What is neoliberalism?

Neoliberalism is a word that is used to describe a wide variety of processes and practices that began to gain prominence in the 1970s following the economic slow downs that occurred during that decade. The word neoliberalism is obviously derived from the conjoining of ‘neo’ with ‘liberalism’, i.e. some form of new liberalism. What then is liberalism, and what is new about neoliberalism?

The development of liberalism as a political idea is closely conjoined with the end of feudalism and the beginnings of capitalist modes of production. Besides the social aspects of liberalism, like support for individual rights, fair treatment under the law, and democracy, liberalism is also fundamentally about the sanctity of private property and the superiority of the so-called free market as a means of organizing economic exchanges. Neoliberalism is a reinvigoration of the economic aspects of liberalism, drawing upon the branches of economic theory known as neoclassical economics and monetarism. Fundamental economic principles of neoliberalism, as described by one of its best proponents, Thomas Friedman, include a set of so-called ‘golden rules’ like,

making the private sector the primary engine of [a nation’s] economic growth; maintaining a low rate of inflation and price stability; shrinking the size of [the] state bureaucracy; maintaining as close to a balanced budget as possible, if not a surplus; eliminating and lowering tariffs on imported goods; removing restrictions on foreign investment; getting rid of quotas and domestic monopolies; increasing exports; privatizing state-owned industries and utilities; deregulating capital markets; making [the] currency convertible; opening industries, stock and bond markets to direct foreign ownership and investment; deregulating [the] economy to promote as much domestic competition as possible; opening up [the] banking and telecommunications systems to private ownership and competition; and allowing citizens to choose from an array of competing pension options and foreign-run pension mutual funds. (Qtd in Albo 2002, pp. 46-47)

Put in less economistic terms, by David Harvey, neoliberalism is,

in the first instance, a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. (Harvey, 2007, p. 2)

Neoliberalism arguably extends these economic principles into the political, cultural, and social realms in ways that support and encourage its economic policies. Philosopher Slavoz Zizek describes that “for most people under twenty in Europe and North America, the lack of alternatives to capitalism [and its current form, neoliberalism,] is no longer an issue. Capitalism seamlessly occupies the horizons of the thinkable” (Fisher, 8). It has become difficult to see the forest for the trees; indeed, it is difficult to imagine in the current era of cutbacks and austerity, a time in Canada when the creation of massive public programs like medicare and the Canadian Pension Plan were even thinkable let alone politically achievable. Privatization of public goods; commodification, especially of the previously uncommodified, like water and air; privileging the individual over the collective; free trade agreements; increasing inequality the world over; increasing presence and acceptance of advertizements; ubiquitousness of fears of liability; the marketization of environmental movements and international aid; all of these disparate processes are characteristic of neoliberalism, but what connects them all?
There is nothing obviously or directly connecting all of the ideas associated with neoliberalism but there is a “family resemblance” between all of these ideas. The philosopher Ludwig Wittgenstein in his explorations of the workings of language in the book Philosophical Investigations, develops this idea of family resemblance. Rather than looking for one common trait that runs through a set of obviously connected words, he postulates that the members of this set would all have a connection to each other that is like the common physical traits that make members of the same family look like each other. Two sibling might have similarly-shaped noses, while one of them shares a jaw line in common with a cousin, and the other has similar eyebrows to a different cousin. All of these traits combine to create a family resemblance. Another metaphor is the construction of rope: there is no one long strand that runs through a length of rope; rather, the rope is made up of a number of shorter strands that combined make up the longer rope. All of the concepts and processes that describe neoliberalism are like the strands of a rope or particular family traits: though these concepts and processes do not share any one thing in common, they combine to describe a coherent whole.
But how coherent is neoliberalism really? As described by its proponents as a set of economic principles that will lead to the creation of an ideal society, neoliberalism is not coherent. There is no connection between the way that neoliberal policies are supposed to work and the way that they are actually enacted and received. Neoliberalism in theory is utterly different from neoliberalism in practice. This is because neoliberalism is not fundamentally about economic policies for sustained growth. It is really about the restoration of elite class power. In Harvey’s words, neoliberalism can be interpreted “either as a utopian project to realize a theoretical design for the reorganization of international capitalism or as a political project to re-establish the conditions for capital accumulation and to restore the power of economic elites” (2007, p. 19). Greg Albo insists that, “neoliberalism cannot be reduced to a discourse about market society, ‘golden rules’ for public policy… It is a particular form of class rule within capitalism” (2002, p.?). Stephen Gill, echoing the ideas of Karl Polanyi, calls neoliberalism starkly utopian arguing that “a pure market system is a utopian abstraction and any attempt to construct it fully would require an immensely authoritarian of political power through the state” (1995, p. 420). So, on the one hand neoliberalism could be about rejuvenating (international) capitalism in response to the economic crises that occurred in the 1970s, which is how it is described in the mainstream, or on the other hand it could be seen as opportunism designed to counter the general progress that had been made between the end of the Second World War and the 1970s towards a more equitable distribution of wealth and power within a capitalist system (i.e. Keynesianism and ‘embedded liberalism’). Only if seen in this light, as intentional elite opportunism, can a coherent description of neoliberalism be constructed.

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