Neoliberalism

NEOLIBERALISM has become, over the last decades, a synonym for a series of new economic policies related to global free trade. The economic oil crisis of 1973, when the Organization of Petroleum Exporting Countries (OPEC) quadrupled oil prices for Western countries; the decline of the postwar Keynesian model of economic regulation in the late 1970s; the increasing privatizations of public property; and the deregulation politics of Margaret Thatcher (1979–90) in England and of Ronald Reagan (1981–89) in the United States signaled the emergence of the neoliberal era.

At the same time, an ensemble of various, interdependent processes framed the socioeconomic context of neoliberalism: the internationalization of capital, the denationalization of the state, the modernization of the postnational world economy, and the deregulation of the welfare state, including public administration and social services. New economic principles became influential, like the EEE principle (economy, efficiency, and effectiveness) and the idea of new public management.

The basic task of neoliberal, post-Keynesian governments was to facilitate enterprises to achieve free trade and free movement of capital in the cheapest way, not only to maximize profits and efficiency but also to obtain economic status through the extension to new international markets. Economic agents like the International Monetary Fund (IMF) and the World Bank were designed by John Maynard Keynes and Harry Dexter White at Bretton Woods (1944) for reasons of financial stability, and initially had no serious power over national economic policies, but are now called upon to play a major role in the neoliberal world order. The Keynesian ideas of the welfare state have gradually been replaced by neoclassical economics and the neoliberal theories of the free market of Friedrich August von Hayek (1899–1992), Ludwig von Mises (1881–1973), and Milton Friedman (1912–).

What is actually “neo” in neoliberalism is the revised interest of governments and economic, multinational, or global elites in the deliberation of markets and free trade in response to the economic crisis that capitalism underwent during the late 1970s and early 1980s. More than ever in its history, the market is considered self-regulating through market pressures and demand.

The idea that the interference of the state damages the movement of the market and the circulation of capital and products is becoming an economic and political [Page 764]orthodoxy. For there is no generally acceptable definition of or theoretical perspective on both liberalism and neoliberalism; the analysis of the concept, economic principles, and theory of neoliberalism and its connections with poverty requires primarily a short analysis of the concept of liberalism.

On the economic level, liberalism expressed the need for a free market. Adam Smith (1723–90), who is considered the first liberal philosopher and economist, theorized in his book The Wealth of Nations (1776) that the market is a self-regulating economic space. The competition among economic actors, products, and markets would not result in economic inequality and the poverty of special parts of the population, but in a natural, self-regulating economic and therefore social balance.

According to the theory of economic liberalism and the physiocratic doctrine of laissez-faire, laissezpasser, for the accomplishment of such goals, governments should minimize all the possible barriers to the free functioning of the market. Such antiliberal barriers to be fought off are the national tariffs system, the economic regulations and measurements assessed by governments, standards like taxation laws or economic legislation, and the restrictions on capital flows and private investments. In liberal terms, social order is achieved through the free market, which must not be a political field of governments, like the judiciary and the military.

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