Neoliberalism

Neoliberalism refers to an ideology encouraging free-market capitalism and minimal government intervention. In simple terms, it believes in individual economic freedom and highlights the significance of privatization. This ideology came in the 20^th century and is prominently associated with laissez-faire economics.

The ideology states that a framework promoting minimal government intervention in economic and social activities and removing regulations and restrictions in the labor and financial markets will enhance capitalism and ultimately bring social well-being. Examples of countries incorporating the essence of this ideology are China, South Korea, and Australia. 

• Neoliberalism in economics refers to an ideology encouraging free-market capitalism and minimal government intervention. It was first coined in a conference held in Paris in 1938, emphasizing economic freedom.
• The major criticism revolves around inequality, corporate dominance, wage disruption, unemployment, private investments, and a lack of humane concern.
• It is different from liberalism because liberalism is a moral and political philosophy focusing on citizens' freedom and covering more aspects of life.
• Neoliberalism is a philosophy, whereas capitalism is an economic system where rich and powerful entities dominate the system.

Neoliberalism was first introduced in 1938 at a meeting held in Paris and attended by economists, academics, journalists, etc. The failure of economic liberalism exemplified by the Great Depression in the 1930s triggered the argument for neoliberalism, reflecting a revival of liberalism. Furthermore, its proliferation and increased usage started in the 1980s, specifically in western circles.

It signifies the importance of freedom and economic growth of private entities in the economy achieved mainly by eliminating government control over businesses, encouraging privatization, and promoting globalization. The government will not intervene by introducing policies primarily as protective measures. Hence, it motivates free-market and open competition since they believe in free-market fundamentalism.

Business entities in the private sector demand that government should never put boundaries on their earning potential and should create reforms favoring wealth accumulation. If the government favors this, it can affect the poor people facing poverty, illiteracy, and unemployment and the sectors requiring governmental support to survive and grow.

Features of neoliberalism like the free-market mechanism, privatization, reduced government intervention, and decrease in government expenditure for public good have both positive and negative impacts. Proponents advocate that it leads to the efficient allocation of resources and market functions. However, its negative impacts often come from inequality in wealth and income, creating a favorable environment for monopolies, etc. Moreover, a nation incorporating this ideology will give more power to the elite class formed of successful entities than the democratic structure representing the majority. Hence certain areas or industries require government intervention to control unethical practices and unhealthy competition.

A neoliberalism example emerges whenever a shift of ownership and control of industries, sectors, or companies from a government body to a private sector organization happens. It seeks ownership transfer and control of economic factors to the private sector and favors globalization.

• Chile in the 1970s encouraged neoliberalism under the military dictatorship; the country adopted free-market policies, promoted privatization at a major level, participated in deregulation, and minimized government intervention in important schemes like healthcare, pensions, and education. Similarly, in the 1980s, only the important authorities' intervention was seen in regulating the economy. The country also heavily witnessed the idea of privatizing state-owned industries and cutting down income taxes.

• Examples of its presence in the United States include the deregulation of the airline, trucking, and banking industries in the 1970s, tax cuts to encourage economic growth, financial deregulation, trade deficit expansion, and implementation of policies influenced by supply-side economics in the 1980s.

This has been a Guide to What is Neoliberalism & its definition. We explain its meaning in economics, examples, vs. liberalism, and vs. capitalism. You can learn more from the following articles –

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