Neoliberalism is a theory about political-economic practices that emerged in the second half of the 20th century based on 19th century liberalism. To understand what it consists of and to what extent it differs 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 markets and free trade. What would the difference be? For some experts, the difference would be that neoliberalism makes economic growth absolute by turning it into an objective in itself, which leaves aside the reformist moral discourse of classical liberalism.
“ Laissez faire ” policy
Laissez faire is a French expression that means “to let go”, and was used by liberals who feared that the State would act as a repressive entity in economic matters. Neoliberalism proposes that the State should not even act as an auditor, but should stimulate the development of the private business sector.
Criticism of state interventionism
According to David Harvey in his book A Brief History of Neoliberalism , neoliberal theory states that the State is incapable of predicting the behavior of the economy and preventing “powerful interest groups from distorting and conditioning these state interventions” (Harvey, 2005). . That is, neoliberalism is justified by the argument that interventionism favors corruption. Neoliberalism also points to the paradox that the State is not subject to any kind of social control.
Rethinking the role of the State
The only role of the State in the economy, according to neoliberalism, should be to create a legal framework that favors the market. That is to say, it does not oppose the State itself, but rather tries 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, the lobby and the workers’ unions.
Neoliberalism considers that the free market is the only one capable of guaranteeing the most appropriate 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 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 force of production
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 the subjects and not only with abstract economic potentialities.
Neoliberalism is based on market ethics, that is, on the conception of the market as an absolute, as a regulating principle of order and social behavior to which all aspects of life have been subjected and towards which all must 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 challenges the limits and controls of the national State in matters of the economy. Neoliberalism takes root, in this way, with globalization. In this scenario, the limits and scope of responsibilities and wealth distribution mechanisms become porous.
It may interest you: globalization.
Priority of the world market over the domestic market
Since it is based on free trade, neoliberalism gives priority to the international market over the internal market. This implies, among other things, that it favors foreign investment over national ones, which, on the one hand, generates capital movement, but on the other, causes significant imbalances in the distribution of power.
Economic growth as a fundamental objective
Neoliberalism’s fundamental objective is economic growth, an interest that dominates over any other sphere of social development. This becomes the center of reference and orientation of economic policies.
Disinterest in social equality
Unlike classical liberalism, neoliberalism views the search for social equality with suspicion, since it considers that social differences are what drive 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 imaginary of democracy. That is, there could be neoliberalism without democracy.