In my time here at dailykos I've noticed that there seems to be a lot of confusion surrounding the term "neoliberalism". Some seem to think those who use the term are republicans in disguise who are attacking liberals. Others seem to think that the terms is intentionally designed to be misleading and to slime liberalism. Given the way the term "liberal" is used in the United States, it is not surprising that those who do not have an academic background in political science and who are not familiar with European political categories would be confused by this term. So it goes. Follow me below the fold for a little clarification.
The term "neoliberalism" originated in Germany and was originally coined by sociologist and economist Alexander Rüstow. Now the thing to understand is that in Europe the term "liberal" means almost the exact opposite of what it means in the United States. For those in the United States and outside academic political science, "liberal" means "left". In the United States, a liberal is someone who supports strong regulations, progressive taxation, strong government programs, and who is on the left on a variety of different cultural issues.
However, in Europe, "liberal" refers to that conservative economic philosophy that advocates minimal regulation, the minimization of government programs, and so on. As wiki puts it,
Classical liberalism is a political philosophy and ideology belonging to liberalism in which primary emphasis is placed on securing the freedom of the individual by limiting the power of the government... It advocates civil liberties with a limited government under the rule of law, and belief in laissez-faire economic policy. Classical liberalism is built on ideas that had already arisen by the end of the 18th century, such as selected ideas of Adam Smith, John Locke, Jean-Baptiste Say, Thomas Malthus, and David Ricardo, stressing the belief in free market and natural law, utilitarianism, and progress. Classical liberals were more suspicious than conservatives of all but the most minimal government and, adopting Thomas Hobbes's theory of government, they believed government had been created by individuals to protect themselves from one another.As you can see, these are the sorts of government and economic policies we here in the United States associate with republicans and conservatives. I'm not quite sure how the American left came to call itself "liberal" given the philosophers and economists that that originated this term, but the thing to remember is that in Europe "liberal" means "conservative". Perhaps this shift took place during the McCarthy Red Scare era when activists on the left began to dissociate themselves from socialism because it had become so dangerous to be a socialist in the United States. After all, let's face it, when we talk about leftist policy we're talking about moderately socialist policy.
Basically neoliberalism is more or less the same thing as classical liberalism (I realize the academic political scientists here will quibble with me about this, but remember, we're writing here for a popular audience, not fellow academics; baby steps):
Neoliberalism is a label for economic liberalism, advocates of which support economic liberalization, free trade and open markets, privatization, deregulation, and decreasing the size of the public sector while increasing the role of the private sector in modern society.So why the "neo" in "neoliberalism"? Why not just call it "classical liberalism"? Again, you need to understand the European context in which the term emerged. Following WWII, many economists and political leaders recognized that one of the reasons that fascism, destructive nationalism, and ethnic cleansing were able to rise was due to the absence of a strong economic social safety net. When average people are exposed and vulnerable to the vicissitudes of the economy, when economies collapse and people go hungry and are unable to support their families, they cast about for scapegoats. This is one of the things that happened during the Great Depression.
As a result of this experience, economists and leaders came to recognize that a strong social safety net as well as a well regulated economy was crucial to preventing future horrors akin to the Holocaust and the hundreds of thousands who died during WWII. When people have a strong social safety net providing for retirement, food, medical care, shelter, and education, they are less likely to fall into reactionary ideologies that scapegoat other religions, races, and genders. A well regulated economy helps to mitigate those boom and bust cycles thrust people into financial ruin and create the circumstances in which charismatic leaders like Hitler spinning yarns about things like the "Jewish Plot" become attractive.
While leftist economic policy such as this certainly does not eradicate religious intolerance, religious internecine warfare, racism, sexism, homophobia, and all the other things that cultural leftists in the United States struggle against, it certainly goes a long way towards minimizing the sorts of socio-economic circumstances that are a breeding ground for these sorts of sentiments. This is why struggles on behalf of leftist cultural issues can't simply remain at the level of culture, at the level of debunking and denouncing hatreds towards different demographics. If you want to fight, for example, racism, you have to also address the economic circumstances-- the vulnerability of people to the world when they live in conditions of poverty --that are breeding grounds for racism. And, of course, it goes without saying that minorities suffer disproportionately under classical liberal economic policies.
This context sheds light on the "neo" of "neoliberalism". "New" can mean "new", but it can also mean "revived". For example, against Christian fundamentalism we can imagine leftist Christians calling themselves "neo-Christians" not because they are proposing a new Christianity, but because they are reviving Jesus's teachings in a religious context that has obscured, erased, and forgotten those teachings. Well similarly in the case of "neoliberalism". Given that the policies of classical economic liberalism had been largely abandoned in Europe because of the role deregulation and unfettered markets had played in the outbreak of WWII, the resurrection of classical economic liberalism is a revival of those positions and therefore a "neoliberalism".
The terminology can be confusing when you're not aware of the historical and geographical context, but it's clear enough once we understand these things. Unfortunately, it's more or less the terminology we're stuck with until someone comes up with something better. At any rate, we're before instances of neoliberalism whenever free market solutions are proposed, whenever deregulation is fought for, or whenever functions that were previously undertaken by government are privatized. For example, the use of private contractors in Iraq and Afghanistan is an example of neoliberal policy. Likewise the push for charter schools and private school vouchers are examples of neoliberalism at work. In healthcare, the mediation of all care through the agency of insurance companies is a neoliberal policy. The list goes on and on. It will also be noticed that neoliberal economic philosophy has largely been embraced by both republicans (though on steroids with them) and the democratic party.
Why should we be concerned with neoliberalism? Well, on the one hand, it's simply a historical truth that unregulated markets inevitably lead to boom and bust cycles that lead to things like the Great Depression. We've been living through a bust cycle during the last few years that resulted directly from deregulation. If you're into leftist politics primarily for cultural reasons you should be concerned about this because racism, religious intolerance, and gender oppression intensify during these bust cycles. On the other hand, we've seen historically (and see today) that the gap between the wealthy and poor increases exponentially wherever classical liberal economics is practiced. The rich get richer, the poor get poorer, and the middle disappear. We also have to understand that economy functions very differently today than it did sixty years ago. When economic production was dominated by industrial and agricultural capital, the idea of trickle down economics made a little sense. With appropriate government regulation money might go back to workers and the middle class, benefiting everyone. However, our economy is now dominated by finance capital where money is made on interest and speculation. This wealth does not trickle back down to workers and the middle class because it doesn't create jobs. As a consequence, we see the stock market rise and rise and rise, while we see wages and jobs remain stagnant.
However, the other thing is that classical liberal economics just doesn't work very well. Contrary to what the free market ideologues claim, free market solutions often lead to inefficiency, waste, and abuse. We see this in the case of all the money that's disappeared in the war on terror and the adventures in Iraq and Afghanistan. We see this in the case of insurance companies that use every means at their disposal to deny people coverage. We see it in private and charter schools that find every way they can to exclude poorly performing students in their pursuit of government money and attempts to eradicate even more public education so that greater investment opportunities might be created. Do you really think standardized testing is about increasing educational performance and accountability? No! It's about creating new investment industries such as companies that grade the tests. "Performance" and "accountability" are just obfuscatory buzzwords to veil what's really going on. Do you really think that attempts to deny gay marriage are just about homophobia? That's part of it, sure. But I suspect that it's much more a matter of insurance company lobbyists who don't want to pay out to spouses.
Two final points in this already overly long diary. First, free markets tend to diminish job opportunities. This is because capital will go anywhere it can to pursue profit and therefore ineluctably leads to outsourcing that kills jobs here. This is a direct result of deregulation that makes it easier for companies to do this. Second, there's an economic dimension to all of this. In its ruthless pursuit of profit, capitalism necessarily pursues environmentally destructive practices with respect to energy, mining, shipping, and agriculture. So long as these environmentally destructive ways of doing things are cheaper and more profitable, green solutions can't get a foothold. In short, supporting neoliberalism also means supporting the destruction of our planet.
Unfortunately I won't be around much the next few days as I'm traveling, but I will read comments when I can if anyone bothers to read this behemoth.