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Neoliberalism

Overview

Neoliberalism is a political and economic ideology that advocates for free-market capitalism, which became dominant in policy-making from the late 20th century onward. The term has multiple, competing definitions, and is most often used pejoratively. In scholarly use, the term is often left undefined or used to describe a multitude of phenomena. However, it is primarily employed to delineate the societal transformation resulting from market-based reforms.

Neoliberalism is often associated with a set of economic liberalization policies, including lower taxes, privatization, deregulation, depoliticisation, consumer choice, labor market flexibilization, economic globalization, free trade, monetarism, austerity, and reductions in government spending. These policies are designed to increase the role of the private sector in the economy and society. Additionally, the neoliberal project is oriented towards the establishment of institutions and is inherently political in nature, extending beyond mere economic considerations.

Neoliberalism has become an increasingly prevalent term in recent decades. It has been a significant factor in the proliferation of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them. The term is largely absent from economics journals.

Recent critiques argue that neoliberalism has exacerbated income and wealth inequality by promoting policies that prioritize market efficiency over social welfare. Labor deregulation under neoliberal agendas has led to the rise of nonstandard work arrangements, such as zero-hour contracts, which often lack job security, consistent income, and access to benefits. These conditions disproportionately impact low-wage workers and contribute to broader socioeconomic divides. Research also shows that workers’ performance is influenced not only by their absolute wages but also by their relative income position, which can further entrench inequality. Additionally, neoliberal reforms have encouraged privatization in education and healthcare, intensifying debates about access and affordability. Critics assert that while neoliberalism may aim for economic growth, its implementation often overlooks the structural disadvantages faced by marginalized populations, raising questions about long-term equity and sustainability. These critiques have fueled contemporary policy discussions about balancing market freedom with inclusive economic reforms.

The term is rarely used by proponents of free-market policies. When the term entered into common academic use during the 1980s in association with Augusto Pinochet's economic reforms in Chile, it quickly acquired negative connotations and was employed principally by critics of market reform and laissez-faire capitalism. Scholars tended to associate it with the theories of economists working with the Mont Pelerin Society, including Friedrich Hayek, Milton Friedman, Ludwig von Mises, and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan, and Alan Greenspan. Once the new meaning of neoliberalism became established as common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy. By 1994, the term entered global circulation and scholarship surrounding the topic has grown over the last few decades.

Neoliberalism originated among European liberal scholars during the 1930s. It emerged as a response to the perceived decline in popularity of classical liberalism, which was seen as giving way to a social liberal desire to control markets. This shift in thinking was shaped by the Great Depression and manifested in policies designed to counter the volatility of free markets. One motivation for the development of policies designed to mitigate the volatility of capitalist free markets was a desire to avoid repeating the economic failures of the early 1930s, which have been attributed, in part, to the economic policy of classical liberalism. In the context of policymaking, neoliberalism is often used to describe a paradigm shift that was said to follow the failure of the post-war consensus and neo-Keynesian economics to address the stagflation of the 1970s, although the 1973 oil crisis, a causal factor, was purely external, and created policy challenges that existing economic frameworks struggled to address.

According to multiple scholars the dissolution of the Soviet Union and the end of the Cold War have facilitated the rise of neoliberalism in the United States, the United Kingdom and around the world.

Overview adapted from Wikipedia (CC BY-SA 4.0; see the article history for authors).

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But when once their nature is understood, they can, in the hands of the producers working together, be transformed from master demons into willing servants. The difference is as that between the destructive force of electricity in the lightning of the storm, and electricity under command in the telegraph and the voltaic arc; the difference between a conflagration, and fire…
Friedrich Engels, Socialism, Utopian and Scientific
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For example:-- "The revenue derived from labor is called wages; that derived from stock by the person who manages or employs it is called profit. The revenue which proceeds from land is called rent and belongs altogether to the landlord. The revenue of the farmer is derived partly from his labor and partly from his stock.... When those three different sorts of labor belong to different persons they are readily…
Friedrich Engels, Landmarks of Scientific Socialism
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The demand for, would continually decrease, in a declining country, 30. The province of Bengal cited as an instance, ib. Is not badly paid for in Great Britain, ib., 31. An increasing demand for, favourable to population, 33. That of freemen cheaper to the employers than that of slaves, ib. The money price of, how regulated, 36. Is liberally rewarded in new colonies, 38. Common labour and skilful labour…
Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations
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Neoliberalism

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