Neoliberalism

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For the school of international relations, see Neoliberalism (international relations).

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Neoliberalism (neo-liberalism)[1] refers primarily to the 20th century resurgence of 19th century
ideas associated with laissez-faireeconomic liberalism.[2]:7 These include extensive economic
liberalization policies such as privatization, fiscal austerity, deregulation,free trade, and reductions
in government spending in order to increase the role of the private sector in the economy and
society.[3][4][5][6][7][8][9] These market-based ideas and the policies they inspired constitute a paradigm
shift away from the post-warKeynesian consensus which lasted from 1945 to 1980.[10][11] 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 financial crisis of 2007
08 as one of the ultimate results.[12][13][14][15][16][17]
The term has been used in English since the start of the 20th century with different meanings, [18] but
became more prevalent in its current meaning in the 1970s and 1980s by scholars in a wide variety
of social sciences,[19][20] as well as being used by critics.[21][22] Modern advocates of free market policies
avoid the term "neoliberal"[23] and some scholars have described the term as meaning different things
to different people,[24][25] as neoliberalism "mutated" into geopolitically distinct hybrids as it travelled
around the world.[3] As such, neoliberalism shares many attributes with other contested concepts,
including democracy.[4]
The definition and usage of the term have changed over time.[4] It was originally an economic
philosophy that emerged among European liberal scholars in the 1930s in an attempt to trace a so-
called "third" or "middle" way between the conflicting philosophies of classical liberalism and socialist
planning.[26]:145 The impetus for this development arose from a desire to avoid repeating the economic
failures of the early 1930s, which were mostly blamed by neoliberals on the economic policy of
classical liberalism. In the decades that followed, the use of the term neoliberal tended to refer to
theories at variance with the more laissez-faire doctrine of classical liberalism, and promoted instead
a market economy under the guidance and rules of a strong state, a model which came to be known
as the social market economy.
In the 1960s, usage of the term "neoliberal" heavily declined. When the term was reintroduced in the
1980s in connection withAugusto Pinochet's economic reforms in Chile, the usage of the term had
shifted. It had not only become a term with negative connotations employed principally by critics of
market reform, but it also had shifted in meaning from a moderate form of liberalism to a more
radical and laissez-faire capitalist set of ideas. Scholars now tended to associate it with the theories
of economistsFriedrich Hayek and Milton Friedman,[4] along with politicians and policy-makers such
as Margaret Thatcher, Ronald Reagan andAlan Greenspan.[27] Once the new meaning of
neoliberalism was established as a common usage among Spanish-speaking scholars, it diffused
into the English-language study of political economy.[4] By 1994, with the passage of NAFTA and
the Zapatistas reaction to this development in Chiapas, the term entered global circulation.
[3]
Scholarship on the phenomenon of neoliberalism has been growing. [20] The impact of the global
20082009 crisis has also given rise to new scholarship that critiques neoliberalism and seeks
developmental alternatives.[28]

Contents
 [hide]

1Terminology

o 1.1Origins

o 1.2Current usage

2Early history

o 2.1Colloque Walter Lippmann

o 2.2Mont Pelerin Society

3Post-WWII neo-liberal currents

o 3.1Argentina

o 3.2Australia

o 3.3Chile

o 3.4Germany

o 3.5China

o 3.6United Kingdom

o 3.7United States

4Traditions

o 4.1Austrian School

o 4.2Chicago School

5Political policy aspects

o 5.1Political freedom

6Criticism

o 6.1Class project

o 6.2Global health

o 6.3Infrastructure
 o 6.4Corporatism

o 6.5Environmental impact

o 6.6Political opposition

o 6.7Protest

7Neoliberalism and Social Capital

8See also

9Notes

10Further reading

11External links

o 11.1Online lectures

Terminology[edit]
Origins[edit]

Friedrich von Hayek

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 economistMaffeo Pantaleoni,[29] with the term "no-libralisme"
previously existing in French,[18] and the term was later used by others including the economist Milton
Friedman in a 1951 essay.[30] In 1938 at the Colloque Walter Lippmann, the term "neoliberalism" was
proposed, among other terms, and ultimately chosen to be used to describe a certain set of
economic beliefs.[26]:123[31] 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".[26]:134 To be "neoliberal" meant advocating a modern economic policy with state
intervention.[26]:48 Neoliberal state interventionism brought a clash with the opposing laissez-
faire camp of classical liberals, like Ludwig von Mises.[32] While present-day scholars[who?] tend to
identify Friedrich Hayek, Milton Friedman, and Ayn Rand as the most important theorists of
neoliberalism, most scholars in the 1950s and 1960s understood neoliberalism as referring to the
social market economy and its principal economic theorists such as Eucken, Rpke, Rstow, and
Mller-Armack. Although Hayek had intellectual ties to the German neoliberals, his name was only
occasionally mentioned in conjunction with neoliberalism during this period due to his more pro-free
market stance.[33]
During the military rule under Augusto Pinochet (19731990) in Chile, opposition scholars took up
the expression to describe the economic reforms implemented there and its proponents (the
"Chicago Boys").[4] Once this new meaning was established among Spanish-speaking scholars, it
diffused into the English-language study of political economy.[4] 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 largely become a
term of condemnation employed by critics, and suggests a market fundamentalismcloser to
the laissez-faire principles of the paleoliberals[who?] than to the ideas of those who originally attended
the colloquium. This leaves some controversy as to the precise meaning of the term and its
usefulness as a descriptor in the social sciences, especially as the number of different kinds of
market economies have proliferated in recent years.[4]
Another center-left movement from modern American liberalism that used the term "neoliberalism" to
describe its ideology formed in the United States in the 1970s. According to David Brooks, prominent
neoliberal politicians included Al Gore and Bill Clinton of the Democratic Party of the United States.
[34]
The neoliberals coalesced around two magazines, the New Republic and the Washington
Monthly. The "godfather" of this version of neoliberalism was the journalist Charles Peters[35] who in
1983 published " A Neoliberal's Manifesto".[36]
Current usage[edit]
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."[37] Neoliberal theory argues that a free market will allow efficiency, economic growth, income
distribution, and technological progress to occur. Any state intervention to encourage these
phenomena will worsen economic performance. [38]
At a base level we can say that when we make reference to 'neoliberalism', we are generally referring to the new
political, economic and social arrangements within society that emphasize market relations, re-tasking the role of the
state, and individual responsibility. Most scholars tend to agree that neoliberalism is broadly defined as the extension
of competitive markets into all areas of life, including the economy, politics and society.

The Handbook of Neoliberalism[3]

According to some scholars, neoliberalism is commonly used as a catchphrase and pejorative term,
outpacing similar terms such as monetarism, neoconservatism, the Washington Consensus and
"market reform" in much scholarly writing,[4] The term has been criticized,[39][40] including by those who
often advocate for policies characterized as neoliberal.[16]:74 Historian Daniel Stedman Jones says the
term "is too often used as a catch-all shorthand for the horrors associated with globalization and
recurring financial crises"[41]:2 The Handbook of Neoliberalism 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." Yet the
handbook argues to view the term as merely a pejorative or "radical political slogan" is to "reduce 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."[3] Currently, neoliberalism is most commonly used to refer to market-oriented reform
policies such as "eliminating price controls, deregulating capital markets, lowering trade barriers",
and reducing state influence on the economy, especially through privatization and austerity.[4] Other
scholars note that neoliberalism is associated with the economic policies introduced by Margaret
Thatcher in the United Kingdom and Ronald Reagan in the United States.[5]
There are several distinct usages of the term that can be identified:

As a development model, it refers to the rejection of structuralist economics in favor of the

Washington Consensus.

As an ideology, it denotes a conception of freedom as an overarching social

value associated with reducing state functions to those of a minimal state.

As an academic paradigm, it is closely related to neoclassical economic theory.[4]

Sociologists Block and Somers claim there is a dispute over what to call the influence of free market
ideas which have been used to justify the retrenchment of New Dealprograms and policies over the
last thirty years: neoliberalism, laissez-faire or "free market ideology."[42] Others, such as Braedley
and Luxton, assert that neoliberalism is a political philosophy which seeks to "liberate" the processes
of capital accumulation.[13] In contrast, Piven sees neoliberalism as essentially hyper-capitalism.
[43]
However, Robert W. McChesney, while defining it 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.[44]:7
8
Lester Spence uses the term to critique trends in Black politics, defining neoliberalism as "the
general idea that society works best when the people and the institutions within it work or are
shaped to work according to market principles."[45]

Early history[edit]
Colloque Walter Lippmann[edit]

Per capita income during the Great Depression[46]

The worldwide Great Depression of the 1930s brought about high unemployment and widespread
poverty, and was widely regarded as a failure of economic liberalism. To renew liberalism a group of
25 intellectuals organised the Walter Lippmann Colloquium at Paris in August 1938. It brought
together Louis Rougier, Walter Lippmann, Friedrich von Hayek, Ludwig von Mises, Wilhelm
Rpke andAlexander Rstow among others. Most agreed that the liberalism of laissez faire had
failed and that a new liberalism needed to take its place with a major role for the state. Mises and
Hayek refused to condemn laissez faire, but all participants were united in their call for a new project
they dubbed "neoliberalism."[47]:189 They agreed the Colloquium into a permanent think tank called
Centre International dtudes pour la Rnovation du Libralisme based in Paris.
Deep disagreements in the group separated 'true (third way) neoliberals' around Rstow and
Lippmann on the one hand and old school liberals around Mises and Hayek on the other. The first
group wanted a strong state to supervise, while the second insisted that the only legitimate role for
the state was to abolish barriers to market entry. Rstow wrote that Hayek and Mises were relics of
the liberalism that caused the Great Depression. Mises denounced the other faction, complaining
that Ordoliberalism really meant "ordo-interventionism".[47]:1920
Mont Pelerin Society[edit]
Neoliberalism began accelerating in importance with the founding of the Mont Pelerin Society, in
1947, by Friedrich Hayek. The Colloque Walter Lippmann was largely forgotten.[48] The new society
brought together the widely scattered free market thinkers and political figures.
Hayek and others believed that classical liberalism had failed because of crippling conceptual flaws
and that the only way to diagnose and rectify them was to withdraw into an intensive discussion
group of similarly minded intellectuals.[26]:16
With central planning in the ascendancy worldwide and few avenues to influence policymakers, the
society served to bring together isolated advocates of liberalism as a "rallying point" as Milton
Friedman phrased it. Meeting annually, it would soon be a "kind of international 'who's who' of the
classical liberal and neo-liberal intellectuals."[49] While the first conference in 1947 was almost half
American, the Europeans concentration dominated by 1951. Europe would remain the epicenter of
the community with Europeans dominating the leadership. [26]:167

Post-WWII neo-liberal currents[edit]

Argentina[edit]
Further information: Jos Alfredo Martnez de Hoz and Domingo Cavallo
In the 1960s, Latin American intellectuals began to notice the ideas of ordoliberalism; these
intellectuals often used the Spanish term neoliberalismo to refer to this school of thought. They were
particularly impressed by the social market economy and the Wirtschaftswunder (economic
miracle) in Germany, and speculated about the possibility of accomplishing similar policies in their
own countries. Neoliberalism in 1960s meant essentially a philosophy that was more moderate than
classical liberalism and favored using state policy to temper social inequality and counter a tendency
toward monopoly.[4]
In 1976, the military dictatorship's economic plan, led by Martnez de Hoz, was the first attempt at a
neoliberalist plan in Argentina. They implemented a fiscal austerity plan, whose goal was to reduce
money printing and thus 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. Also, aiming for
a free market, they decided to open the country's borders, so that foreign goods could freely enter
the country. Argentina's industry, which had been on the rise for the last 20 years since Frondizi's
economic plan, rapidly declined, because it wasn't able to compete with foreign goods. Finally, the
deregulation of the financial sector, gave a short-term growth, but then rapidly fell apart when capital
fled to US in the Reagan years.[citation needed] Following the measures, there was an increase in poverty
from 9% in 1975 to 40% at the end of 1982.[50]
From 1989 to 2001, another neoliberalist plan was attempted by Domingo Cavallo. This time, the
privatization of public services was the main objective of the government; although financial
deregulation and open borders to foreign goods were also re-implemented. While some
privatizations were welcomed, the majority of them were criticized for not being in the people's best
interests. Along with an increased labour market flexibility, the final result of this plan was an
unemployment rate of 25% and 60% of people living under the poverty line, alongside 33 people
killed by the police in protests that ended up with the president, Fernando de la Ra, resigning two
years before his term as president was completed.[citation needed]
Australia[edit]
In Australia, neoliberal economic policies are embraced by governments of both the Labor Party and
the Liberal Party since the 1980s. The governments of Bob Hawke and Paul Keating from 1983 to
1996 pursued economic liberalisation and a program of micro-economic reform. These governments
privatized government corporations, deregulated factor markets, floated the Australian dollar, and
reduced trade protection.[51]
Keating, as federal treasurer, implemented a compulsory superannuation guarantee system in 1992
to increase national savings and reduce future government liability for old age pensions. [52] The
financing of universities was deregulated, requiring students to contribute to 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.[53] The admitting of domestic full fee paying students to public universities was stopped in
2009 by the Rudd Labor Government.[54]
Chile[edit]
Further information: Crisis of 1982 and Miracle of Chile

Pamphlet calling for a protest in 1983 following the economic crisisattributed to neoliberal experimentation[55][56]

In 1955, a select group of Chilean students (later known as the Chicago Boys) were invited to
the University of Chicago to pursue postgraduate studies in economics. They worked directly under
Friedman and his disciple, Arnold Harberger, while also being exposed to Hayek. When they
returned to Chile in the 1960s, they began a concerted effort to spread the philosophy and policy
recommendations of the Chicago and Austrian schools, setting up think tanks and publishing in
ideologically sympathetic media. Under the military dictatorship headed by Pinochet and severe
social repression, the Chicago boys implemented radical economic reform. The latter half of the
1970s witnessed rapid and extensive privatization, deregulation, and reductions in trade barriers. In
1978 policies that would reduce the role of the state and infuse competition and individualism into
areas such as labor relations, pensions, health, and education were introduced. [4] These policies
resulted in widening inequality as they negatively impacted the wages, benefits and working
conditions of Chile's working class.[50][57]According to Chilean economist Alejandro Foxley, by the end
of Pinochet's reign around 44% of Chilean families were living below the poverty line. [58] According
to Klien, by the late 1980s the economy had stabilized and was growing, but around 45% of the
population had fallen into poverty while the wealthiest 10% saw their incomes rise by 83%. [59]
In 1990 the military dictatorship ended. Hayek argued that increased economic freedom had put
pressure on the dictatorship over time and increased political freedom. Years earlier he argued that
"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."[60]The Chilean scholars Martnez and Daz
rejected this argument, pointing to the long tradition of democracy in Chile. The return of democracy
required the defeat of the Pinochet regime, though it had been fundamental in saving capitalism. The
essential contribution came from profound mass rebellions, and finally, old party elites using old
institutional mechanisms to bring back democracy.[61]
Germany[edit]
Ludwig Erhard

Neoliberal ideas were first implemented in West Germany. The economists around Ludwig
Erhard drew on the theories they had developed in the 1930s and 1940s and contributed to West
Germanys reconstruction after the Second World War.[62] 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.[63]
The ordoliberal Freiburg School 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, German neoliberal theory was marked by the willingness to
place humanistic and social values on par with economic efficiency. Alfred Mller-Armack coined the
phrase "social market economy" to emphasize the egalitarian and humanistic bent of the idea.
[4]
According to Boas and Gans-Morse, Walter Eucken stated that "social security and social justice
are the greatest concerns of our time".[4]

Builders in West Berlin, 1952

Erhard emphasized that the market was inherently social and did not need to be made so. [47] 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
ofVolkskapitalismus there were some efforts to foster private savings. But 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.[64] Rstow,
who had coined the label "neoliberalism", criticized that development tendency and pressed for a
more limited welfare program.[47]
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 was a muddle of inconsistent aims.[65] Despite his
controversies with the German neoliberals at the Mont Pelerin Society, Ludwig von Mises stated that
Erhard and Mller-Armack accomplished a great act of liberalism to restore the German economy
and called this "a lesson for the US".[66] According to different research, however, Mises believed that
the ordoliberals were hardly better than socialists. As an answer to Hans Hellwigs 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, "taught more or less the New
Frontier line of" President Kennedy's"Harvard consultants (Schlesinger, Galbraith, etc.)".[67]
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 (economic
miracle) mentality of the 1950s and 1960s.[47]
China[edit]
Following the death of Mao Zedong, Deng Xiaoping led the country through far ranging market
centered reforms, with the slogan of Xiokng, that combined neoliberalism with
centralized authoritarianism. These focused on agriculture, industry, education, and science/defense.
[68]

United Kingdom[edit]
Further information: Thatcherism
During her tenure as Prime Minister, Margaret Thatcher oversaw a number of neoliberal reforms
including tax reduction, reforming exchange rates, deregulation and privatization. [69] These reforms
were continued and supported by her successor John Major but although opposed by the Labour
Party at the time, were largely left unaltered when the latter came to power in 1997. Instead the
Labour government under Tony Blair finished off a variety of uncompleted privatisation and
deregulation measures.[70]
United States[edit]
See also: Reaganomics
David Harvey uses the term neoliberalism to describe Lewis Powell's 1971 confidential
memorandum to the US Chamber of Commerce.[68] 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
organizations and think-tanks which advocated for neoliberal policies, such as the Business
Roundtable, The Heritage Foundation, The Cato Institute, Citizens for a Sound Economy, Accuracy
in Academia and the Manhattan Institute for Policy Research. For Powell, universities were
becoming an ideological battleground and recommended the establishment of an intellectual
infrastructure to serve as a counterweight to the increasingly popular ideas of Ralph Nader and other
opponents of big business.[71][72][73] On the left, neoliberal ideas were developed and widely popularized
by John Kenneth Galbraith, while the Chicago School ideas were advanced and repackaged into a
progressive, leftist perspective in Lester Thurow's influential 1980 book "The Zero-Sum Society".[74]
Early roots of neoliberalism were laid in the 1970s, during the Jimmy Carter administration, with
deregulation of the trucking, banking, and airline industries.[75][76][77] This trend continued into the
1980s, under the Reagan Administration, which included tax cuts, increased defense spending,
financial deregulation and trade deficit expansion.[78] Likewise, concepts of supply-side economics,
discussed by the Democrats in the 1970s, culminated in the 1980 Joint Economic Committee 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.[79]
During the 1990s, the Clinton Administration also embraced neoliberalism[70] by supporting the
passage of the North American Free Trade Agreement, 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 through passage of the Personal
Responsibility and Work Opportunity Act.[78][80][81] The neoliberalism of the Clinton Administration differs
from that of Reagan, as the Clinton Administration purged neoliberalism of neoconservative positions
on militarism, family values, opposition to multiculturalism and neglect of ecological issues.[69]:50
1[disputed discuss]
Traditions[edit]
Austrian School[edit]
Main article: Austrian School

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The Austrian School is a school of economic thought which bases its study of economic phenomena
on the interpretation and analysis of the purposeful actions of individuals.[82][83][84][85] It derives its name
from its origin in late-19th and early-20th century Vienna with the work of Carl Menger, Eugen von
Bhm-Bawerk, Friedrich von Wieser, and others.[86]
Among the contributions of the Austrian School to economic theory are the subjective theory of
value, marginalism in price theory, and the formulation of the economic calculation problem.[87] Many
theories developed by "first wave" Austrian economists have been absorbed into
most mainstream schools of economics. These include Carl Menger's theories on marginal utility,
Friedrich von Wieser's theories on opportunity cost, and Eugen von Bhm-Bawerk's theories on time
preference, as well as Menger and Bhm-Bawerk's criticisms of Marxian economics. The Austrian
School follows an approach, termed methodological individualism, a version of which was codified
by Ludwig von Mises and termed "praxeology" in his book published in English as Human Action in
1949.[88]
The former U.S. Federal Reserve Chairman, Alan Greenspan, speaking of the originators of the
School, said in 2000, "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 this country."[89] In 1987, Nobel Laureate James M. Buchanan told an
interviewer, "I have no objections to being called an Austrian. Hayek and Mises might consider me
an Austrian but, surely some of the others would not." [90] Republican U.S. congressman Ron
Paul stated that he adheres to Austrian School economics and has authored six books which refer to
the subject.[91][92] Paul's former economic adviser, investment dealer Peter Schiff,[93] also calls himself
an adherent of the Austrian School.[94] Jim Rogers, investor and financial commentator, also
considers himself of the Austrian School of economics. [95] Chinese economist Zhang Weiying, who is
known in China for his advocacy of free market reforms, supports some Austrian theories such as
the Austrian theory of the business cycle.[96]
Chicago School[edit]
Main article: Chicago school of economics

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The Chicago school of economics describes a neoclassical school of thought within the academic
community of economists, with a strong focus around the faculty of University of Chicago.
Chicago macroeconomic theory rejected Keynesianism in favor ofmonetarism until the mid-1970s,
when it turned to new classical macroeconomics heavily based on the concept of rational
expectations.[97] The school is strongly associated with economists such as Milton Friedman, George
Stigler, Ronald Coase and Gary Becker.[98]
The school emphasizes non-intervention from government and generally rejects regulation in
markets as inefficient with the exception of central bank regulation of the money supply
(i.e., monetarism). Although the school's association with neoliberalism is sometimes resisted by its
proponents,[97] its emphasis on reduced government intervention in the economy and a laissez-
faireideology have brought about an affiliation between the Chicago school and neoliberal
economics.[99][100]

Political policy aspects[edit]

Political freedom[edit]
In The Road to Serfdom, Hayek argued that "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." [60]

Milton Friedman and Richard Nixon

Later, in his book Capitalism and Freedom (1962), Friedman developed the argument that economic
freedom, while itself an extremely important component of total freedom, is also a necessary
condition for political freedom. He commented that centralized control of economic activities was
always accompanied with political repression.
In his view, the voluntary character of all transactions in an unregulated market economy and wide
diversity that it permits are fundamental threats to repressive political leaders and greatly diminish
power to coerce. Through elimination of centralized control of economic activities, economic power is
separated from political power, and the one can serve as 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.[101]
Amplifying Friedman's argument, it has often been pointed out that increasing economic freedoms
tend to raise expectations on political freedoms, eventually leading to democracy. Other scholars
see the existence of non-democratic yet market-liberal regimes and the undermining of democratic
control by market processes as strong evidence that such a general, ahistorical nexus cannot be
upheld.[102] Contemporary discussion on the relationship between neoliberalism and democracy
shifted to a more historical perspective, studying extent and circumstances of how much the two are
mutually dependent, contradictory or incompatible.
Stanley Fish argues that neoliberalization of academic life may promote a narrower and, in his
opinion, more accurate definition of academic freedom "as the freedom to do the academic job, not
the freedom to expand it to the point where its goals are infinite." What Fish urges is "not an inability
to take political stands, but a refraining from doing so in the name of academic responsibility." [103]

Criticism[edit]
Neoliberalism has received criticism both from the political left as well as the right, in addition to
myriad activists and academics.[104]
Class project[edit]
David Harvey described neoliberalism as a class project, designed to impose class on society
through liberalism.[105] Economists Grard Dumnil and Dominique Lvy posit that "the restoration
and increase of the power, income, and wealth of the upper classes" are the primary objectives of
the neoliberal agenda.[106] Economist David M. Kotz contends that neoliberalism "is based on the
thorough domination of labor by capital."[16]:43 The emergence of the 'precariat', a new class facing
acute socio-economic insecurity and alienation, has been attributed to the globalization of
neoliberalism.[107]
Sociologist Thomas Volscho has argued that the imposition of neoliberalism in the United States
arose from a conscious political mobilization by capitalist elites in the 1970s who faced two crises:
the legitimacy of capitalism and a falling rate of profitability in industry. Various neoliberal ideologies
(such as monetarism and supply-side economics) had been long advanced by elites, translated into
policies by the Reagan administration, and ultimately resulted in less governmental 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 the debt-financing of the state." [108]
The invisible hand of the market and the iron fist of the state combine and complement each other to make the lower
classes accept desocialized wage labor and the social instability it brings in its wake. After a long eclipse, the prison
thus returns to the frontline of institutions entrusted with maintaining the social order.

Loc Wacquant[109]

Several scholars have linked the rise of neoliberalism to unprecedented levels of mass incarceration
of the poor in the United States.[2]:3, 346[110][111][112][113] Sociologist Loc Wacquant argues that neoliberal
policy for dealing with social instability among economically marginalized populations following the
implementation of other neoliberal policies which have allowed for the retrenchment of the
social welfare state and the rise of punitive workfare, increased gentrification of urban areas,
privatization of public functions, the shrinking of collective protections for the working class via
economic deregulation, and the rise of underpaid, precarious wage labor is the criminalization of
poverty and mass incarceration.[111]:534[114] 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 privileged classes
and corporations such as fraud, embezzlement, insider trading, credit and insurance fraud, money
laundering, and violation of commerce and labor codes.[111][115] According to Wacquant, neoliberalism
doesn't 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.[111][116]
In expanding upon Wacquant's thesis, sociologist and political economist John L. Campbell
of Dartmouth College suggests that through privatization, the prison system exemplifies the centaur
state:
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.
US incarceration rate per 100,000 population 19252013.[117][118]

In addition, he says the prison system benefits corporations through outsourcing, as the inmates are
"slowly becoming a source of low-wage labor for some US corporations." Both through privatization
and outsourcing, Campbell argues, the US penal state reflects neoliberalism. [119]:61 Campbell also
argues that while neoliberalism in the US 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
indebtednessand recently home foreclosureamong the middle class."[119]:68
David McNally, Professor of Political Science at York University, argues that while expenditures on
social 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."[120] 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."[121] Both Wacquant and Harcourt refer to this phenomenon
as "Neoliberal Penality."[122][123]
Global health[edit]
The effect of neoliberalism on global health, particularly the aspect of international aid involves key
players such as non-governmental organizations (NGOs), the International Monetary Fund (IMF),
and the World Bank. According to James Pfeiffer,[124] neoliberal emphasis has been placed on free
markets and privatization which has been tied to the "new policy agenda" in which NGOs seen as
being able to provide better social welfare than governments. International NGOs have been
promoted to fill holes in public services created by the World Bank and IMF through their promotion
of Structural Adjustment Programs (SAPs) which reduce government health spending, and which
Pfeiffer criticized as unsustainable. The reduced health spending and the gain of the public health
sector by NGOs causes the local health system to become fragmented, undermines local control of
health programs and contributes to local social inequality between NGO workers and local
individuals.[125]
In 2016, researchers for the IMF released a paper entitled "Neoliberalism: Oversold?," which stated:
There is much to cheer in the neoliberal agenda. The expansion of global trade has rescued millions
from abject poverty. Foreign direct investment has often been a way to transfer technology and
know-how to developing economies. Privatization of state-owned enterprises has in many instances
led to more efficient provision of services and lowered the fiscal burden on governments.
Member nations of the International Monetary Fund

However, it was also critical of some neoliberal policies, such as freedom of capital and fiscal
consolidation for "increasing inequality, in turn jeopardizing durable expansion."[126] The authors also
note that some neoliberal policies are to blame for financial crises around the world growing bigger
and more damaging.[17] The report contends the implementation of neoliberal policies by economic
and political elites has led to "three disquieting conclusions":

The benefits in terms of increased 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 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.[127]
The IMF has itself been criticized for its neoliberal policies.[128][129] Rajesh Makwana writes that "the
World Bank and IMF, are major exponents of the neoliberal agenda."[130]Sheldon Richman, editor of
the libertarian journal The Freeman, also sees the IMF imposing "corporatist-flavored 'neoliberalism'
on the troubled countries of the world." The policies of spending cuts coupled with tax increases give
"real market reform a bad name and set back the cause of genuine liberalism." Paternalistic
supranational bureaucrats foster "long-term dependency, perpetual indebtedness, moral hazard, and
politicization, while discrediting market reform and forestalling revolutionary liberal change." [131]
Rowden wrote that the IMFs monetarist approach towards prioritising price stability (low inflation)
and fiscal restraint (low budget deficits) was unnecessarily restrictive and has prevented developing
countries from scaling up long-term investment in public health infrastructure, resulting in chronically
underfunded public health systems, demoralising working conditions that have fueled a "brain drain"
of medical personnel, and the undermining of public health and the fight against HIV/AIDS in
developing countries.[132]
Infrastructure[edit]
Nicolas Firzli has argued that the rise of neoliberalism eroded the post-war
consensus and Eisenhower-era Republican centrism that had resulted in the massive allocation of
public capital to large-scale infrastructure projects throughout the 1950s, 1960s and 1970s in
both Western Europe and North America: In the pre-Reagan era, infrastructure was an apolitical,
positively connoted, technocratic term shared by mainstream economists and policy makers []
including President Eisenhower, a praetorian Republican leader who had championed investment in
the Interstate Highway System, Americas national road grid [] But Reagan, Thatcher, Delors and
their many admirers amongst Clintonian, New Labour and EU Social-Democrat decision makers in
Brussels sought to dismantle the generous state subsidies for social infrastructure and public
transportation across the United States, Britain and the European Union. [133]
Following Brexit, the United States presidential election, 2016 and the progressive emergence of a
new kind of self-seeking capitalism ("Trumponomics") moving away to some extent from the
neoliberal orthodoxies of the past, we may witness a massive increase in infrastructure investment
in the United States, Britain and other advanced economies [134][135]
Corporatism[edit]
Mark Arthur has written that the influence of neoliberalism has given rise to an "anti-corporatist"
movement in opposition to it. This "anti-corporatist" movement is articulated around the need to re-
claim the power that corporations and global institutions have stripped governments of". 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]".[136]
Environmental impact[edit]
Nicolas Firzli has argued that the neoliberal era was essentially defined by the economic ideas of
Milton Friedman who wrote that if anything is certain to destroy our free society, to undermine its
very foundation, it would be a widespread acceptance by management of social responsibilities in
some sense other than to make as much money as possible. This is a fundamentally subversive
doctrine [137] 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: the long-dominant Friedman stance is becoming culturally
unacceptable and nancially costly in the boardrooms of pension funds and industrial rms in
Europe and North America.[137]
Political opposition[edit]
Counterpoints to neoliberalism:

Globalization can subvert nations' ability for self-determination.[138]

The replacement of a government-owned monopoly with private companies, each

supposedly trying to provide the consumer with better value service than all of its private
competitors, removes the efficiency that can be gained from the economy of scale. [139]

Even if it could be shown that neoliberal capitalism increases productivity, it erodes the
conditions in which production occurs long term, i.e., resources/nature, requiring expansion into
new areas. It is therefore not sustainable within the world's limited geographical space. [140]

Exploitation: critics consider neo-liberal economics to promote exploitation and social

injustice.[141]

Negative economic consequences: Critics argue that neo-liberal policies produce economic
inequality.[2]:7

Mass incarceration of the poor: some critics claim that neoliberal policies result in an
expanding carceral state and the criminalization of poverty.[2]:3, 346[113]

Increase in corporate power: some organizations and economists believe neoliberalism,

unlike liberalism, changes economic and government policies to increase the power of
corporations, and a shift to benefit the upper classes.[142][143]

Anti-democratic: some scholars contend that neoliberalism undermines the basic elements
of democracy.[102][144]

There are terrains of struggles for neoliberalism locally and socially. Urban citizens are
increasingly deprived of the power to shape the basic conditions of daily life. [145]

Trade-led, unregulated economic activity and lax state regulation of pollution lead to
environmental impacts or degradation.[146]
 Deregulation of the labor market produces flexibilization and casualization of labor, greater
informal employment, and a considerable increase in industrial accidents and occupational
diseases.[147]

Mass extinction: according to David Harvey, "the era of neoliberalization also happens to be
the era of the fastest mass extinction of species in the Earth's recent history." [68]:173
Instead of citizens, it produces consumers. Instead of communities, it produces shopping malls. The net result is an
atomized society of disengaged individuals who feel demoralized and socially powerless.

Robert W. McChesney[44]:11

American scholar and cultural critic Henry Giroux alleges neoliberalism holds that market forces
should organize every facet of society, including economic and social life, and promotes a social
darwinist ethic which elevates self-interest over social needs.[148][149][150]
According to the economists Howell and Diallo, neoliberal policies have contributed to a U.S.
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 underemployed; only 40% of the working-age population
in the U.S. is adequately employed.[151]
The Center for Economic Policy Research's (CEPR) Dean Baker (2006) argued that the driving force
behind rising inequality in the U.S. has been a series of deliberate, neoliberal policy choices
including anti-inflationary bias, anti-unionism, and profiteering in the health industry.[152] However,
countries have applied neoliberal policies at varying levels of intensity; for example, the OECD has
calculated that only 6% of Swedish workers are beset with wages it considers low, and that Swedish
wages are overall lower.[153] Others argue that Sweden's adoption of neoliberal reforms, in particular
the privatization of public services and reduced state benefits, has resulted in income inequality
growing faster in Sweden than any other OECD nation.[154][155] In the 2014 elections, Swedish voters
rejected the neoliberal policies of the center-right government which had undermined thesocial
safety net and put the left-leaning Social Democrats back in power.[156]
The rise of anti-austerity parties in Europe and SYRIZA's victory in the Greek legislative elections of
January 2015 have some proclaiming the end of neoliberalism. [157]
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.[158]
Notable critics of neoliberalism in theory or practice include economists Joseph Stiglitz,[159] Amartya
Sen, Michael Hudson,[160] Robert Pollin,[161] Julie Matthaei,[162] and Richard D. Wolff;[143] linguist Noam
Chomsky;[44] geographer and anthropologist David Harvey;[68] political activist and public
intellectual Cornel West;[163] Marxist feminist Gail Dines;[164] author, activist, and filmmaker Naomi
Klein;[165] journalist and environmental activist George Monbiot;[166] Belgian psychologist Paul
Verhaeghe;[167] journalist and activist Chris Hedges;[168] and the alter-globalization movement in
general, including groups such as ATTAC. Critics of neoliberalism argue that not only is
neoliberalism's critique of socialism (as unfreedom) wrong, but neoliberalism cannot deliver the
liberty that is supposed to be one of its strong points.
Protest[edit]
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 WTO in Cancun, Mexico in 2003. He was protesting against the decision of
 the South Korean government to reduce subsidies to farmers. Prior to his death he expressed his
concerns in broken English:[5]:96
My warning goes out to the all citizens that human beings are in an endangered situation that
uncontrolled multinational corporations and a small number of bit WTO members officials are leading
an undesirable globalization of inhuman, environment-distorting, farmer-killing, and undemocratic. It
should be stopped immediately otherwise the failed logic of the neo-liberalism will perish the
diversities of agriculture and disastrously to all human being. [5]:96[169]

Neoliberalism and Social Capital[edit]

The connnection between neoliberalism and social capital is a double-edged sword. On the one
hand, it has greatly contributed to the popularisation of the social capital concept, while neoliberalism
gained political prominence during the 1990s. The existence of this link has transformed social
capital from a fancy academic theory into an important ingredient of new political discourses. On the
other hand, this connection may well be the cause of social capital theoretical demise. This draws
from the fact that, in a period characterised by economic crisis and preceded by decades of rising
economic inequality, the policy aim to bolster social capital is incompatible with the neoliberal
political agenda (Ferragina and Arrigoni 2016) [170].

See also[edit]

Liberalism portal

Anarcho-capitalism

Capitalism

Classical liberalism

Cultural globalization

Free market

Globalism

Globalization

History of macroeconomic thought

Inverted totalitarianism

Economic liberalism

Neoclassical economics

Right libertarianism
 Social Darwinism

Triangulation

Washington Consensus