The economic sensation everyone is talking about finally gets a terrible introduction
The term Neoliberalism has been used for many decades and has shifted from meaning to meaning time and again. It has been misguidedly used due to its main word “Liberalism” which has different meanings and attitudes depending on where one is from and how narrow sighted the politics are there. The word is often thrown around with disdain but to the outside viewer the term can be quite confusing. Firstly a lot of confusion comes from the aforementioned “Liberalism” and the confusion only grows when usually conservative politicians are said to have Neoliberal policies. But a great deal of confusion comes from the basic meaning of the term itself. It is often thrown around and for this reason it must be explained to properly understand what the word is. However this should be taken as a short introduction hence the title. I really don't have the time or patience to write and in depth study so here's a pamphlet I threw together.
Part 1: The Coining
The first use of the term came from the late 1800s and was used sparling by both French and Italian economists. However the word gained its modern meaning or its first modern meaning in 1938 at the Colloque of Walter Lippmann which was basically a meeting of economists and intellectuals. The term meant an economic system of free enterprise with competition and a strong state that would intervene impartially, However this definition of the term lost favor quite quickly and no longer has any meaning to Neoliberalism and was entirely pointless to bring up.
During the dictatorship of Augusto Pinochet in Chile the term gained a new meaning. It was used to describe the economic reforms of the dictatorship by the opposition. The Spanish term then picked up by English economists and the new term circulated within these philosophical circles. It was then used to describe an ideology that was brewing in the united states in the 70s. The term although used by some to label their beliefs has now become more of an insult or criticizing phrase as one would use An-cap or conservative Christian to describe objectively terrible people. It is also used to describe conservative politicians and similar objectively terrible people like Margaret Thatcher and Ronald Reagan which as mentioned before can lead to confusion. The entire term is altogether quite confusing when shown its use throughout history. Its original phrase means utterly nothing now, It's used to describe what seem to be opposites on the political spectrum and its thrown around insultingly with very little context. Which is why now the procrastination must end and the term must finally be defined as a word.
Part 2: Basic Economics
What are the basic tenets of Neoliberalism? Essentially privatization and laissez faire capitalism. The usual aspects follow deregulation and the cutting of taxes. That's basically it. The general premises is like all other justification of economic policies that of growth. The goal is that by removing government influence the private sector is allowed to properly expand in the economy. This is different from the previous post world war 2 type of economics. After world war 2 most governments set up a type of social safety net for its people in the form of social benefits given by the government. These types of social democracies put more taxes on the rich and private businesses in order to do more social spending. Neoliberalism rejects these previous principals entirely and calls for the immediate privatization of all these social programs and a reduction of taxes (although solely for the rich). This is done so for the express purpose of efficiency and a better economy and Neoliberalism is the best policy for a stronger economy and an efficient market. Yes Neoliberalism is one of the best tools for the economy, it increase productivity and causes the economy to grow. And precisely for these reasons is why it is an utterly terrible belief.
Part 3: Let's (not) get political
Some people like to divorce economics from its political aspects or like to look at the market only in terms of numbers and graphs rather than how it affects humans. They like to look at the economy only as something that can be changed and rearranged for efficiency and growth because that's what the economy is meant to do. This cold calculated view on the economy, removed from all impacts it has on human life is one of the main reasons why Neoliberalism has been so effective at gaining favor in our modern world. It has to date been a very effective way at growing economies. Although it has had numerous market crashes and slow downs the economy chugs on but all of this is utterly meaningless to most people
The dictatorship of Augusto Pinochet in Chile, where the term gained its new and current meaning was as most dictatorships our quite brutal. Political repression, assassination, and disillusion abound one of the hallmarks of the new ruler was the complete reforming of the economy from a well organized almost socialist economy into a Neoliberal capitalist market. All previous programs were cut and slashed in favor of deregulation and letting the private sector take over. By the late 70s the economy had completely crashed and was in shambles however it was stabilized and was even growing by the late 80s. So this seems like a win for Neoliberalism right? Showing the amazing ability to crash spectacularly and rise and form into a better economy. And it would be a win if the lives the Chilean people were actually better off. With the destruction of the previous government and all its previous economic policies the standard of living had dropped dramatically. Not only was a great portion of the population below the poverty line but the inequality gap had grown leaps and bound in those years. But the economy improved and it grew, it stabilized and thrived. It showed the miracle of Neoliberal policies: immense growth at the cost of the population.
However the two greatest examples of Neoliberalism are of course the United States and the United Kingdom. Although these policies found their genesis in the administrations of the mid to late 70s the policies were finalized mainly by Ronald Reagan and Margaret Thatcher in their respective countries. Reaganomics as it was kindly called was essentially the policy of deregulating the economy and cutting taxes on the rich. Margaret Thatcher followed suit with these policies and privatized a number of companies. The idea was that by giving the rich more money then of course these kindly people would generously contribute back to society. The end result of all this was as always the same, a better economy and a worse off population. Wealth was concentrated into the hands of the few leaving none for the rest. Although the repercussions wouldn't be felt for about a decade the inequality gap grew in both countries. In America in particular traditional manufacturing jobs and laborers were completely gone and wages which were already bad grew even more stagnant. But the economy grew, it may have stumbled but it grew. The stock market grew, the GDP grew, all of the economy was prosperous but that was it. Only the economy alone was prosperous.
On a final note people often claim that capitalism and Neoliberalism itself has a democratizing force with it. That by the mere fact that it exists within a country it helps to create a democracy. Right now our lens will be focused on Neoliberalism in particular although this applies to capitalism as a whole. One of the promoted aspects of Neoliberalism was that it helps to liberalize the system of government. This at face value is utterly false. Milton Friedman a proponent of Neoliberalism praised the Pinochet dictatorship for its superb economic reforms. Emphasis on the word dictatorship. Further proof is found in Argentina and Guatemala. Argentina’s dictatorship of 1976 implemented its Neoliberal reforms and its authoritarian reforms. Even in the supposed “democratic” governments of the United States and United Kingdom the most authoritarian measures were used. In order to increase the power of corporations unions had to be destroyed. In order to stop the fight for wage increases Ronald Reagan used government intervention to destroy the Air Traffic Control Union and ending any power of unions left in America. In the England Margaret Thatcher defeater the power of the National Union of Mineworkers by using the police to crackdown on the striking miners. After this she closed down a number of mines and privatized the rest. Even in the most democratic countries the government still used repression in order to pass its reforms. To claim that Neoliberalism democratizes places as Friedman or Friedrich Von Hayek claim is to be completely ahistorical.
Part 4: Conclusion
There really is no conclusion to this. The only thing to be learned is how the market and economists switch phases and meanings to misguide people. It is always looked as a good thing when the market grows or when it is more free. Human cost is thrown to the wind when all that the economy is looked as numbers and prices. There is no real conclusion to any of this.