What Is Neoliberalism?

It’s not uncommon to hear much talk in recent years of neoliberalism, specifically the responsibility for a variety of social ills being laid at the feet of this all-encompassing ideology which is said to be behind many of the social trends we are currently experiencing. Whether it’s the election of Donald Trump, Brexit, The Great Recession, migration challenges, threats to the environment amongst a trove of other issues which are increasingly pertinent to the many societies, the fault of these issues seems to lay squarely at the feet of Neoliberalism – but is this a fair or accurate evaluation?

When one begins to explore the concept of neoliberalism, it does indeed seem to be the ideology that has come to encompass much of our political systems and guides a great deal of the ways in which we can make policy, but what is it? how did it come to be dominant? how has it developed over time? what are the alternatives to it? in this piece, I will seek to provide some degree of an answer to each of these questions and advance a discussion on what has come to be perhaps one of the most dominant ideologies in the modern world. Indeed the way in which such an ideology has come to pass until recently without much of a framework for understanding may seem perplexing to many, but we will explore whether such an evaluation of dominance is indeed accurate and how one can identify manifestations of a neoliberal system.

Firstly it’s important to note, as numerous scholars have pointed out, that neoliberalism is less a clearly delineated model, a process in which one can follow to achieve a neoliberalist system, it is instead a way of thinking, a worldview which comes to be dominated by the approaches typified by neoliberalist systems. There is also no widely held consensus view on what exactly constitutes a neoliberal system, there are common explanations. These usually involve to some degree the role played by former US president Ronald Reagan and UK prime minister Margaret Thatcher and their ‘conservative revolutions’ of the 1980’s, but the origins of this particular strand of the ideology predates this period in economic history by some time.

If we look at the data available from Google’s Ngram viewer, which reviews the appearance of terms across books we can see that interest in the concept of neoliberalism really began to accelerate after the second world war. While indeed there was an explosion in usage of the terms beginning in the 1980’s, that this can be explained by the term being used to explain the policy paradigm in which Reagan & Thatcher’s conservative revolution could be explained through.

It is commonly understood that the development of ‘Neoliberalism’ as opposed to simply classical ‘Liberalism’ can be attributed to the work of a number of economists, but most prominently we can see this work closely associated with Friedrich Hayek alongside members of the ‘Austrian School’ of economics. Their work was instrumental in providing a framework which was a clear departure from Kenysian and intervention-inspired governments of the 50’s, 60’s & 70’s. For many, this period was a pinnacle with regards to a number of factors, but not least worker share of national income, a trend which is seen as being undermined by weaker bargaining power, brought on by weaker unions aross a number of countries.

What is Neoliberalism?

As stated above, there are a number of definitions commonly used to explain what neoliberalism is, and there are varying motivations to define neoliberalism within a particular framework, many are essentially a variation of ” a political and economic ideology committed to reducing the size and involvement of the state in economic matters, and relying to a great degree on private enterprise” and while this definition is certainly quite rough and removes much of the nuance in an evaluation of neoliberalism – it does go some way to exploring one of the central tenets of the ideology, essentially that the profit motive can be used to measure the value of goods and services and that marketization of (particularly) public services is seen as beneficial as resources are best allocated by market forces as opposed to the state. For much of the exploration of what constitutes neoliberalism, I have leaned upon the great work of Dag Einar Thorsen and Amund Lie from the University of Oslo who explored the academic framework surrounding neoliberalism in great detail and provide a much more detailed exploration of the framework that I will delve into here.

Indeed it’s an important consideration for those with an interest in understanding policy paradigms, to explore the way in which Neoliberalism has been seen by some to become such a dominant paradigm. Indeed building on the seminal work of Peter Hall in this area, we can perhaps explore the ‘shift’ that took place for us to arrive in a supposed neoliberal and understand it through the lens of ” ‘a motivation, means, and motor’. We can understand the motivation behind the shift from a Kenysian intervention model to a neoliberal model as being a reaction to a number of events (while there are competiting theories on what ultimately led to the rise of neoliberalism, such as the oil crisis, a reaction to growing worker power, a tipping point being reached as typified by the Rehn-Meidner plan in Sweden or the challenge of ‘stagflation’) serving as the catalyst for a transition towards neoliberalism. The means and motor are typified by the success of conservative movements in the UK & USA in the late 70’s early 80’s to fundementally alter a consensus in favour of intervention to a revisiting of the relationship of the state with regards to the economy.

Working towards a definition and an interpretation of neoliberalism will firstly require an understanding of liberalism, and with it’s many strands and variations, and adaptions it could require an article all to itself, but to zip past all of this lets just say we’re focusing on liberalism in the sense of economic liberalism, namely trade liberalisation and the lowering of barriers to trade and specifically an opposition to protectionism – this is an important consideration as it has consquences to the development of neoliberalism. Indeed there is much that can (and indeed has) been wrote about how distinct and diverse liberalism has and remains to be, but for the purposes of posterity we will focus not on social, or civic and political strands of liberalism and instead focus on economic liberalism and it’s development and adaption.

In much of the available literature, we see discussion centered around the absence of a theoretical definition of what Neoliberalism is, with many echoing the same explanation (or variant thereof) that it began with Thatcher & Reagan and continued onwards. Let us try to look at it in a more critical way, let us try to define neoliberalism through its opposition. the period which followed the second world war in many western countries is typically understood as a period when Kenysian economics reigned supreme, when government intervention in the market and the development of comprehensive welfare states which provided; healthcare, education, good quality jobs etc to citizens was seen more as an expectation of the state to provide to it’s citizens as part of an expanded social contract, but this period is seen to have concluded with the advent of the neoliberals, but what exactly were they advocating for & what was different about them?

There is much in the way of developing a framework which was inclusive of the developments of early neoliberalism and proposed alternatives to the Kenysian system which was so common, and one which market interventions by the state took place frequently enough to be seen as a problem by some. What was being articulated was a vision of a society which as proposed by Harvey was one in which;

“(Neoliberalism is 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”

This vision of society was unique in that by focusing more on the transfer of economic power from the state to private enterprise we have seen a number of reverberations being felt across a variety of areas from the protection of the environment as addressed by George Monbiot, to the weakening of union power which in turn led to a precipitous fall in living standards for many people in the western world. But if we look at neoliberalism within the scope of developing alongside increasing globalization, can it really be seen as a distinctive trend which is developing on its own or is it perhaps part of a bigger movement away from the relevance of individual states to have a decisive role on their domestic economies, there is much in the way of research to point to decisive events which were happening around the time of the supposed advancing stregnth of neoliberalism that point to a much more nuanced picture of how things developed.

Neoliberalism Defined

There is an importance to the requirement to frame and interpret neoliberalism, the absence of an understanding belies the challenge in proposing alternatives if required and identifying what the flaws with such a paradigm are as opposed to flaws which may be blamed upon a trove of other factors impacting upon the policy-making process.

So let’s evaluate how neoliberals are framed, and why it is believed that this policy paradigm is seen as unneeding of a clear-cut definition. By undertaking an analysis of the ways in which neoliberalism is spoken about on Twitter we can take the pulse as to how the term is being defined and understood by a variety of commentators. For this we have an X-axis and a Y-Axis, along with the X-axis we can evaluate whether the co-occurring terms are ‘pleasant’ or ‘unpleasant’ in that are these using positive or negative terms alongside Neoliberalism? and along the Y-axis, we can evaluate whether they are quite active or are indeed more subdued in that they are not as frequently tweeting.

we can see some interesting insights albeit not entirely surprising, namely that neoliberalism is indeed seen with terms such as ‘rich’, ‘money’ and ‘corporate’ there is also a framing of neoliberalism amongst such social factors as democracy, capitalism, and class alongside what we most commonly assume when we consider neoliberalism, that of the market.

So what does this signify, it begins the process of understanding what constitutes neoliberalism through an academic framing alongside a more common interpretation through understanding the ways in which Twitter users (an admittedly popular forum for political discussions) frame the concept of neoliberalism.

When we begin to look deeper into the co-occurring terms that are used to frame neoliberalism in discussions, we can such much of it focusing on those core concepts of money and richness, perhaps within this frame, we can understand the ways in which neoliberalism can be viewed as a descent from the more egalitarian ideals of universality of welfare systems provided under Kenysian (and indeed Beveridgean) systems.

” Neoliberalism is perhaps best perceived of as a radical descendant of liberalism „proper‟, in which traditional liberal demands for „equality of liberty‟ have been bent out of shape into a demand for total liberty for the talented and their enterprises.”
(emphasis added)

While we can still seek to understand whether we do in fact live within a neoliberalist system, or indeed whether there is such a thing as neoliberalism, it’s perhaps more apt to seek to understand the effects the rampant monetarist policies had on inducing the great 2008-2009 recession and which system we are seeing being built following The Great Recession.