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Neoliberalism[1] is a term whose usage and definition have changed over time.[2]

Since the 1980s, the term has been used by scholars[3] and critics[4] primarily in reference to the resurgence of 19th century ideas associated with laissez-faire economic liberalism beginning in the 1970s and 1980s, whose advocates support extensive economic liberalization policies such as privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy.[2][5][6][7][8][9][10][11][12] Neoliberalism is famously associated with the economic policies introduced by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States.[5] The transition of consensus towards neoliberal policies and the acceptance of neoliberal economic theories in the 1970s are seen by some academics as the root of financialization, with the financial crisis of 200708 one of the ultimate results.[13][14][15][16][17]

Neoliberalism was originally an economic philosophy that emerged among European liberal scholars in the 1930s in an attempt to trace a so-called Third or Middle Way between the conflicting philosophies of classical liberalism and socialist planning.[18] The impetus for this development arose from a desire to avoid repeating the economic failures of the early 1930s, which were mostly blamed on the economic policy of classical liberalism. In the decades that followed, the use of the term neoliberal tended to refer to theories at variance with the more laissez-faire doctrine of classical liberalism, and promoted instead a market economy under the guidance and rules of a strong state, a model which came to be known as the social market economy.

In the 1960s, usage of the term "neoliberal" heavily declined. When the term was reintroduced in the 1980s in connection with Augusto Pinochets economic reforms in Chile, the usage of the term had shifted. It had not only become a term with negative connotations employed principally by critics of market reform, but it also had shifted in meaning from a moderate form of liberalism to a more radical and laissez-faire capitalist set of ideas. Scholars now tended to associate it with the theories of economists Friedrich Hayek and Milton Friedman.[2] Once the new meaning of neoliberalism was established as a common usage among Spanish-speaking scholars, it diffused directly into the English-language study of political economy.[2] Scholarship on the phenomenon of neoliberalism has been growing.[19] The impact of the global 2008-09 crisis has also given rise to new scholarship that critiques neoliberalism and seeks developmental alternatives.[20]

The German scholar Alexander Rstow coined the term "neoliberalism" in 1938 at the Colloque Walter Lippmann.[21][22][23] The colloquium defined the concept of neoliberalism as involving "the priority of the price mechanism, the free enterprise, the system of competition and a strong and impartial state".[24] To be "neoliberal" meant advocating a modern economic policy with State intervention.[25] Neoliberal State interventionism brought a clash with the opposite laissez-faire camp of classical liberals, like Ludwig von Mises.[26] While present-day scholars tend to identify Friedrich Hayek, Milton Friedman, and Ayn Rand as the most important theorists of neoliberalism, most scholars in the 1950s and 1960s understood neoliberalism as referring to the social market economy and its principal economic theorists such as Eucken, Rpke, Rstow, and Mller-Armack. Although Hayek had intellectual ties to the German neoliberals, his name was only occasionally mentioned in conjunction with neoliberalism during this period due to his more pro-free market stance. Friedman's name essentially never appeared in connection with neoliberalism until the 1980s.[2] In the sixties, use of the term "neoliberal" heavily declined.[2]

Another movement from the American left that used the term "Neoliberalism" to describe its ideology formed in the United States in the 1970s. Prominent neoliberal politicians supposedly included Al Gore and Bill Clinton of the Democratic Party of the United States.[27] The neoliberals coalesced around two magazines, The New Republic and the Washington Monthly. The "godfather" of this version of neoliberalism was the journalist Charles Peters[28] who in 1983 published "A Neoliberal's Manifesto."[29]

Elizabeth Tandy Shermer argues that, "Academics (largely left-wing) started using neoliberalism in the 1970s to describe and decry a late twentieth-century effort by policy makers, think-tank experts, and industrialists to condemn social-democratic reforms and unapologetically implement free-market policies."[30] Other academics note that neoliberalism has critics from across the political spectrum.[31]

During the military rule under Augusto Pinochet (19731990) in Chile, opposition scholars took up the expression to describe the economic reforms implemented in Chile after 1973 and its proponents (the "Chicago Boys").[2] Once the new meaning of neoliberalism was established as a common usage among Spanish-speaking scholars, it diffused directly into the English-language study of political economy.[2] In the last two decades, according to the Boas and Gans-Morse study of 148 journal articles, neoliberalism is almost never defined but used in several senses to describe ideology, economic theory, development theory, or economic reform policy. It has largely become a term of condemnation employed by critics. And it now suggests a market fundamentalism closer to the laissez-faire principles of the "paleoliberals" than to the ideas of the original neoliberals who attended the colloquium. This leaves some controversy as to the precise meaning of the term and its usefulness as a descriptor in the social sciences, especially as the number of different kinds of market economies have proliferated in recent years.[2] In the book Neoliberalism: A Very Short Introduction, published by Oxford University Press (2010), the authors argue that neoliberalism is "anchored in the principles of the free-market economics."[15]

According to Boas and Gans-Morse, neoliberalism is nowadays an academic catchphrase used mainly by critics as a pejorative term, and has outpaced the use of similar terms such as monetarism, neoconservatism, the Washington Consensus and "market reform" in much scholarly writing.[2] Daniel Stedman Jones, a historian of the concept, says the term "is too often used as a catch-all shorthand for the horrors associated with globalization and recurring financial crises"[32] Nowadays the most common use of the term neoliberalism refers to market-oriented reform policies such as "eliminating price controls, deregulating capital markets, lowering trade barriers", and reducing state influence on the economy especially by privatization and fiscal austerity.[2] The term is used in several senses: as a development model it refers to the rejection of structuralist economics in favor of the Washington Consensus; as an ideology the term is used to denote a conception of freedom as an overarching social value associated with reducing state functions to those of a minimal state; and finally as an academic paradigm the term is closely related to neoclassical economic theory.[2] The sociologists Fred L. Block and Margaret R. Somers claim there is a dispute over what to call the influence of free market ideas which have been used to justify the retrenchment of New Deal programs and policies over the last thirty years: neoliberalism, laissez-faire or just "free market ideology."[33]

Other academics, such as Susan Braedley and Meg Luxton, assert that neoliberalism is a political philosophy which seeks to "liberate" the processes of capital accumulation.[14] American professor of political science and Democratic socialist Frances Fox Piven sees neoliberalism as essentially hyper-capitalism.[34]Robert W. McChesney, American professor at the University of Illinois at UrbanaChampaign and co-editor of the independent socialist magazine Monthly Review, claims that the term neoliberalism, which he defines as "capitalism with the gloves off," is largely unknown by the general public, particularly in the United States.[35]

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Neoliberalism - Wikipedia, the free encyclopedia