberalism may reduce the availability of natural resources over the long term, and may therefore not be sustainable within the world's resource depletion, limited geographical space. In Robert Fletcher's 2010 piece, "Neoliberal Environmentality: Towards a Poststructuralist Political Ecology of the Conservation Debate" his premise is that there is a conflict of ideas in conservation; that on one side of things you have deep ecology and protectionist paradigms and on the other side you have community based conservation efforts. There are problems with both approaches, and on either side they frequently fail to do conservation work in a substantial way. In the middle, Fletcher sees a space where social sciences are able to critique both sides of and blend the approaches, forming not a triangle of ideologies, but a spectrum. The relationship between capitalism and conservation is one that has to be reckoned with due to an overarching neoliberal framework guiding most conservation efforts.
Marxist Marxism is a left-wing to far-left method of socioeconomic analysis that uses a materialist interpretation of historical development, better known as historical materialism, to understand class relations and social conflict and a dialecti ...
economic geographer
David Harvey David W. Harvey (born 31 October 1935) is a British-born Marxist economic geographer, podcaster and Distinguished Professor of anthropology and geography at the Graduate Center of the City University of New York (CUNY). He received his P ...
argues neoliberalism is to blame for Holocene extinction, increased rates of extinction. Notably, he observes that "the era of neoliberalization also happens to be the era of the fastest mass extinction of species in the Earth's recent history." American philosopher and animal rights activist Steven Best argues that three decades of neoliberal policies have "marketized the entire world" and intensified "the assault on every ecosystem on the earth as a whole". Neoliberalism reduces the "tragedy of the commons" to an argument for private ownership. The Friedman doctrine, which Nicolas Firzli has argued defined the neoliberal era, may lead companies to neglect concerns for the environment. Firzli insists that prudent, fiduciary-driven long-term investors cannot ignore the environmental, social and corporate governance consequences of actions taken by the CEOs of the companies whose shares they hold as "the long-dominant Friedman stance is becoming culturally unacceptable and financially costly in the boardrooms of pension funds and industrial firms in Europe and North America". Critics like Noel Castree focus on the relationship between neoliberalism and the biophysical environment explain that critics of neoliberals see the free market as the best way to mediate the relationship between producers and consumers, as well as maximize freedom in a more general sense which they view as inherently good. Castree also asserts that the assumption that markets will allow for the maximization of individual freedom is incorrect.


Political opposition

In political science, disillusionment with neoliberalism is seen as a cause of politicization, depoliticization and the growth of anti-political sentiment, which can in turn encourage populism, populist politics and "repoliticization". Instances of political opposition to neoliberalism from the late 1990s onward include: * Research by Kristen Ghodsee, ethnographer and Professor of Russian and East European Studies at the University of Pennsylvania, shows that widespread discontent with neoliberal capitalism has led to a "Communist nostalgia, red nostalgia" in much of the former Communist bloc. She notes that "the political freedoms that came with democracy were packaged with the worst type of unregulated, free-market capitalism, which completely destabilized the rhythms of everyday life and brought crime, corruption and chaos where there had once been comfortable predictability," which ultimately fueled a resurgence of extremist nationalism. * In Latin America, the "pink tide" that swept leftist governments into power at the turn of the millennium can be seen as a reaction against neoliberal hegemony and the notion that "there is no alternative" (TINA) to the
Washington Consensus The Washington Consensus is a set of ten economic policy prescriptions considered to constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Mone ...
. * In protest against neoliberal globalization, South Korean farmer and former president of the Korean Advanced Farmers Federation Lee Kyung-hae committed suicide by stabbing himself in the heart during a meeting of the World Trade Organization in Cancun, Mexico, in 2003. He was protesting against the decision of the South Korean government to reduce subsidies to farmers. *The rise of anti-austerity parties in Europe and SYRIZA's victory in the Greek legislative election, January 2015, Greek legislative elections of January 2015 have some proclaiming "the end of neoliberalism". *In 2018, the Yellow vests movement in France and the 2019–2021 Chilean protests, have emerged in direct opposition to neoliberal governments and policies including
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
and
austerity Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
, which are blamed for the rising cost of living, surging personal debts, and increased economic inequality. In 2019, protests against neoliberal reforms, policies and governments have taken place in scores of countries on 5 continents, with opposition to austerity, privatization and tax hikes on the working classes being a common theme among many of them. * During the 2021 Chilean general election, president-elect Gabriel Boric promised to end the country's neoliberal economic model, stating that "if Chile was the cradle of neoliberalism, it will also be its grave."


See also

* Anarcho-capitalism * Beltway libertarianism * Capitalism * Capitalist realism * Classical liberalism * Conservatism in the United States * Conservative liberalism * Cultural globalization * Economic globalization * Economic liberalism * Elite theory * Free market * Globalism * Globalization * History of macroeconomic thought * Inverted totalitarianism * Late capitalism * Neoclassical economics * Neoclassical liberalism * Neoconservatism * Neo-libertarianism * Objectivism * Political Economy * Reagan Democrat * Reaganomics * Reason magazine * Right libertarianism * Shock therapy (economics) * Thatcherism * Triangulation (politics), Triangulation * Trickle-down economics


References


Bibliography

*


Further reading


Summaries and histories

* Albo, Gregory. "Neoliberalism from Reagan to Clinton." ''Monthly Review'' 52.11 (2001): 81-89, in US
online
* * * * Burgin, Angus. ''The Great Persuasion: Reinventing Free Markets since the Depression'' (Harvard University Press, 2012) 303pp * Cahill, Damien, et al., eds. ''The SAGE handbook of neoliberalism'' (Sage, 2018). * Cahill, Damien and Konings, Martijn. ''Neoliberalism''. John Wiley & Sons. 2017. * Campbell, John L., and Ove K. Pedersen, eds. ''The Rise of Neoliberalism and Institutional Analysis'' Princeton University Press, 2001. 288 pp. * Eagleton-Pierce, Matthew (2015).
Neoliberalism: The Key Concepts
'' Routledge. * * * Kingstone, Peter. ''The Rise and Fall (and Rise Again?) of Neoliberalism in Latin America'' (Sage Publications Ltd, 2018). * * * Prasad, Monica. "The popular origins of neoliberalism in the Reagan tax cut of 1981." ''Journal of Policy History'' 24.3 (2012): 351-383. * * * * * Wang, Hui, and Karl, Rebecca E. "1989 and the Historical Roots of Neoliberalism in China," ''positions: east Asia cultures critique'', Volume 12, Number 1, Spring 2004, pp. 7–70


Criticisms

* * Brady, David. 2008. ''Rich Democracies, Poor People: How Politics Explain Poverty''. New York: Oxford University Press. * Wendy Brown (political scientist), Brown, Wendy (2005). "Neoliberalism and the End of Liberal Democracy" in ''Edgework: critical essays on knowledge and politics'' Princeton University Press, ch 3
Abstract
* * Buschman, John. ''Libraries, Classrooms, and the Interests of Democracy: Marking the Limits of Neoliberalism''. The Scarecrow Press. Rowman & Littlefield. 2012. 239 pp. notes. bibliog. index. . * * Crouch, Colin.
The Strange Non-death of Neo-liberalism
', Polity Press, 2011. (Reviewed in
The Montreal Review
') * Davies, William.
The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition.
' Sage Publications, 2014. * * * * * * * Henry Giroux, Giroux, Henry (2008). ''Against the Terror of Neoliberalism: Politics Beyond the Age of Greed (Cultural Politics and the Promise of Democracy).'' Paradigm Publishers. * Giroux, Henry (2013)
''Public Intellectuals Against the Neoliberal University''
''philosophersforchange.org''. * Giroux, Henry (2014). ''Neoliberalism's War on Higher Education.'' Haymarket Books. * Bernard Harcourt, Harcourt, Bernard (2012).
The Illusion of Free Markets: Punishment and the Myth of Natural Order
'' Harvard University Press. * * * * * * * Vicenç Navarro, Navarro, Vicenç, ed. ''Neoliberalism, Globalization, and Inequalities: Consequences for Health and Quality of Life (Policy, Politics, Health, and Medicine Series).'' Baywood Publishing Company, 2007. * Overbeek, Henk and Bastiaan van Apeldoorn (2012).
Neoliberalism in Crisis
'' Palgrave Macmillan. * * * * Springer, Simon (2015).
Violent Neoliberalism: Development, Discourse, and Dispossession in Cambodia
'' Palgrave Macmillan. * Stiglitz, Joseph (13 May 2019)
"Three decades of neoliberal policies have decimated the middle class, our economy, and our democracy"
Market Watch. * * Paul Verhaeghe, Verhaeghe, Paul (2014). ''What About Me? The Struggle for Identity in a Market-Based Society.'' Scribe Publications. * Loïc Wacquant, Wacquant, Loïc (2009).
Prisons of Poverty
'' University of Minnesota Press. *


Other academic articles

* * Cahill, Damien. "The End of Laissez-Faire?: On the Durability of Embedded Neoliberalism". Edward Elgar Publishing. 2014. * * Cooper, Melinda (2017). ''Family Values: Between Neoliberalism and the New Social Conservatism.'' Zone Books. * * Ferris, Timothy. ''The Science of Liberty'' (2010) HarperCollins 384 pages * Foucault, Michel. ''The Birth of Biopolitics'' Lectures at the College de France, 1978–1979. London: Palgrave, 2008. * Griffiths, Simon, and Kevin Hickson, eds. ''British Party Politics and Ideology after New Labour'' (2009) Palgrave Macmillan 256 pp. * * * * Ingar Solty, Solty, Ingar (2012). "After Neoliberalism: Left versus right projects of leadership in the global crisis," in Stephen Gill (political scientist), Stephen Gill (Ed) (2012). ''Global Crises and the Crisis of Global Leadership'' (Cambridge University Press), pp. 199–214. * Stahl, Garth; "Identity, Neoliberalism and Aspiration: Educating White Working-Class Boys" (London, Routledge, 2015).


External links


Neoliberalism
— entry at ''Encyclopædia Britannica''
"Neoliberalism 101"
— podcast by The Cato Institute
"What is Neoliberalism?"
— video by the Barnard Center for Research on Women
"Monetarism"
— The New School's Economics Department's History of Economic Thought website
"Neoliberalism and the State"
— discussion between Toronto Metropolitan University, Ryerson University professors John Shields and Bryan Evans
"A Look at Argentina's 2001 Economic Rebellion"
– video report by ''Democracy Now!''
"The Scorecard on Development, 1960–2010: Closing the Gap?"
— report by the Center for Economic and Policy Research, April 2011
"The crisis of neoliberalism"
– 2010 interview with economist Gérard Duménil on ''The Real News''
"Henry Giroux on Resisting the Neoliberal Revolution"
— interview with Henry Giroux by Bill Moyers, February 21, 2014.
The Politics of the Anthropocene in a World After Neoliberalism
''Boston Review''. March 10, 2021.
Capitalism: What Makes Us Free?
NPR. July 1, 2021.
Has Covid ended the neoliberal era?
''The Guardian''. September 2, 2021

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Online lectures


"The Neoliberal City"
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. University Channel. October 4, 2010.
"Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism"
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. ''Democracy Now!''. October 2008.
"Neo-Liberalism: An Accounting"
Noam Chomsky. University of Massachusetts Amherst. April 19, 2017. {{Authority control Neoliberalism, Classical liberalism Conservative liberalism Economic globalization Economic liberalism Ideologies of capitalism Imperialism studies Liberalism Political terminology Political theories