Neoliberalism Made Simple: How It Shapes Our Lives
A quick breakdown of Neoliberalism.
Typically, I struggle to understand concepts of political development, so for the sake of helping other people understand, I’ve decided to explain neoliberalism in straightforward terms.
What is neoliberalism?
Neoliberalism is a political and economic approach that prioritizes free markets, privatization, and minimal government intervention, with the belief that this will lead to economic growth and prosperity.
You can’t talk about neoliberalism without mentioning Margaret Thatcher and Ronald Reagan. Neoliberalism was pioneered by the two of them as a response to the 1970s economic crisis, and we haven’t really looked back or evaluated it on a major scale since. Though it originated in their policies, neoliberalism has since shaped economies around the world, influencing institutions like the International Monetary Fund (IMF) and the World Bank.
Core principles of neoliberalism
There are many definitions of neoliberalism, but the most overarching one is that it’s a political approach that favors free-market capitalism, deregulation, and a decrease in government spending. This is where the idea of trickle-down economics came from. The theory was that if the government is run like a business, deregulates companies, and makes it easier for people in the 1% to maintain their wealth, they’ll regulate themselves (which raises the question: why would a business report its crimes?), create jobs, and eventually allow wealth to “trickle down” to everyone else.
Criticisms of neoliberalism
It depends on the idea that rich people and companies are generous and want to help others, which isn’t usually the case. This trickle-down has been proven repeatedly not to work. Its most notable characteristic is that the jobs created by deregulation often make wealth spill out rather than trickle down. Many of the people running these companies live in tax havens like Panama and the Isle of Man, meaning they don’t contribute to the U.S. tax system.
Companies frequently move their operations abroad to take advantage of cheap labor, or they bring in foreign workers temporarily. Because of deregulated labor protections, employees in these companies are more likely to be mistreated, overworked, or even exposed to harmful conditions like cancer-causing chemicals. This also adds to U.S. pollution.
The impact of neoliberalism on society
Neoliberalism places heavy importance on individualism and “getting it out of the mud” over things like strong family ties, social connections, or welfare programs. This is why, in times of economic crisis, austerity (cuts to social spending) happens—because social spending is seen as taking away people’s ability to be self-sufficient. Neoliberalism assumes there’s equal opportunity in a free market, even though monopolies, discrimination, and differences in education exist.
It also allows anything to be commodified, which is why we pay for $5 bottles of water, healthcare, and other things that are essentially required to live. Globally, neoliberalism has influenced policies around privatizing industries and reducing public services in many countries, often through organizations like the IMF and the World Bank. These institutions sometimes tie loans or financial aid to neoliberal policies, such as cutting government spending or privatizing public resources, which can exacerbate inequality in developing nations.
In summary, this has been a breakdown of the basic characteristics of neoliberalism. I hope it helped you better understand how the world around us works, especially since neoliberalism is the only system a lot of us have ever lived under. I encourage you to check it out more!