Neoliberalism is a theory of political-economic practices that emerged in the second half of the 20th century based on 19th-century liberalism. To understand what it is and how it is distinguished from liberalism, it is necessary to review its most important characteristics below.
Private property, free market and free trade
Neoliberalism maintains the foundations of liberalism, which are summarized in private property, free market and free trade. What would be the difference? For some experts, the difference would be that neoliberalism absolutizes economic growth by making it an objective in itself, which leaves aside the reformist moral discourse of classical liberalism.
Policy of “let do” (laissez-faire)
Laissez-faire It is a French expression that means “to let do”, and was used by the liberals who feared that the State would act as a repressive entity in economic matters. Neoliberalism states that the State should not act even as an intervener, but should stimulate the development of the private business sector.
Criticism of state interventionism
According to David Harvey in his book Brief history of neoliberalism, the neoliberal theory states that the State is incapable of predicting the behaviour of the economy and of preventing “powerful interest groups from distorting and conditioning these state interventions” (Harvey, 2005). In other words, neoliberalism is justified in the argument that interventionism favours corruption. Neoliberalism also points out the paradox that the State is not subject to any type of social control.
Rethinking the role of the State
The only role of the state in the economy, according to neoliberalism, must be to create a legal framework that favours the market. In other words, it is not opposed to the State itself but rather aims to limit it to the purpose of private business growth, based on the encouragement and arbitration of competition. Therefore, neoliberalism consents to the action of the State in the control of the monopoly, of the lobby and of the labour unions.
Neoliberalism considers that the free market is the only one capable of guaranteeing the most adequate allocation of resources based on economic growth. From this point of view, the only way for the market to regulate itself is through free competition.
Privatization of state companies
The privatization of state-owned companies is another of the foundations of neoliberalism, not only with regard to the productive sectors but also with regard to services of public interest such as water, electricity, education, health and transportation, among others.
Individual as a production force
Neoliberalism sees individuals as the production force of the economic order, which confronts it with liberalism, which was concerned with the full development of the capacities of subjects and not only with abstract economic potentialities.
Neoliberalism is built on a market ethic, that is, on the conception of the market as an absolute, as the regulating principle of order and social behaviour to which all aspects of life have been subjected and towards which everyone should be oriented, from material to imaginary aspects (cultures, individual interests, belief systems, sexuality, etc.).
Free movement of goods, capital and people
Neoliberalism proposes the free movement of goods, capital and people, which in some way defies the limits and controls of the national state in matters of economy. Neoliberalism is rooted, in this way, with globalization. In this scenario, the limits and scope of responsibilities and the mechanisms of wealth distribution become porous.
Priority of the world market over the internal market
Since it is based on free trade, neoliberalism prioritizes the international market over the internal market. This implies, among other things, that it favours foreign investments over national ones, which, on the one hand, generates capital movements, but on the other, causes significant imbalances in the distribution of power.
Economic growth as a fundamental objective
Neoliberalism has economic growth as its fundamental objective, an interest that dominates any other area of social development. This becomes the centre of reference and orientation of economic policies.
Disinterest in social equality
Unlike classical liberalism, neoliberalism views the search for social equality with distrust, since it considers that social differences are what stimulate the economy.
Relativization of the value of democracy
Neoliberalism perceives democracy as a historical circumstance but does not conceive it as an inherent project of economic freedom. In this sense, he understands that the freedom to which he appeals transcends the political imagination of democracy. In other words, there could be neoliberalism without democracy.