An initially challenge faced by any scholar attempting to study neoliberal ideology in more detail is the apparent lack of written literature on neoliberalism from a neutral or sympathetic point of view. In real sense, everyone writing about the ideology do so as part of a critique of the ideology. According to this critical analysis, neoliberalism refers to the rejuvenation and spread of one specific aspect of liberal tradition, namely economic liberalism. Funder mentally, economical liberalism refers to the notion that states should abstain from intervening in the economy, and instead leave space for individuals to participate freely in self-regulated markets. Neoliberalism and economic liberalism, should in the view of this discussion, be handled separate from liberalism in general, which according to Oxford English Dictionary (502), refers to instituting constitutional changes or legal reforms that favors democracy or freedom. On the other hand, the same dictionary defines neoliberalism as a modern form of liberalism and tends to advocate for individual rights and free market economy (Oxford English Dictionary 502). In spite of being informative, these definitions need further elaboration.
Consequently, the following section of this paper presents a brief analysis of the ideology of liberalism, because we find it essential to do so before discussing neoliberalism. This analysis will serve as basis for the third part, which attempt to define the concept of neoliberalism. The end of this section will propose a unified definition of the concept of neoliberalism. The fourth and final section will shed light into the importance of neoliberalism as it applies to North Atlantic and to what extent it governs the world.
Liberalism as a concept can refer to economic, political, or even religious views. In the US, political liberalism has traditionally been used as strategy to control social conflict. The concept is presented to the working and poor people as a progressive movement compared to conservative or right wing. The concept of neoliberalism suggests a harsh or tough version of the liberal thought. It proposes that liberalism was at one point in history a very influential political ideology that lost its significance at some point, only to rejuvenate itself in the recent times in a new form. However, as things turn out, liberalism has dominated politics in the West as well normative thought normative political thoughts for the past sixty years, until the time in which it became a shared inheritance among professional politicians, political theorists, and almost all major political movements in its native countries. This is evidenced by the fact that people rarely speaks in public against democracy or freedom anymore, which are the fundamental values of liberalism, as set out in the dictionary definition quoted above. As such, the lost tradition of liberalism could scarcely provide an understanding of neoliberalism as an ideology. Instead, in the view of this paper, the ideology differentiates itself from what scholars describe as ‘liberalism’.
The word ‘liberal’ assumed a specific political meaning with the institution of liberal parliamentary caucuses in Spain and Sweden, and subsequently throughout Europe during the first decade of the nineteenth century (Gray 32). These budding political affiliations coined the term ‘liberal’ in response to their favorable assessment of emerging democratic political systems in UK and especially in the US, in contrast to their conservative opponents, who campaigned for the return of pre-revolutionary forms of government (cf. Sartori 367f). Conversely, the term is conventionally used to describe an obvious phenomenon that share same political ideologies as proposed by John Locke, with his theological and philosophical justification for religious easiness and popular autonomy towards the end of seventeenth century (Ryan 1993; Gray 1995). Partially due to its relatively long history, the term ‘liberalism’ has become a rather ill defined concept, with considerable varying usage over time and according to varying regional experiences. According to Ryan (284), scholars find it easy to identify famous liberals, but they fail to identify the commonalities that they share in their ideologies as they relate to democracy and state welfare. He adds that “Anyone trying to give a brief account of liberalism is immediately faced with an embarrassing question: are we dealing with liberalism or liberalisms? It is easy to list famous liberals; it is harder to say what they have in common” (Ryan 291).
The issues worsens further with the increasing tendency among economic theorists to use the ideology of liberalism loosely as a standard concept applicable in political struggle, with some liberals defining liberalism as something that only the very impious could fail to embrace liberalism (Ryan 292). In addition, several political philosophers, politicians, and liberal parties have often offered varying views on the true or real meaning of liberalism.
However, identifying some of common varieties of liberalism does not prove cumbersome. Ryan argues that the most common distinction found centers between classical and modern types of liberalism (Ryan 293-296). According to Ryan’s understanding, classical liberalism associates with earlier liberals such as Adam Smith and John Locke. Additionally, he mentions Alexis de Tocqueville and Friedrich von Hayek from the nineteenth and twentieth century respectively, as belonging to classical liberalism.
Classical liberalism builds on the concept that state involvement should be minimal, which implies that practically everything with exception of law enforcement and armed forces should be left to the citizens to freely choose how they should be run. In addition, some authors, specifically John Locke (1689/90), think that an ideal state should be a freely established association between individuals, where members can freely conduct a justified cause for rebellion if they believe the government exercises more compared to the originally ceded agreement by its citizens. Apparently, classical liberalism shares much common ground with what we have described above as ‘economic liberalism’. Moreover, as often the case with classical liberals’ tendency to favor laissez-faire economic policies, characterized the proponents of ‘neoliberals’.
Modern liberalism is, on the other hand, exhibits greater willingness to allow active participation of the state in the economy. Modern liberals believe that government should participate in the economy through provision of essential goods and services to the society. As such, modern liberalism presents an insightful review of liberalism, specifically on the economic policies associated with it. Whereas economic or classical liberals favor laissez-faire economic policies, modern liberals discredit this analysis as misleading and insufficient, and that state has a significant role to play if the most liberal purposes and goals are to come to reality. Modern liberals could probably find itself on the left of classical liberalism due to its willingness to trust the state as an instrument for distribution of power and wealth.
An examination of the history and recent developments of liberal thought could make one come to an agreement with Ryan (294) that it would prove tiresome to identify exactly which political goals, ideas, and beliefs liberals share in common. However, there have been several attempts to make a reunified definition of what liberalism actually is. John Gray believes that all liberals share common ideas and he identifies four basic elements of a highly abstract conception of man and society, which according to him, sets them apart from non-liberals (Gray 260).
This volume also sheds some light into the core tenets of liberalism (Gray 311). According to Ryan (293), the liberal share a common distaste for political theocracy, absolutism, and unrestricted capitalism from Locke to present time. Of all these tents, it is the last one, which elicits some mixed reaction, given the emphasis that the classical liberals put on commercial liberty. Ryan associates liberalism with a set of political theories, which places emphasis on individual freedom to choose meaningful options in life. Secondly, liberalism advocates for the view that citizens must be subjected to democratic governance and rule of law. Finally, Ryan connects liberalism with the notion that state should exercise power with caution and within the constitutional limits, for example, a system based on separation of power, as suggested by earlier liberals such as Montesquieu and Locke.
Saad-Filho and Johnston (1) sums it that “we live in the age of neoliberalism”. Together with the authors of the book, Neoliberalism – A Critique Readers, they share a common view that wealth and power are, to an ever increasing degree, concentrated within the elite groups and multinational corporations due to the implementation of a politically ideology they refer to as ‘neoliberalism’. On the volume’s back cover blurb, the publisher of the book extends further to describe neoliberalism as “the dominant ideology shaping our world today”. However, despite its supposed overwhelming importance, Saad-Filho and Johnston find it “impossible to define neoliberalism purely theoretically” (ibid.).
According to another contributor to the same volume, it is not possible to locate the emergence of liberalism precisely, but a look at Adam Smith’s work on the conception of man and society shows some traces of classical (Clarke 45). Under this view, liberalism is thought of as an entirely new paradigm for policy-making and economic theory – the ideology behind the most recent stage in the development of capitalistic society, while at the same time reviving the economic theorist of Smith and his intellectual heirs in the nineteenth century.
Palley (224) continues with this line of argument by purporting that a ‘great reversal’ has taken place, where neoliberalism has substituted the economic theories of John Maynard Keynes (432) and his cohorts. Keynesianism, as it came to be known, flourished as theoretical framework in economics and policy-making between 1945 and 1970, but later replaced by a more ‘monetarist’ approach originating from research and theories of Milton Friedman (34). Following this period, we are led to accept as truth that ‘neoliberalism’, i.e. monetarism and related theories, has occupied an important place in the macroeconomic policy making as evidenced by preference for towards limited state control of the economy and increased focus on stability on economic policy rather than Keynesian goals such as alleviation of abject poverty and full employment (Clarke 112).
Munck (56) believes that the possibility of a self-regulated market is a center assumption in classical liberalism, as well as a presumption among neoliberals. The most important function of an economic system is efficient allocation of resources, and the best way to achieve this is through market mechanism, in line with what Munck describes as ‘neoliberal economic theories’ (Munck 121). Intervention activities by the government in the economy are therefore not required, because intervention undermines forces under play in the marketplace, and thus reduce market efficiency. As ‘the the dominant ideology shaping the world’, neoliberalism exerts, according to Munck, greater power over contemporary debates concerning reforms of the public sector and international trade. To this end, one must decide to take a position against or embrace neoliberal reforms.
In many ways, the Critical Reader represents a recent wave of ‘critical literature’, which aims at denouncing a powerful propensity, which goes under the name of ‘neoliberalism’. Majority of these works places an overwhelming significance on neoliberalism, while at the same time leave the concept of ‘neoliberalism’ undefined, claiming, along with Saad-Filho and Johnston, that it defies definition. To this end, one would not be mistaken for suspecting that the concept has assumed a generic term referring to deprecation describing any political or economic development considered undesirable (Palley, 35).
Neoliberalism: a conceptual history
David Harvey stands out in the recent critical literature as one of the few who tries, in his A Brief History of Neoliberalism, to offer a diverse definition of liberalism (Harvey 5). In his opening statement, Harvey describes neoliberalism as “the first instance a theory of political and 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” (Harvey 2). In my view, Harvey provides a clear description on his understanding of the concept of liberalism. He starts his argument by suggesting that neoliberalism is political and economic ideology that promotes individual entrepreneurial skills and freedoms within an institutional framework that exhibits free markets, strong property rights, and free trade (Harvey 5).
Harvey’s definition augers well with his overall analysis of the concept, which accommodates the belief that the world has experience a drastic turn of events favoring neoliberalism in political and economic thinking and practices (Ryan 213; Gray 190). The definition given by Harvey purports that neoliberalism is a distinct economic theory rather than a rejuvenated liberalism. Apparently, Harvey views neoliberalism not as a continuation of liberalism ‘proper’, but something different and independent from mainstream liberal policies and values. Evidently, some neoliberals are not liberals in any constructive sense, as Harvey points out anti-liberal autocrats such as Augusto Pinochet and Deng Xiaoping among supporters of neoliberalism. Conversely, there appears to be neoliberals with a liberal identity as well, and include conservative politicians such as Thatcher and Reagan (Harvey 7). Harvey believes that neoliberalism has its foundations in the modern. Harvey’s definition, that incorporates everything from Thatcherism to ‘socialism building on Chinese characteristics’; he concludes that neoliberalism is ‘a theory of political economic practices’ rather than a ‘complete’ political ideology.
Neoliberalism political philosophy
Anna-Maria Blomgren (210) on the other hand also defines neoliberalism, but this time taking a normative perspective on political theory. In her ‘critical analysis’ of political thoughts of Nozick, Friedman and Hayek, she depicts their respective economic and political theories as representation of ‘neoliberal philosophy’. In her classification of neoliberalism, Blomgren overlaps to some extent, but emphasizes more vividly the internal diversity of neoliberal thought. Blomgren (212) argues that neoliberalism depends on ethical foundations as well as normative conclusions. Blomgren suggests that, “neoliberalism is commonly thought of as a political philosophy giving priority to individual freedom and the right to private property. It ranges over a wide expanse in regard to ethical foundations as well as to normative conclusions” (224).
Blomgren maintains that Nozick, Friedman and Hayek all give separate accounts on fundamental foundations of neoliberalism policies and evaluations (Blomgren 230). She believes that Friedman tends to favor policies such as privatization, deregulation, and tax cuts as they contribute to the overall wellbeing of the citizens as well as the economic climate. When Blomgren consider the matter further, she however finds that his policy recommendations bases on a conception on natural law. This is an indication that Friedman attempts to bring neoliberal economic practices and policies because human beings are social animals, and that their social way demands some way of organization, which highlights the for individual freedom (cf. Friedman 1980).
On a similar note, Hayek puts his argument as a more conservative type of neoliberal, who bases his political thought on an idea of natural law while alternating at places a utilitarian argument in favor of neoliberalism. His theory bases on the idea of ‘spontaneous order’ of social life, which serves better than any kind artificially created order in regards securing individual well-being and liberty (cf. especially Hayek 173).
Finally, Nozick advocates for the much of the same policies as Friedman and Hayek, but deviates by arguing that human being have absolute rights that thwart any legitimated role of the government (Nozick 165). Nonetheless, Nozick calls for the state involvement in correcting past injustices even if it means increased state intervention in the economy.
In line with the literature presented above, as well as other parts previous parts of this study, we therefore advance a definition, which directly builds on the more moderate voices of critical literature, majorly Harvey and Blomgren. The definition proposed in this analysis takes into account all factors in order to develop a non-biased analysis of the concept of liberalism, and political conditions in the modern world.
Neoliberalism is a loosely demarcated set of political ideologies, which most prototypically and prominently include the conviction that the only legitimate duty of the state is to safeguard individual, especially liberty, commercial, as well as a strong private property rights (cf. Nozick 84). This assurance results into a belief that, the state power or influence should only have minimal or at least drastically reduced in size and strength, and denunciation of any transgression by the state beyond ceded responsibility is unacceptable (ibid.). These set of beliefs could apply to international landscape as well, where a system of free trade and free markets should take charge as well; the only prominent reason for regulating international trade is to protect the same kind of property rights and liberty, which should be realized on a national level (Friedman 265).
Furthermore, neoliberalism generally includes the belief that adopting a free market mechanism provides the optimal means of organizing all exchange of goods and services (Friedman 269). It is believed that free trade and free markets would set free the entrepreneurial spirit and the creative potential, which finds its way into the unprompted order of any human society, subsequently leading to more individual liberty and efficient allocation of resources (Gray 270).
Following the analysis, neoliberalism refers to a set of ideas on how the relationship between the state and external environment should be organized, rather than a complete ideology or philosophy (Blomgren 243). As matter of fact, there is no clear understanding as a theory how political processes should be organized. For instance, neoliberalism avoids specifying if we should have a free exchange of political ideas and democracy.
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