An Outline
Markets know best
- Competitive markets are seen as the most efficient way to allocate resources.
- Prices are treated as the best information system humans have.
- Government planning is assumed to distort signals and create inefficiency.
Assumption: If markets are free enough, they’ll self-correct. This belief is held in common with neo-classical economics (that’s the stuff taught worldwide in university economics and business classes.
The state should be small—but strong
- Small in social spending, welfare, public ownership, regulation.
- Strong in:
- Enforcing property rights
- Protecting contracts
- Policing labor, protests, and “market disruptions”
- Backstopping finance in crises
Neoliberalism is not anti-state; it’s pro-market state power. This, of course, begs the question of who controls the state? The rich and corporations know the answer. They control the state
Privatization of public goods
Move services from public to private hands:
- Utilities
- Transport
- Healthcare
- Education
- Prisons
Private firms are more efficient and innovative.
Result in practice: monopoly rents, higher prices, weaker accountability, impoverished services
Deregulation (especially of finance and corporations)
Reduce rules on:
- Banks
- Capital flows
- Corporate behavior
- Labor markets
Belief that regulation “stifles growth” and innovation.
Reality: risk shifts from firms to workers, households, and governments. Private risk is socialized. See bailouts after the 2008 Global Financial Crisis
Labor market “flexibility”
- Weaken unions and collective bargaining.
- Make hiring and firing easier.
- Push wages toward “market clearing” levels.
Often framed as:
- “Flexibility”
- “Competitiveness”
- “Efficiency”
In practice: wage stagnation, insecure work, declining labor power, part-time gig work, few or no job benefits. Money (capital) can flow around the world, labor not so easily.
Low taxes on capital and high incomes
Cut taxes on:
- Corporations
- Capital gains
- High earners
Shift tax burden toward:
- Consumption (sales/VAT)
- Payroll taxes
Justification: investment and growth will “trickle down.” A thoroughly debunked claim. The rich and corporations laugh about this all the way to their offshore secret bank accounts
Individual responsibility over social provision
Poverty framed as a personal failure, not a structural outcome.
Welfare programs are:
- Cut
- Means-tested
- Moralized
Social risks: health, retirement, and unemployment are individualized. This is one of the most pernicious aspects of Neoliberalism. Individuals are morally culpable for their situation regardless of the structural issues they face.
Globalization of capital
Free movement of:
- Capital
- Goods
- Investment
Constraints on national economic policy via:
- Trade agreements
- Investor-state dispute mechanisms
- Financial markets
Labor is not equally mobile. US loses millions of high-paid manufacturing jobs. Finance speculation (gambling) goes global.
Competition as a moral good
Competition is treated not just as an economic mechanism but as a social and individual virtue.
Applied to:
- Schools
- Universities
- Hospitals
- Cities
- Individuals (“human capital”)
Society becomes a marketplace. Everything is subordinated to the values of the marketplace.
Shareholder Value Theory (new addition in the 1970s)
Milton Friedman’s 1970 opinion piece in the NYTimes argued that the only job of a corporation is to increase shareholder profits. This led to the financialization of the economy. Instead of business managers paying central attention to the production of goods and services, they were personally incentivized to extract as much money as quickly as possible from the business. Thus, business is managed to meet Wall St.’s quarterly expectations.
Shareholder value theory is the corporate governance engine of neoliberalism. If neoliberalism is the macro-system, shareholder value is the rulebook inside the firm.
Where does the term “neoliberalism” come from?
Americans think of liberalism as a feature of FDR’s policies to combat the Great Depression and successor policies during the thirty years following WWII. LBJ and JFK are the initials of Presidents who pop to mind as liberals.
The liberalism of neoliberalism refers to 18th- and 19th-century European liberalism, a reaction against monarchism. Key figures would include Adam Smith, John Locke, John Stuart Mill, Immanuel Kant, and others.
20th-century American liberalism is a reaction to the excesses of income and wealth inequality during the American Gilded Age, roughly 1880-1910. Friedrich Hayek, Milton Friedman, and others in the Mont Pelerin Society used this term beginning in the 1950s.