An Introduction
to Neoliberalism
What is Neoliberalism?
It is neither easy nor always fruitful to define neoliberalism. This is because neoliberalism has been used to describe diverse kinds of socioeconomic and political projects, practices, and institutions in advanced capitalist societies: over time it has become a sort of general descriptor for everything that is wrong with global capitalism. Thus, rather than attempting a single and cogent definition, it is usually preferable to associate neoliberalism with a loosely connected set of ideas that can be articulated in diverse ways depending upon the theoretical perspective one is partial to. However, if there is one thread that connects all the ideas usually associated with neoliberalism it is the sociopolitical positioning of individualized, market-based competition as the preferred governing principle for shaping human action in all areas of life both at the individual and collective, societal levels.
Perspectives on Neoliberalism
The key ideas of neoliberalism arose in the 1940s and 1950s in small corners of academia in Europe as a conservative, intellectual response to progressive, social welfare efforts by the governments in Western Europe and the United States. Perceiving a threat to the capitalist social order from state-led socioeconomic planning and progressive ideas, a few economists, historians, and philosophers, including Friedrich von Hayek, Ludvig von Mises, and Milton Friedman, came together to build a new liberalism for the 20th century.
Founders of neoliberalism believed that the market is not just a platform to exchange goods and services. But, more importantly, it is the only way society can come to have objective knowledge of the world and can determine the true value of entities that could be exchanged in our society. In other words, these theorists believed that market-based economic rationality is key to arriving at the best decisions about all matters – economic or otherwise. Further, it was thought that economic freedoms should have precedence over all other kinds of freedom, as it is the most fundamental freedom and guarantees other kinds of freedoms. Only a society that is organized around the market can be the one that promises both individual liberty and societal prosperity. In such a society, the state exists only to make sure that the markets function and remain central to the organization of social life.
These ideas largely circulated among the conservative think tanks supported by the economic elite, such as the Institute of Economic Affairs in the United Kingdom and the Heritage Foundation of the United States, and the economics departments in a few universities, such as the University of Chicago. The ideas of these intellectuals remained on the margins of academic thought and public policy until the 1970s. However, with help from the moneyed elite and compliant policymakers, these institutions were able to take advantage of the oil and budgetary crises of the 1970s to push their ideas center-stage in the economics departments as well as public policy. As a result, governments reduced their commitments to social welfare and markets came to be seen as the key mechanisms for organizing societal affairs. The last few decades have only seen a deeper entrenchment of the cultural hegemony of neoliberal ideas in most advanced capitalist societies. This change has been very beneficial to the rich strata of society, while income and wealth inequalities have worsened with each passing decade. These developments have been understood from varied perspectives. Three prominent viewpoints that have contributed the most to our understanding of neoliberalism can be summarized as follows:
Marxist Perspective: Marxists see the marketization of society and withdrawal of the state in governing societal affairs as a class offensive by the economic elite against the rest of the society. This class war is being waged to reclaim class power and further the elite's material interests much to the detriment of the poor and working class.
As a result, Marxists see neoliberalism as a hegemonic ideology of the ruling class that manifests itself in two fundamental ways. First, this ideology has over time become an integral part of the common sense about organizing public and private life in advanced capitalist societies. Consequently, it has been able to secure the consent of the masses while also shaping people’s subjectivities in ways that reinforce the dominance of the rich over the poor. Second, the dominance of neoliberal ideology in public policy has also enabled the economic elite to recast the material structures and institutional frameworks critical to social, economic, and political reproduction in the society to facilitate capital accumulation mainly through a regressive transfer of wealth from the poor to the rich.
Policy Perspective: This perspective views neoliberalism as a set of policies, institutions, and practices that favor market capitalism while rolling back the scope and the powers of the state to organize social life. This includes opening public services that have traditionally been organized by the state, such as healthcare and education, to the market-based competition. Further, neoliberalism also calls for a restructuring of the state so that it can be assessed and held accountable on economic principles of efficiency and effectiveness. This is done to ensure that the purpose of the state is to support the creation, extension, and preservation of markets as the key mechanism for regulating individuals as well as society as a whole.
Governmentality Perspective: The role of language is critical in this perspective, as there is an assumption that the way we talk about ourselves, our work, and our lives fundamentally change us and how we live our lives. This perspective also relies on a definition of governmentality as the different ways in which the state, directly and indirectly, shapes our collective and individual behavior to achieve certain sociopolitical objectives. In this sense, then, neoliberalism is a way of thinking and talking about the state and its relation with the society. That is, it is a discourse of governmentality that influences capitalist societies primarily by influencing how we think and communicate about the relationship between the state, society, and individuals.
While the other two perspectives focus on the state, society, and its institutions, neoliberalism from the governmentality perspective is more about normalizing a profoundly radical view of citizenship in a capitalist society. According to this perspective, “good citizens” are framed as those who govern their lives according to market-based rationality. That is, it encourages us to become self-responsibilized entrepreneurs in all aspects of our lives – personal and professional. Both the state and society work to normalize this reconfiguring of citizenship by making individual-centered enterprise, competition, and market-based exchange as dominant frameworks for social action in all walks of life.
Key Features of Neoliberalism:
It is not always easy to identify the influence of neoliberalism in our lives. This is because neoliberalism works more by emphasizing and normalizing certain existing features of our life than by inventing new ones. Most commonly identified markers of neoliberalism have long been in existence. But, while earlier their role and presence was marginal or specific to a narrow domain, now because of neoliberalism they have come to acquire a more prominent role in structuring our language, actions, practices, and the world we live in. Though it is not always the case, the influence of neoliberalism can often be seen in the following markers that tend to define advanced capitalist societies.
A redefined role of the government: Neoliberalism calls for a government that enables rather than provides. That is, in a neoliberal society the government is only willing to acknowledge a much-muted commitment to look after and be responsible for the well-being of its citizens. Rather the government is tasked with the responsibility of creating enabling conditions that make it possible for all entities, whether they be individuals or complex organizations, to be responsible for their welfare through enterprise and competition in a marketized society. In fact, the political legitimacy and representativeness of the state in a neoliberal society depends on the extent to which it respects and protects the economic freedom of the citizens, even if it is at the expense of other forms of freedom. Further, the government is expected to be vigilant and active in creating, extending, and maintaining well-functioning markets by undertaking (a) regulatory actions, such as controlling inflation and using free-market instruments to manage the economy, as well as (b) organizing actions, such as by creating and maintaining an adequate supply of well-trained workers and by maintaining appropriate legal systems.
Market as the underpinning of the society: Neoliberalism positions markets as not only the most efficient but also the most ethical mode of social organization for building a prosperous, just, and free society. In pre-neoliberal times markets were earlier thought of as embedded in the society. This relation gets reversed in a neoliberal society as it is now the society itself that gets embedded in the market. This momentous change positions individualized, market-based competition and exchange as the foundation of our relations with others. That is, market-based contractual relations gain primacy over other societal relations and entrepreneurship becomes one's primary positionality vis-à-vis others.
Civil society that supports market and entrepreneurship: Neoliberalism envisages a civil society in which citizens can thrive by becoming enterprising economic actors, while the state recedes in the background and ostensibly out of the lives of the people. The state remains still active though. But it is now assigned the important tasks of creating conditions, contexts, structure, inducements, and sanctions to help citizens govern themselves as self-responsibilized, enterprising economic agents. When citizenship morphs into entrepreneurship, social relations tend to increasingly become more short-term and contractual. This shift naturally threatens social cohesion, promotes selfish individualism as a virtue, and contributes to the atomization of the individuals.
It has been seen that in societies where neoliberalism is in ascendance, (neo)conservative forces have also become more influential in their abilities to influence mainstream discourses. Rather than directly taking on neoliberalism, votaries of (neo)conservatism have often found it more strategically advantageous to promote conservative values and ideals, traditional societal mores, and projects that aim to restore society to its glorious, imagined past, as a potent counter to the socially corrosive effects of neoliberalism.
Another consequence of the dominance of neoliberalism in advanced capitalist societies has been the increasing removal of politics from the public sphere. The idea of and practices related to politics have acquired negative connotations in most advanced capitalist societies. Trust in political institutions is also running low. Neoliberalism has exacerbated this trend by privileging technocratic, economic rationality based decision-making by experts over contestations, debates, and negotiations in the public sphere as the better way for resolving politically difficult and complex societal issues. This shifts politics out of the public sphere and also out of the reach of common people leading to the emergence of a technocratic post-democratic form of governance in such societies. The depoliticization of decision-making has been a veritable one-two punch-in-the-gut for ordinary citizens. On the one hand, depoliticization relegates citizens to the margins of the political arena in the social sphere by transferring power in the hands of technocrats and experts for making major decisions affecting the society. While on the other, the reification of self-responsibilization, individual freedom, and autonomy as prime virtues in neoliberal discourses has made ordinary citizens overwhelmingly responsible for making the right decisions in sociopolitical contexts over which they have little control.
Citizens as Homo Economicus
As social behavior and relations get embedded in market-based exchanges and economic rationality becomes the measure of intelligibility of all manner of social action, the idea of what it is to be a citizen also undergoes a profound transformation in a neoliberal society. The citizen is now seen primarily as an economic person, in other words as a homo economicus. The point is not that all citizens in a society where neoliberalism enjoys a cultural hegemony become homo economicus. Neoliberalism, whether we think of it as an ideology, set of policies, or as a discourse, is never so powerful that it extinguishes all other conceptions of citizenship and personhood. What does happen is that in a neoliberal society we are continually and directly or indirectly encouraged, compelled, and guided to see ourselves and others primarily as homo economicus. That is, as persons whose social actions and behavior are primarily motivated by economic objectives and guided by economic rationality. This is because neoliberalism assumes that becoming homo economicus is a prerequisite to achieving economic well-being, individual freedom, and self-realization. Equally importantly, neoliberalism also assumes that it is only when we become homo economicus that we can fulfill our civic duty of contributing to building a prosperous society.
As homo economicus, we are expected to live our lives as if it were an enterprise and we were CEOs of ourselves. That is, as entrepreneurs of our lives we are enjoined to ceaselessly preserve and enhance our individual capital-at-hand through judicious investments and protections against all forms of risk so that it can generate ever-increasing returns on investment. Here the meaning of 'capital' expands to include all aspects of our lives that can be leveraged or used to generate some sort of economic advantage to us. Thus, our education and training become intellectual capital, social network, and status in society transmutes as social capital, and cultural traditions and practices find themselves in economic calculations as cultural capital. For much of human history, these aspects of our lives were never conceived and articulated in economic terms. The consequences of this economic capitalization of ourselves have been truly profound. For instance, it has encouraged us to commit to an unending engagement with training, upgrading of skills, and enhancement of job-ready credentials in a lifelong effort to continually enhance various kinds of capital at our disposal. Similarly, we are becoming increasingly accustomed to see and build upon our social relations with social networking tools such as LinkedIn and Facebook as resources to be leveraged for opportunities to better compete against others in the market and move up the socio-economic ladder. In fact, relating with others through social media is now seen as essential for building our personal brands so that we can sell our abilities and outcompete others in all sorts of market-places ranging from jobs to intimate relationships.
Under the influence of neoliberalism, we listen to experts and then set quantitative, measurable targets for myriad little enterprises that we divide our life into. We have easy access to a variety of tools and techniques that help us both to act and then continuously audit our actions on grounds of efficiency and outcome maximization for each of these enterprises. The point here may not be to always monetize an aspect of our life. But, in such efforts, the underlying rationality that guides action is usually an economic one, in the sense that we are encouraged to undertake and assess our actions based on a continual cost-benefit and outcome maximization analysis.
Thus, a neoliberal society is also an audit society in which individuals, along with corporations and other social groups, are consistently taking stock of all aspects of their lives and actions to make our sundry enterprises successful. It doesn't surprise us much, therefore, when life consultants encourage us to do financial self-audit, life audit, and happiness audit, while religious groups accost us to think about doing a spiritual audit. Further, as neoliberalism forces the state to withdraw its obligations to take care of citizens in times of need, and the individuals are positioned to see themselves as solely responsible for taking care of their lives and of those dependent upon them, people's tolerance for risk gets severely curtailed. Continuous auditing of all aspects of our lives to minimize future risks along with taking on privately funded insurance policies, thus, becomes a core strategy for survival in the neoliberal age.
Neoliberalization of Popular Culture:
Social media, TV programs, and advertisements constantly bombard us with explicit and subliminal messages about what is acceptable and what is not. These messages play a powerful role in shaping our commonsense understanding of the world. Many scholars have noted a steady neoliberalization of popular culture since the 1980s. For instance, the last few decades have witnessed an increase in the popularity of self-help gurus in popular culture. Janice Peck has studied the rise of Oprah Winfrey as a global cultural icon and one of the most influential self-help gurus of our times. According to her, the immense popularity of Oprah Winfrey reflects the success of neoliberalism in effectively commandeering popular culture for its purposes. Self-help gurus like Oprah Winfrey have been powerful disseminators of neoliberal messages that seek to persuade people to undertake private initiatives and self-improvement over collective efforts to deal with challenges emerging systemic societal issues of inequity, oppression, and exclusion. Similarly, when Nathan DeWall and his colleagues linguistically analyzed popular songs of the last few decades, they found a steady rise in the use of words associated with self-focus and antisocial behavior in these songs. Words "I" and "me" have effectively crowded out "we and "us" in these songs, and by extension in much of popular culture. We find similar messages promoting competition, narcissism, materialism, and individualism in popular reality TV shows, such as The Apprentice and X-Factor of our times.
Neoliberalization of Language:
Hand in glove with the neoliberalization of popular culture, one sees a mutually reinforcing seepage of neoliberal worldview in languages spoken in public, professional and personal spaces. We have increasingly adopted a corporate-speak in understanding and communicating all sorts of experiences, ideas and emotions even if they have little relation to the economic realm. For instance, when we visit a school or a hospital we are increasingly greeted and treated as a customer in a language full of buzzwords borrowed from the world of business, such as human capital investment, value-add, benchmarks, outcomes, targets, deliverables, alignment of incentives, leveraging of assets and so on. This corporate-speak privileges individual choice, competition, self-interest and economic, and instrumental rationality, and thus positions us as buyers and sellers in a world reimagined as one large super-mall.
Further, under the influence of neoliberalism, even words that don't necessarily belong to the market have taken on connotations that promote a neoliberal worldview. For instance, Doreen Massey argues that when one talks of work, it is usually understood as an economic activity mediated by a transaction of money. As a result, unpaid labor, such as caregiving, without which human societies cannot exist goes largely unnoticed and underappreciated. Similarly, taxes are increasingly talked of as burdensome expenses rather than as social investments needed for a just, secure and prosperous society. On the other hand, a value extraction activity such as buying shares on the stock market purely for speculation is given a positive sheen by treating it as an investment. Language does far more than representing the world. The act of labeling by words and symbols also produces us as people with distinct positions and roles in society. In our times, it is becoming increasingly clear that under the influence of neoliberalism language is progressively recasting us as buyers and sellers looking to make a good deal in a society reconstructed as an all-encompassing marketplace.
What is so Neo about Neoliberalism?
As a new invention in the art of government, liberalism ushered in profound changes in the relation between the government and society in 18th century Europe and North America. These changes began with the emergence of a new compact between the rulers and the masses in which, perhaps for the first time, the rulers agreed to limit their exercise of power over the masses. It was recognized that citizens had certain inalienable human rights that cannot or should not be infringed upon in normal circumstances. For instance, it was recognized that all citizens had equal rights to life, liberty, and to own private property. This development led to an era that saw liberalism as the dominant paradigm for governance in many European and North American societies till the early decades of the 20th century. Societally speaking, liberalism translated as the rule of law, constitutional government with limited powers, guarantees of civil and political rights, freedom of opinion and expression, and religious tolerance. In the economic sphere, liberalism became associated with a strong belief in a laissez-faire unplanned economy based on free and competitive markets and private ownership of property and means of production.
The failures and horrors of the first half of the 20th century, such as the stock market collapse of the 1930s and the second world war, shook the dominance of liberalism as the leading socio-economic philosophy of the era. As a result, two countervailing sets of ideas about governance began to compete for revisions to liberalism to make it better suited for peace and prosperity in modern times. On the one hand, democratic socialist ideas favored by the political elite in the United States and Western Europe in the decades following the second world war called for a greater public safety net to protect the working class from the vagaries of the market, progressive taxation, and state planning of the economy. While, on the other, a small group of nonmainstream economists and philosophers led by Friedrich von Hayek, Ludvig von Mises, and Milton Friedman made the case for a revised, renewed liberalism that we now recognize as "neoliberalism". Since 1908s, it is this new form of liberalism that managed to eclipse democratic socialist ideas of the post-war decades to become the dominant art of government in most advanced, capitalist societies.
Neoliberalism updates classic liberalism of the pre-second world war era in the following ways:
End of the decoupling between the economic and political spheres: Agreeing with the overall scholarly consensus that laissez-faire capitalism of the 19th century fell far short of its promises, neoliberal scholars acknowledge that free and competitive markets cannot exist on their own. That is, without governmental intervention free markets are likely to devolve into corrupt, inefficient markets dominated by monopolies. Thus, neoliberalism envisages a strong state that remains constantly vigilant about and regularly intervenes in the economy to ensure that markets remain free and competitive.
Society for the market: Further, rather than acting as a screen or buffer between the markets and the society, the government now becomes the key instrument for the reshaping and governance of the society for the sake of the market. This is a radical departure from classic liberalism because the state is now expected to embed the society in the market rather than the other way around.
One rationality to rule them all: Classic liberalism recognized that the society may need different forms of rationality, such as instrumental rationality, value rationality, and traditional rationality, in different spheres. Thus, for instance, it was assumed that while it would be reasonable to focus only on outcomes in certain kinds of activities, it might be preferable for our reasons to be guided by traditions or values in other spheres. In neoliberalism, however, we see the emergence of economic instrumental rationality as the preferred rationality for deciding the reasonable course of action in all kinds of spheres both economic and non-economic. Here economic rationality implies deciding how to optimally allocate scarce resources to alternative ends to achieve maximum outcomes with minimum costs. For example, in noneconomic spheres, such as education, the dominance of economic rationality may encourage educators to focus more on those students that give them the greatest increase in average student learning achievement scores than on students that deserve more attention on grounds of equity and justice.
The dominance of economic rationality is also reflected in the recognition of economy and economic reason as the grounds for legitimacy of the government and governmental action. Increasingly, we see that governments in advanced capitalist societies are forced to defend their actions largely on the economic grounds of efficiency and assessed on their performance in maximizing economic growth and economic freedoms.
Competition is central to capitalism: In societies guided by liberalism, markets are heralded as sites where people get to exercise their economic freedoms in acts of voluntary exchange. In neoliberalism, the key motif characterizing markets is competition. This is because following Frederick Hayek it is believed that competition is the "best discovery procedure" for arriving at the true value of anything. But, with the marketization of the entire society, we now see competition fast emerging as the key relation between fellow citizens and central societal mechanism for arriving at both collective and individual decisions. We see this amply reflected in the dominance of audits, rankings, coaching, and sports metaphors in popular culture.
Economic Freedom trumps all: Neoliberalism privileges economic freedom over other kinds of freedom. For instance, Milton Friedman believed that only economic freedom was key to a free and just society as it was the basis for other kinds of freedom, such as political freedoms of association, dissent, and free exchange of ideas. Thus, in a neoliberal society promotion of economic freedom becomes the central basis for the state's political representativeness and legitimacy. Other kinds of freedom are thus either considered to be secondary and derived from economic freedom or not worthy enough for state action. For instance, while the United States ranks very high in ensuring economic freedoms, it does not abide by the Universal Declaration of Human Rights when it comes to the right of an adequate standard of living that includes food, shelter, and healthcare, as a fundamental right guaranteed to all its citizens.
Post-neoliberalism: Are we there yet?
Starting from the great recession of 2008, crises in the sociopolitical and economic realms and the resulting popular and state-level responses have often spawned speculations about the demise of neoliberalism as the dominant influence in advanced capitalist societies. Time and again, it was felt that we are finally transitioning to a post-neoliberal era in which diverse alternative dreams of a socially progressive and democratic society would shortly begin translating into lived realities.
However, it is clear that we are not there yet. Of course, given that the influence and manifestations of neoliberalism have been remarkably varied, localized, and uneven, it would be extremely difficult to even discern the transition to a post-neoliberal age if it indeed started occurring. Still, the recent rise of populism in different corners of the world appears to indicate that the ability of neoliberal ideas, technologies, and practices to shape our world has come under sustained, serious assault in the last decade or so. People outside the policy and academic circles may not be able to identify aspects of their world as neoliberal and mount a pointed challenge against them. But, there appears to be a clear realization among the masses that the existing sociopolitical and economic structures and systems have not been working to the advantage of the majority of the people in most advanced capitalist societies, such as the United States.
A counter-response from the masses was only to be expected. Thus, on the one hand, this crisis has led to a yearning for and support of charismatic, authoritarian leaders who are all too eager to promise to make their lives great again to usurp power. The rise of Donald Trump and widespread support for his brand of reactionary populism in the United States is a case in point. On the other, we also see a parallel massive, global counter-response from the dispossessed, marginalized, and the youth that has manifested in support for diverse democratic and socioeconomically progressive ideas, practices, and projects. For example, there is increasing recognition of and demand for quality healthcare and education as public goods that should be freely available to all. Within the United States, local campaigns for an increase in legal minimum wage and end to the "war on drugs" through the decriminalization of recreational drugs have been remarkably successful even in areas with long histories of conservatism and antipathy towards state action. Unfortunately, these disparate efforts haven't yet come together as a counter-hegemonic bloc to pose any serious challenges to the dominance of neoliberalism in our world.
Neoliberalism came to life as an academic response to the failures of classic liberalism. But even in the halls of academia, it has now begun to lose some of its sheen and ability to influence academic and policy discourse. Unfortunately, the legacy of decades of dominance of its core ideas and instinct for self-preservation among the policy and economic elite has kept it undead almost in a zombie-like fashion. The inability of the academic and political left to pose a serious, persuasive challenge hasn't helped much either.
Thus, it appears that we are currently living in an in-between space where the dominance of neoliberalism appears threatened, but there is no viable alternative to take its place yet. Antonio Gramsci warned that it is in these interregnums that "morbid phenomena of the most varied kind come to pass". The failure of the Trump administration to overcome the COVID pandemic and the sociopolitical convulsions following the 2020 US presidential elections in the United States are prime exhibits of this morbidity flaring up in advanced capitalist societies. Thus, it behooves us to remain vigilant about the possible mutation of neoliberal ideas and practices into more virulent, disastrous forms in these strange times. At the same time, we also need to seize the opportunities presented by the weakening of neoliberalism to build a more hopeful future.
For further reading:
Brown, W. (2015). Undoing the Demos: Neoliberalism's Stealth Revolution. MIT Press.
Foucault, M. (2010). The birth of biopolitics : lectures at the Collège de France, 1978-1979. New York: Picador.
Harvey, D. (2005). A brief history of neoliberalism. New York: Oxford University Press.
Monbiot, G. (2016). Neoliberalism–the ideology at the root of all our problems. The Guardian, 15(04).
Savage, G. C. (2017). Neoliberalism, education and curriculum. Powers of curriculum: Sociological perspectives on education, 143-165.
Metcalf, S. (2017). Neoliberalism: the idea that swallowed the world. The Guardian, 18, 2017.
Steger, M. B., & Roy, R. K. (2010). Neoliberalism: a very short introduction: Oxford University Press.
Videos to watch:
Three Minute Theory: What is Neoliberalism?
Wendy Brown on How Neoliberalism Threatens Democracy
