Thrown around in discussions about politics and economics (some of which could quite understandably send you to sleep), the term ‘neoliberalism’ can seem a bit baffling at first. The ‘neo’ part is easy enough – neo means new, right? – but liberalism has so many different meanings these days it can easily throw you off the scent.
So what the hell is neoliberalism? Full disclosure: I’m no expert, but here’s a basic starting point that is light on economist jargon: Essentially, it is the underlying ideology of our modern Western society. The package of ideas that dictate the way our society is run. In a very basic and non-academic nutshell, it is the belief that liberty in markets (keeping markets – environments in which we trade something for something else – free from regulations and restrictions) is the best way to, well, do money.
Neoliberals believe that individual rights are the top priority. They believe that individuals are rational beings that make rational decisions. They oppose any kind of regulation that may infringe on individual rights, even if that regulation may make life better for a large number of people. They like services to be private (provided by private companies rather than the Government), they hate it when Governments intervene in any economic matters (other than to give tax cuts – they’re not at all hot on the idea of tax), and they believe that markets regulate themselves based on models of supply and demand.
Inherent in the idea of supply and demand is the notion of competition. Neoliberalism loves competition. Companies trying to sell us things compete with each other for our dollars, while we compete against each other in the labour market to earn a living. Winners are rewarded, while losers suffer.
So, according to neoliberals, individual rights reign supreme, a competition-based private sector provides better services than any public-good model could, people and companies get what they deserve when their products or skills are rewarded or passed over in the name of supply and demand, tax is bad and markets somehow magically regulate themselves.
Only, as we saw in the Global Financial Crisis of 2008, it’s not really that simple. You could argue that the international finance crash of 2008 was the market regulating itself, but the fallout of that financial correction brought devastation upon the economies of many nations. And when companies close, people lose their jobs, don’t earn money, and therefore don’t spend money. So the system grinds to a painful halt, as companies compete for money that consumers don’t have and consumers compete to simply stay afloat.
Throw in the fact that many people and companies have been using money they don’t have (credit) to fund their activities and you have a real shitstorm on your hands. When the banks that loaned the money out in the first place find themselves in a pinch (like in the GFC) they call the money back in. Only the people who they’re asking to repay their debts have already spent the money. Awkward.
You won’t generally hear about neoliberalism at school, unless you’ve got economics in your timetable. I can only really recall it hitting the mainstream media in a noticeable way once in recent memory – in early 2015 when Eleanor Catton accused the Government of being neoliberal (and was subsequently ridiculed, patronised and punished for it).
You also probably won’t hear about the alternatives people have come up with over the years, even when those alternatives were once the leading ideologies in the Western world. Ever heard the term ‘Keynesian economics’? Didn’t think so. Yet it was applied in the US, Western Europe and New Zealand (among other places) for decades after the Second World War. The goals of Keynesian economics had more to do with full employment and the eradication of poverty than forcing people to compete for resources. Yet, as we can see by taking a cursory glance at our modern (highly inequal) world, Keynes and his school of thought clearly lost.
Is neoliberalism fair? It depends on who you ask. Although if our current society is anything to go by, it seems to get fairer the richer you become. Is it the only way in which our society can function? No. While neoliberalism has taken off across the globe since the 1980s, people are beginning to voice grave concerns about the selfishness of our modern world.
The root of those concerns? The thing that the Global Financial Crisis, the Panama Papers scandal, the rise of Donald Trump, sluggishness around climate change action, soaring child poverty, and other social ills have in common? A system that’s not working. A system founded on the principles of neoliberalism.