Neoliberalism and economic liberalism
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It is most often used as a term of degradation by populist elements on the left and right alike. Though a flawed and often deriding term, it does denote a real ideology.
Neoliberalism, as described by the encyclopedia Britannica, is an “ideology and policy model that emphasizes the value of free market competition.” According to the article, “Although there is considerable debate as to the defining features of neoliberal thought and practice, it is most commonly associated with laissez-faire economics.”
One might therefore ask what the difference between economic liberalism and neoliberalism is. It is hard to account for this seeming double up of terms, except that the term “neoliberal” appears to be used most in times of reform and, as stated earlier, as a term of attack whereas “economic liberal” seldom is. The Mises Institute sums it up well:
What is neoliberalism? Well, it appears that, at least among its critics, “neoliberalism” usually means nothing more than “liberalism.”
The article does, however, argue that some beliefs make neoliberalism distinct. It talks of an early group of “neoliberals” in the 1920s.
Then as now, the central problem with the neoliberals revolved around their blithe attitude toward inherently anti-market central banks and government-created money.
To those of us who keep up with the details of the marketplace in liberal ideas, these distinctions are readily apparent.
To anti-liberal leftists looking in from the outside, however, Austrians, Chicagoans, and neo-classicals all probably look like pretty much the same thing.
The inclusion of this quote is not an endorsement nor a condemnation of the Austrian school — this writer regards himself as a follower of the Chicago school. It is included simply for the explanation it offers.
Though the article does identify neoliberals as a certain group with set beliefs, it also raises the use of the term as a pejorative for anyone who supports capitalism or who abides to economic liberalism. This seems to be the meaning of the term most commonly intended by its users, certainly outside of academic literature. As such, economic liberalism is the term this article will use to denote the ideology of free markets and free trade.
Most liberal democracies have been governed by people referred to as neoliberals at various points, with two prominent examples being president Ronald Reagan and prime minister Margaret Thatcher whom dominated the 80s. This was just prior to the fall of the Soviet Union.
A considerable portion of the traditionally pro-market GOP has presently abandoned the economic liberalism that was championed in the 80s and 90s. Under the most recent Republican administration, tariffs were imposed and rhetoric on trade took on a protectionist tone whilst government spending and debt continued to increase — as it did, admittedly, under Reagan. By the same token, regulations were reduced. This is not merely an attack on the Republican Party. Recent criticisms of liberal economic policy are in no way unique to America, nor have they come from the whole of the GOP or other conservative parties, nor are they exclusively or even predominantly from the political right.
The rise in skepticism of liberal economics can best be understood as a result of the rise in populism both on the left and the right which took place in the second half of the 2010s. An example from the left has been the groundswell of support for Bernie Sanders during his two presidential runs, though neither succeeded in propelling him to the nomination.
short-term fads should not be mistaken for the long-term trajectory
Regardless, short-term fads should not be mistaken for the long-term trajectory. The rise and fall of fascism in the early 20th century and the subsequent rise and fall of socialism in the latter 20th century were followed by a period of economic reform, which many would regard as neoliberal, spurred on by Pax Americana. Of course, these reforms were simply economic liberalism. Today, largely thanks to this, the world is wealthier and freer than it ever has been. Some of the nations that were formerly standard-bearers of fascism or socialism are now solidly liberal, after embracing both democracy and economic reforms. They’re better off as a result.
This may be assessed using the Index of Economic Freedom, created by the Wall Street Journal and the Heritage Foundation, an American conservative think tank. As of 2021, Germany ranks 29th, and the former Soviet republic of Georgia ranks 12th. Though there may be room for improvement, this demonstrates the perseverance of liberalism. Other formerly socialist countries have trended the same way since the collapse of the USSR, though not necessarily to the same extent.
What is neoliberalism? In large part, it’s another term for economic liberalism; one which is often used as an insult. What is economic liberalism? Free markets and free trade. Has it been attacked? Yes. Is it on the way out? Absolutely not.
