It wouldn’t be entirely accurate to say that no one knows what the hell neoliberal means. Plenty of people are quite sure they know what it means. It’s just that they can’t agree on a common definition.
Consider two articles published in two different left-wing magazines. The first, written by Megan Erickson for Jacobin, is a critique of “unschooling,” an informal, self-directed, countercultural sort of homeschooling that dispenses with tests, lectures, and predetermined curricula. The movement is beloved by many anti-corporate leftists, but Erickson warns them that its “values of freedom, autonomy, and choice are in perfect accordance with market-based ‘reforms,’ and with the neoliberal vision of society on which they’re based.”
The other story, published by Dave Zirin in The Nation, denounces the Brazilian authorities for pouring public money into stadiums for the World Cup and the Olympics. Such subsidies are “neoliberal plunder,” Zirin declares, because “neoliberalism, at its core, is about transferring wealth out of the public social safety net and into the hands of private capital.”
So unschooling is neoliberal even when it is explicitly anti-corporate, because it resembles an idealized free market. And stadium subsidies are neoliberal because they rain wealth on corporations, even if they override market principles in the process. What a capacious word this is.
Now, politics is filled with words that mean different things in different mouths. The world has never come to a complete consensus on the meaning of capitalism, socialism, conservatism, or just plain liberalism, without the neo attached. But neoliberalism is an especially tangled case. It has two entirely separate etymologies, one of which essentially reversed the term’s meaning midway through its evolution. On top of that, the word became a popular epithet at a time when hardly any people were using it to describe themselves—that is, at a time when there wasn’t much of a constituency for keeping a stable definition in place. It’s a bit easier to find self-proclaimed neoliberals today, but they arrived so late that they may have muddied the waters even more.
For all that, there arguably is a coherent way to use the term. But first we need to cut through that historical tangle.
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Most histories of the word neoliberal start in Germany between the world wars, with a group of intellectuals who today are usually called the ordoliberals. At the time they often called themselves neoliberals, because they were trying to develop a new alternative to the old laissez faire liberalism of the 19th century. At one famous gathering—the Walter Lippmann Colloquium, held in Paris in 1938—they mixed with, and sometimes clashed with, several prominent laissez faire liberals of the day, including Ludwig von Mises and F.A. Hayek.
This wasn’t the first time “neo” and “liberal” (or their counterparts in other languages) had been put together. Notably, Phil Magness of the American Institute for Economic Research (AIER) has pointed to the pejorative use of neoliberalismus and neuliberal among certain socialist and proto-fascist German-language writers in the 1920s. But the ordoliberals are especially significant when you’re tracing the term’s meaning, because they explicitly rejected the views derided today as “market fundamentalism.” (One of them, Alexander Rüstow, once declared that Mises and Hayek “should be put into a museum, conserved in formaldehyde.”) A few decades later, by contrast, many writers were using neoliberalism and market fundamentalism interchangeably. That shift is traced in “Neoliberalism: From New Liberal Philosophy to Anti-Liberal Slogan,” a 2009 paper by the political scientists Taylor C. Boas and Jordan Gans-Morse.
“The German neoliberals accepted the classical liberal notion that competition among free individuals drives economic prosperity,” Boas and Gans-Morse explain. But they “sought to divorce liberalism—the freedom of individuals to compete in the marketplace—from laissez faire—freedom from state intervention.” The ordoliberals were a strong influence on West Germany’s postwar “social market economy,” in which officials abolished food rationing, swept away price controls, lowered taxes and trade barriers, and contracted the money supply, but also embraced interventions intended to foster competition and ensure a safety net.
When those German ideas were exported to Latin America in the 1960s, they were known in Spanish as neoliberalismo. But the word’s connotations started to change, Boas and Gans-Morse argue, after some University of Chicago–trained economists convinced the Chilean dictator Augusto Pinochet to adopt a number of market-oriented policies in the 1970s: privatizing state enterprises, lowering tariffs, eliminating various economic controls. Pinochet was not liberal at all when it came to human rights and civil liberties—his regime was notorious for censoring, imprisoning, torturing, and killing its enemies. But under the new meaning of neoliberal that began to take hold, that didn’t matter; this was a liberalism where non-economic liberties were expendable. The important thing was Pinochet’s alleged market fundamentalism.
As it happens, Pinochet was not any kind of market purist. He fixed the price of his country’s currency to the U.S. dollar and, when that overvaluation helped bring on a recession, reacted by raising domestic taxes, doubling tariffs, and bailing out the financial sector; that bailout included the temporary nationalization of several banks. And even at the peak of the Chicago crew’s influence, his government put a lot of shackles on labor-management negotiations. But we are speaking here of how he was perceived, not how he consistently governed. This post-Pinochet spin on neoliberal, Boas and Gans-Morse conclude, “diffused directly into the English-language study of political economy.”
Even as those writers were turning the term inside-out, an American pundit started using the word in yet another way, with an entirely different set of reference points. In the 1970s and ’80s, The Washington Monthly and its founder, Charlie Peters, got a reputation for challenging some of the shibboleths of the old New Deal order. Peters himself admired the New Deal, but he was more willing than the standard Democrat to criticize regulatory agencies and organized labor. Seeing similar heterodox attitudes among some of the younger journalists and politicians around him, he recoined the word neoliberal to describe their emerging belief system. This time, the liberalism being updated wasn’t the laissez faire liberalism of Adam Smith; it was the welfare-state liberalism of Franklin Roosevelt and Lyndon Johnson.
And so, in a 1982 op-ed for The Washington Post, Peters laid out “A Neoliberal’s Manifesto.” Here he presented the label as a riff on the word neoconservative: “If neo-conservatives are liberals who took a critical look at liberalism and decided to become conservatives,” he wrote, “we are liberals who took the same look and decided to retain our goals but to abandon some of our prejudices.” Specifically, they “no longer automatically favor unions and big government or oppose the military and big business.” They celebrate the entrepreneur, want to means-test entitlement programs, oppose “the kind of economic regulation that discourages healthy competition,” and are “against a fat, sloppy, and smug bureaucracy” (but not “against government”). In Peters’ telling, they also backed a military draft, no-fault divorce, and a return of the New Deal–era Works Progress Administration. (Like many wishcasting pundits, Peters may have mixed some personal hobbyhorses into his trendspotting.) Their ideas turned up not just in the pages of magazines like The Washington Monthly and The New Republic but on the lips of certain Democratic officials: Sens. Gary Hart of Colorado, Bill Bradley of New Jersey, Paul Tsongas of Massachusetts.
This use of the word caught on in the American press, and many young politicians were tagged with it over the next few years. Randall Rothenberg’s 1984 book The Neoliberals roped in two future Democratic presidential nominees, Michael Dukakis and Al Gore. (It also listed Pat Choate, who went on to be Ross Perot’s 1996 running mate and a harsh critic of globalization.) At the time, few of the pundits slinging the word around in the U.S. seemed aware of its parallel history in Europe and Latin America. But these neoliberals were skeptical about regulation at the same time that those other neoliberals were taking on parts of the regulatory state, so there was just enough coincidental convergence to confuse everyone. If you’re an American pundit of a certain age, it’s the Charlie Peters crowd that comes to mind when you hear someone say “neoliberal.” And if you’re a leftist academic prone to complaining about neoliberalism, there’s a good chance you think the Peters crew was market-friendly enough to qualify for the label, even if they weren’t exactly market fundamentalists. (Many of them were big on industrial policy, which is the sort of thing conservatives tout today if they want to demonstrate that they’re going “beyond neoliberalism.”)
Those leftist academics started using neoliberal as an insult more often in the 1990s, and their fondness for the word really took off in the early 21st century. The two most influential figures here were the Marxist geographer David Harvey, whose Brief History of Neoliberalism was published in 2005, and the radical philosopher and historian Michel Foucault, whose 1979 lectures on neoliberalism were published posthumously in 2004 as The Birth of Biopolitics. Confusing matters still more, Harvey and Foucault came to the topic from rather different directions.
For Harvey, the heart of neoliberalism was a reconfiguration of state power, not the anti-statist ideas of people like Hayek, even if the latter helped create “a climate of opinion in support of neoliberalism as the exclusive guarantor of freedom.” In practice, he wrote, neoliberalism is marked by partnerships where “the state assumes much of the risk while the private sector takes most of the profits,” and neoliberal states will often enhance policing, surveillance, and incarceration “to protect corporate interests and, if necessary, to repress dissent.” (He adds: “None of this seems consistent with neoliberal theory.”) Foucault, on the other hand, was grappling primarily with neoliberal ideas, both the older German kind and the later Chicago kind. While this partly reflected the fact that he was speaking more than two decades earlier, he also just didn’t share Harvey’s hostility to his subject—though not everyone citing him noticed that.
This tangled history gives people a lot of ways to talk past each other, so any scholars, journalists, or activists who want to use the word neoliberal carefully should take the time to define exactly what they mean by it. But not everyone is interested in using it carefully. Many have taken to treating it as a broad smear-word for everything they dislike about globalization, markets, or modernity—as Boas and Gans-Morse put it, “a vague term that can mean virtually anything as long as it refers to normatively negative phenomena associated with free markets.” When Boas and Gans-Morse examined 148 papers that used the word, they found only four that deployed it in a consistently positive manner.
While a few free market economists, such as Scott Sumner, were willing to call themselves neoliberals, this wasn’t very common at the time. In the last decade, though, some pundits, activists, and academics have tried to reclaim the phrase. Some of them are libertarians, but most are either Democrats who have made their peace with market-driven trade and housing policies or ex-libertarians who have made their peace with government intervention. (Reason‘s Christian Britschgi once cracked that the neoliberal coalition has “a commitment to freedom that’s one NBER working paper deep.”) Unlike the self-proclaimed neoliberals of the 1980s, they are likely to have read Hayek. How reverently they’ll quote him varies widely.
With all these competing uses floating around, the word often seems to lose all coherence. The P2P Foundation, for example, published a post in 2017 that said several cities in Europe have been letting civic groups use municipally owned space “up until the time when real estate companies start re-developing these urban areas.” Such temporary measures, the author argued, did not “directly challenge neoliberal real estate speculation.” But in The Hague, an artists’ and designers’ collective tried something more radical: “They started paying rent for the free space, and used the accumulated capital as down payment for rebuying the space from the city.” In this way, he wrote, they moved “from tenancy to collective ownership.”
So apparently, you can challenge neoliberalism by buying real estate. From the city. A process otherwise known as “privatization.” Which, word has it, is extremely neoliberal.
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Is there a way to use this word that reflects these contradictory meanings without pretending they’re all the same thing? There might be. Neoliberal may not describe a coherent force or worldview, but it’s not a bad way to describe a distinct historical era. We need some label for the period, at any rate—and for all its flaws, this one has the advantage of already existing.
The epoch in question began in the 1970s, when a series of economic crises hit: a global oil shock, a fiscal emergency in New York City, a simultaneous surge in unemployment and inflation. That last challenge, called stagflation, wasn’t just bad news for people facing higher prices and joblessness at the same time; it was bad news for economic officials, most of whom had long believed that increases in inflation and unemployment were mutually exclusive. The door was open for alternative ideas and institutions.
And so—starting in the ’70s, then going into overdrive after the fall of communism—those new ideas and institutions took hold. Or rather, some of them did. That’s the thing about historical periods: The people in them don’t move in lockstep.
For a comparison, think of the Progressive Era. In the traditional triumphalist take on the first two decades of the 20th century, popular protest pushed reformist politicians into office, where they broke up corporate monopolies and ended some of the business world’s worst abuses. A revisionist argument, born in the 1960s New Left and popular among libertarians, takes a darker view: It sees the Progressive Era as an age of technocratic consolidation, marked more by state-corporate cooperation than by reductions in corporate power, with reforms that often did more to stabilize cartels than to dismantle them.
The revisionist argument is true. But so is this: All sorts of progressives were running around in the Progressive Era, with all sorts of different goals. Some of them really were opposed to concentrated power, be it public or private. Some were all for greater concentration of power, as long as they felt enlightened experts were in charge. Some were suspicious of corporate power in theory but fell in behind reforms that ultimately did more to protect that power than to roll it back. And all of them were active at once.
So it was with the Neoliberal Era. Almost every nation has adopted at least some degree of market reform in the last half-century, and that economic liberalization was often joined by advances in free expression, sexual liberty, women’s rights, and other forms of personal autonomy. When grumpy conservatives claim that libertarians run America, that’s the combination of trends they usually have in mind. But libertarians don’t run America, as you can tell by examining the size of the federal budget, the size of the surveillance state, the size of the U.S. military footprint, and the size of the carceral archipelago. Those arms of the authorities may be neoliberal in some David Harvey sense—witness the role that networks of nominally private contractors play in each of them—but they’re not anti-statist at all. (Neither are their counterparts in other countries: Since the mid-’70s, public social spending as a share of GDP has increased not just in the United States but in France, the U.K., Japan, and many other rich nations.)
A committed libertarian looking at the Neoliberal Era should feel a lot like a committed socialist looking at the Progressive Era: happy about many changes, unhappy about many others, and disturbed at some of the people adopting their rhetoric. “It was not that liberal ideas were now consciously and openly held and dominant,” the libertarian historian Stephen Davies wrote of this period in a 2020 article for AIER. “Rather it was that explicitly and openly anti-liberal ones had been discredited.” If the era “can be said to have a philosophy behind it,” he added, “it is best described as technocratic managerialism.”
A case in point would be the transformation of New York after the city’s fiscal crisis of the mid-1970s: The government fired public employees and cut back social programs, and a new Manhattan emerged that was dominated by the FIRE economy (finance, insurance, and real estate). This is often described as a triumph of neoliberalism, yet it was driven not just by those austerity measures but by urban planners, who didn’t roll back their interventions so much as they redirected the benefits. So central a role did they play, in fact, that one of the best-known leftist accounts of the transformation, Robert Fitch’s The Assassination of New York, includes a plea that readers encountering his attacks on the planners not mistake him for “an advocate of laissez-faire.” Meanwhile, the city’s budget was climbing again by the mid-’80s.
But just as we shouldn’t lose sight of the different flavors of progressives, we need to remember the sheer variety of the neoliberals. To appreciate the ideological diversity of the period, ask yourself: Who enacted the era’s market reforms?
Some Democrats adopt a simple partisan narrative focused on President Ronald Reagan and his British counterpart, Margaret Thatcher. That obviously won’t do, given the ways Bill Clinton and Tony Blair consolidated the Reagan-Thatcher order. There are somewhat more sophisticated accounts in which right-wing parties launched neoliberalism and then nominally left-wing parties accommodated themselves to the changes. (The socialist writer Nancy Fraser splits neoliberals into “reactionary” and “progressive” camps, with the former looking like Reagan and the latter like Clinton.) This is more defensible, but it still makes the mistake of starting with Reagan and Thatcher. Their predecessors—Jimmy Carter and James Callaghan, respectively—each enacted market reforms too. Carter, who deregulated several industries, was arguably more of a market reformer than Reagan was. And he wasn’t an outlier: In many places that made serious steps toward freer markets, from New Zealand to Sweden, left-of-center parties took the lead.
And while Charlie Peters’ neoliberals are often seen as precursors to the Clintonian centrists, they had roots in the left-wing “New Politics” movement that fueled the insurgent presidential campaigns of Eugene McCarthy in 1968 and George McGovern in 1972. The McGovernites were anti-war, unimpressed with appeals to law and order, critical of the national security agencies, and supportive of a universal basic income. The Clintonites bombed the Middle East, passed a draconian crime bill, deferred to the national security agencies, and made it harder for poor people to collect welfare benefits. But both broke at key moments with organized labor, were open to deregulation and decentralization, and issued rhetorical jabs at big government. In 1971, the year McGovern entered the presidential race, the National Taxpayers Union had him tied for second in its Senate ratings.
In a new book, The Rise and Fall of the Neoliberal Order (Oxford), the Cambridge historian Gary Gerstle argues that “support for neoliberalism spilled beyond Reagan and his political precincts and into the districts of the New Left,” whose “engagement with neoliberal principles can be discerned in the vehemence of its revolt against what it regarded as the over-organization and bureaucratization of American society.” Gerstle also sees signs of neoliberalism in that hippie bible the Whole Earth Catalog and in the consumer movement led by Ralph Nader. The Naderites, he stresses, did not want to deregulate everything. But their “determination to strengthen consumers meant that they, too, began to give priority to improving markets. This meant attacking corporate oligopoly on the one hand and excessive and counterproductive government regulation on the other. Their shared goal was to make consumers sovereign in the marketplace.” Nader’s role in the revolt against the New Deal order is also central to Paul Sabin’s recent Public Citizens (W. W. Norton & Co.).
How far left did neoliberalism go? In yet another recent book, The Last Man Takes LSD (Verso), the sociologists Mitchell Dean and Daniel Zamora put Foucault’s interest in neoliberal ideas in the political context of 1970s France. Foucault, they note, was attracted to a political current called the Second Left, which offered autogestion—self-management—as an alternative to the centralized statism embraced by the Socialist and Communist parties. These were not squishy centrists, and their views should not be mistaken for those of Nancy Fraser’s socially H.R.-compliant, fiscally creditworthy “progressive neoliberals.” Their roots were in anarchism, the militant Catholic left, and the revolutionary ferment that swept France in May 1968; their ideal of autogestion had been embraced, though only temporarily, by the radical regime that took power in France’s former colony of Algeria. Yet by the end of the ’70s, the sociologist George Ross writes, their efforts to exorcise statism from the left were leading them to call “for decentralized bargaining as an approach to social problems of all kinds, for a revitalized ‘civil society,’ and for recognition of the utility, as a decentralized mechanism, of the market.”
They did this just as parts of the French right, led by President Valéry Giscard d’Estaing, were breaking with old Gaullist statist traditions, tentatively turning to more market-oriented policies even as Giscard liberalized divorce, contraception, and abortion laws, rolled back censorship, and adopted immigration and prison reforms. (The president’s closest point of intersection with the left was more personal: He had a mistress in common with the exiled Black Panther Eldridge Cleaver.)
To some French radicals, Foucault among them, these parallel developments on the left and right suggested a new political alignment. That’s the backdrop for, say, Foucault’s discussion of Milton Friedman’s negative income tax, in which the government maintains a safety net by simply sending money to citizens whose income falls below a certain level. Giscard flirted with this idea, to Foucault’s apparent approval: In one of his lectures on neoliberalism, he notes that the “negative tax,” as he calls it, would be “much less bureaucratic and disciplinary” than traditional welfare programs.
And that was before the USSR collapsed, throwing the advocates of state socialism into disarray. After that, the most militant opponents of the institutions that represented David Harvey’s neoliberalism sounded a lot like the Second Left. “Since the end of the Cold War, Neoliberalism has become so ideologically dominant that it is no longer clear whether the real Neoliberals are the leaders of the G8 or the people outside in the balaclavas and the overalls,” Malcolm Bull wrote in 2001. “Take Ya Basta!, the Italian group formed in 1996 in support of the Chiapas uprising….They are fighting under the slogan ‘per la dignità dei popoli contro il neoliberismo,’ but their two key political demands, free migration and the right to a guaranteed basic income, are policies that were once largely the preserve of Neoliberal think-tanks in the United States.” Bull was being cheeky, but he had a point.
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If neoliberal is flexible enough for people to fling it at both the anarchists and the G8, it shouldn’t be surprising to see the word applied to both the unschoolers and the World Cup. That’s what happens when you’re talking about a multifaceted era instead of a unified movement. But eras eventually end, and there are signs that this is happening, or perhaps has happened already. Nostalgia for pre-neoliberal days has been rising on both the left and the right, and countries around the world have been erecting new barriers to trade, travel, and communication.
But the end of the Neoliberal Era doesn’t necessarily mean the end of its signature ideas. Progressives did not disappear when the Progressive Era petered out: They spent the 1920s running on fumes, butting heads with each other, and finding homes across the political spectrum. The decade’s Republican presidents did not take a machete to the progressives’ changes, even if they pruned a few; the last of them, Herbert Hoover, was a product of the progressive moment himself. The New Deal of the 1930s was in many ways a resuscitation of progressive reform. At the same time, some of the New Deal’s noisiest opponents were old progressives of the decentralist sort, who distrusted the new concentrations of power and sometimes sounded rather libertarian. When the Progressive Era died, its corpse fertilized the soil for what was to come.
Like the old progressives before them, the old neoliberals will spread out across the spectrum, finding new allies and in many cases new goals. We don’t know whether they’ll fade away or reconstitute themselves and create something as transformative as the New Deal. And if such a transformation does come, we don’t know which side of the old neoliberal order it will reflect. Whichever it is, let’s hope we can come up with a better word for it.
The post It's the End of the Neoliberal Era, and We Still Don't Know What Neoliberalism Is appeared first on Reason.com.
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