2.11. Neoliberalism: What It Is and Why It Matters

Ever since Ronald Reagan was elected in 1980, the U.S. government has been massively reshaped by neoliberal policies.

Wouldn’t it be nice if we had a name for all these problems we have today?

It turns out we do. But it’s not very well known…for a really silly reason.

The word is neoliberalism. But it doesn’t have anything to do with the way we think of liberalism in politics.

In politics, liberals are usually in favor of more government regulation of businesses and corporations.

But in economics, liberalism is about free markets, and free choice.

It was “liberal” and progressive back in the 1700 and 1800s, when it was first developed, because it was in contrast to the old monarchies of Europe, who definitely were not in favor of free markets.

But of course, by the 1900s, economic liberalism had pretty much won out. The question was no longer whether or not there should be free markets, but how much government intervention there should be in them.

Economic neoliberalism started to be developed in the mid-1900s, in response to expanded role of government ushered in by the New Deal in the United States, and similar programs elsewhere.

In some ways, it was like economic liberalism on steroids: getting rid of regulations and government programs like Medicare and Social Security, pushing even freer markets, freer trade, and more choice.

But it was more than that. It was also a reimagining of what government should be.

There’s one thing neoliberals very much want government to do—and that’s to protect people’s private property rights, through a strong military and strong law enforcement.

But just about anything else the government could do, in their mind, is better done in a free market.

That means the government shouldn’t have many regulations, protections, programs, or taxes. It shouldn’t administer public goods. It shouldn’t intervene to do things about income inequalities, global warming, or protecting workers and consumers. Because, in their mind, the free market can deal with that stuff better.

It wasn’t a very popular idea at first. But when the economy started to flounder in the 1970s, people became more receptive to it. And ever since Ronald Reagan was elected in 1980, the U.S. government has been massively reshaped by neoliberal policies: big tax and budget cuts, deregulation of businesses, and massive privatization of public goods.

It’s definitely a set of policies more closely aligned with Republicans. But the Democrats have been neoliberal too. You can see the influence of neoliberalism, for example, in how Clinton reformed welfare programs, how Obama set up Obamacare, and how both of those presidents supported free trade agreements.

Say what you want about the wisdom of this or that neoliberal policy. But I do think this notion at the heart of neoliberalism—that the government should be more concerned with protecting markets than protecting people—is really dangerous.

Free markets aren’t magic. They do some good things, but they have plenty of problems if they aren’t regulated. They exploit workers and consumers. They produce large income inequalities and environmental crises.

The government is the only institution that has the power to fix those problems. The government is the only institution that can stand up for ordinary people when they’re victimized by markets.

Neoliberalism is the source of many of our problems. Scaling back neoliberal policies, and making the government prioritize people over businesses again, is the best thing we can do to solve them.

 

This is the 39th in a series of over 150 videos about how to create real, lasting social change. Click here for a list of all titles, videos, and transcripts.

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