Neoliberalism, Explained
What is neoliberalism and how can you describe it to others?
A man watches the clock tick in his economics class, tuning out a lecture about the design of America’s tax system. At last, the bell rings. He hastily gathers his belongings, and exits the building, eager to return to his dormitory. But wait, there’s commotion! A half dozen students in “Young Marxist Society” t-shirts are stalking outside the economics building, copies of Das Kapital tucked in-arm, approaching passerby at random and yelling “NEOLIBERAL” into their megaphones. He flees the scene, embarrassed and dazed.
He’s been called a neoliberal. The word itself has a pretentious resonance and it must have been an insult, but he isn’t really sure what it means.
In a 2019 article, British journalist Will Hutton described neoliberalism as a slur used by “unthinking leftists” against liberals to “stifle debate.” I picture Hutton straining his eyes, fuming as he imagines a certain leftist caricature which he bases his critique on.
Neoliberalism is indeed a word sometimes thrown around pejoratively by people on the left. However, arguments like Hutton’s distract from the importance of understanding the severe implications of this ideology. Neoliberalism is a consequential term with a specific definition.
What is neoliberalism and why does it matter?
The prefix “neo” means “new” or “modified,” both of which are applicable. “Liberalism” is a political philosophy based on specific rights ascribed to individuals, including: private property, freedom of speech, rule of law, and participation in market economies. So what exactly is this new/altered liberalism?
Neoliberalism describes two related but different things.
An economic agenda with the goal of privatizing services previously managed in part or full by the government, and creating for-profit industries controlled by corporations. This includes healthcare, prisons1, housing, airport security, education, even water.
A social transformation resulting from the above market-based capitalist economies, specifically the creation of societies that emphasize individualism and personal responsibility over communalism and guaranteed basic human rights.
Under this “new” liberalism, empowering corporations is the optimal method of organizing economies and societies. The government still intervenes; however, its primary function is to protect corporate interests from labor and environmental concerns, rather than protecting the interests of its citizens. This is opposed to the “old” liberalism, sometimes referred to as Keynesian economics, which conceptualized privatization as fraught and sought government intervention.
One common misconception is that because neoliberalism contains the word “liberal,” it belongs to liberals or Democrats. In fact, since the 1980s and the end of the Cold War, neoliberalism boasts a uni-party consensus as the de facto U.S. agenda. Even though it is an inherently conservative ideology–advocating for deregulation and abdicating responsibility to individuals for their suffering–every U.S. president since Reagan has expanded its influence. Today, neoliberalism represents the dominant global order.
Neoliberalism at a global scale
Neoliberalism began its rise to preeminence as the Cold War came to an end and capitalism became an increasingly uncontested global ideology. The U.S. and Britain, under the leadership of Ronald Reagan and Margaret Thatcher, implemented a series of economic programs, both domestically and abroad. “Trickle-down economics,” a falsehood coined by Reagan, encapsulates how this took shape in America.
Reagan’s administration enacted a set of policies characterized by the combination of rolling back labor and environmental regulations, decreasing government spending on social services and cutting corporate taxes. The EPA’s budget was decreased by 22%, education spending was cut in half, and medicare, social security, food stamps budgets were all reduced. The principle underpinning these policies was that the “invisible hand” of the “free” market would provide these services more efficiently, and all you had to do was work hard and stay out of trouble. However, the idea that unfettered capitalism leads to more social welfare was proven false. While Reagan’s policies did indeed bolster corporate profits, job security and raises did not “trickle-down” to workers. Instead, labor conditions deteriorated, environmental racism went unchecked and corporate stock buybacks2 consolidated economic gains in the hands of the wealthy.
Simultaneously, Reagan’s “war on drugs” created a heavily militarized police force and expansion of a draconian prison system. As services formerly provided by the government became privatized, people lost access to any semblance of a social safety net, and poverty was intensified, especially in Black communities. The governments’ response to this manufactured poverty was racist, over-policing of poor neighborhoods and severe consequences for minor legal infractions. No U.S. administration since the inception of neoliberalism under Reagan has challenged its premise.
The impact of neoliberalism is not restricted to the United States or “western” world; in fact, the global South bears the brunt of its impact. Neoliberalism expands through the effortless movement of capital across international borders. Countries that have recently shaken off the shackles of colonialism are encouraged to adopt “free” market economies, incentivized by massive loans from the World Bank and other international developers. These loans are an invitation to multinational corporations, largely based in the U.S., to seize control of industries that might otherwise be developed by local populations. And the profits of development are unsurprisingly consolidated by shareholders and national elites, rather than “trickling-down” to workers. The result: exacerbated global poverty as billions of people in the global South, where neoliberalism has rooted itself, are denied access to basic needs.
Perhaps worst of all, neoliberalism holds a grip on nations in the global South that stifles social change. Capital can leave a country as easily as it enters, so when a “lack of confidence” in a government is deemed a threat to capital owners, investments can be revoked and economies collapsed. This “lack of confidence” is a threat leveled against socialist revolution in the global South, as reliance on the global neoliberal economy gives the U.S. a silver bullet. It can destabilize whole regions by suddenly restricting access to foreign capital, which have become the foundation of national economies. The choice for countries of the global south is fraught. Either comply with neoliberalism and have the fate of your national economy left to the whims of capital owners, or resist the influx of capital and face coup attempts, CIA-backed insurgencies and global isolation. The sovereignty of budding nations is compromised by neoliberalism, their economies under the wing of U.S. empire.
Neoliberalism at an individual scale
Neoliberalism is not only the current state of the world’s political-economy. It is also an attitude, characterized by rugged individualism and the facade of personal choice. Margaret Thatcher sums up the desired social transformation of neoliberalism:
“There is no such thing as society. There are individual men and women and there are families…Economics are the method; the object is to change the soul… You do not blame society. Society is not anyone. You are personally responsible.” - Margaret Thatcher, 1981.
How exactly does Margaret Thatcher wish for us to change our souls? Summed up by “pull yourself up by your bootstraps,” a set of characteristics underlie a neoliberal attitude. Individualism is at the core of this attitude, the idea that your economic/social success–or lack thereof–is your own doing. If you are rich, you are a hard worker, a good person, and the “free” market grants you riches. If you are poor, you are lazy, a bad person, and poverty is simply the consequence of your actions. The logic imposed by neoliberalism is that some people living in penthouses and many living on the streets is the natural order of things. Under neoliberalism, we do not live in a world where food, water, shelter, and a life of dignity are guaranteed human rights.
When the “free” market fails to provide basic needs for people–which it always does–the system that produces such harm needs to justify itself. And it finds a facile scapegoat in the facade of choice. “Society isn’t deteriorating because of a broken system, but due to the bad choices by the poor, marginalized, wretched of society.” Neoliberalism justifies itself by conditioning people towards individual blame, rather than systemic critique.
This, of course, is antithetical to leftist approach of tackling the roots of people’s hardship. Neoliberalism rejects values such as: taking care of each other, having empathy for fellow humans, understanding that not everything comes down to personal choices. Because “there is no society,” there is no camaraderie, and people are on their own.
Neoliberalism distilled
So how do you explain neoliberalism to your grandparents, neighbor, coworker, or that one cousin who works in finance?
My suggestion is that if you’re talking to somebody who isn’t politicized, you avoid the word entirely, at least for now. Hearing a spiel about a word as obnoxious sounding as “neoliberalism” is inaccessible and uninteresting to most people. Instead, start by asking some questions that point to its contradictions. You can ask: if somebody gets severely ill and goes into debt for life-saving medical care, should they receive help or is that their fault? You can point out the history of anti-Black racism in America and how slavery, Jim Crow, redlining and racist carceral system in America is one “unfair disadvantage” in the “free” market. Or you can ask: “do you think somebody born into a poor family, whose school was underfunded, faced food insecurity growing up, maybe one parent was imprisoned, has the same opportunity for success as somebody born into a rich family?” The logic of neoliberalism is so flawed that there are countless compelling ways to reveal its backwardness. I’m sure you can think of many others that are more personal to whomever you’re conversing with.
Are they hooked yet? Great, maybe it’s time to share a concise definition of neoliberalism and connect your questions to it. The tricky part though is explaining neoliberalism as a broad system that impacts not just individuals, but much of the fabric of society. For some, launching into a robust geopolitical analysis might be compelling. For others, an analogy might get the point across.
“A rising tide lifts all boats”
Let’s adapt an analogy from the founders of neoliberalism itself: “a rising tide lifts all boats.” The idea is that free markets lead to more efficient economies (rising tides), which generally increases economic output (lifting boats).
Picture a rising tide, waves swelling across the ocean’s expanse. You are navigating your rowboat in the ocean, doing alright but fearing that one day, the currents may swell too strong for you to maneuver. For now, you grit your teeth and navigate the waters with diligence, faithful that your persistence will eventually guide you to a point of greater stability. In the horizon, you can see an outline of what must be a group of yachts, seemingly unencumbered by the turbulent waters. You think to yourself: “that will be me one day.”
However, you can’t always ignore your reality. Every now and then, you’re forced to avert your eyes when you spot an unfortunate person caught in a riptide, knocked off their makeshift raft and abandoned to the whims of the ocean. Sometimes these poor fellas are adept swimmers and make it back to their rafts, but for others, besting the ocean is futile. You feel sad and wish you could do something, but ultimately you cover your ears to drown out their pleas for help. The real discomfort comes from knowing deep down that this could be you one day. You push this thought aside, and let their anguish motivate you to make it amongst the yachts.
But then on a particularly sunny day, the water catches a glint of light at a specific angle and you notice something peculiar in the distance: these are no normal yachts, in fact they are not boats at all. You can see these “yachts” are actually docked on a beach, exploiting an optical illusion to give the impression they are resting on water. And you see giant machines underneath the land-yachts, sucking water from the ocean into hydro-electric chambers, which must be what powers their extravagant lifestyles. The hydro-electric chambers contract, and water is released into the ocean. All of a sudden, the tides begin rising and each successive wave enlarges until your boat is frantically rocking. At this moment, the truth is revealed: you are not navigating rising tides in the ocean, but trapped in a wave-pool controlled by those in their land-yachts.
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A social disservice
Stock buybacks: the reacquisition by a company of its own shares. It represents an alternate and more flexible way of returning money to shareholders and delaying tax payments.
life in the wave pool ✌️🚢
Truman Show (aka Neoliberalism Hellscape)