Neoliberalism is a political and economic ideology that advocates for free-market capitalism, and that became dominant in policy-making from the late 20th century onward. The term has multiple, competing definitions, and is most often used pejoratively. In scholarly use, the term is often left undefined or used to describe a multitude of phenomena.: "Neoliberalism is a slippery concept, meaning different things to different people. Scholars have examined the relationships between neoliberalism and a vast array of conceptual categories." However, it is primarily employed to delineate the societal transformation resulting from market-based reforms.
Neoliberalism is often associated with a set of economic liberalization policies, including lower taxes, privatization, deregulation, depoliticization, consumer choice, labor market flexibilization, economic globalization, free trade, monetarism, austerity, and reductions in government spending. These policies are designed to increase the role of the private sector in the economy and society.Collins English Dictionary – Complete and Unabridged HarperCollins Publishers 1991, 1994, 1998, 2000, 2003; "Neoliberalism represents a set of ideas that caught on from the mid to late 1970s, and are famously associated with the economic policies introduced by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States following their elections in 1979 and 1981. The 'neo' part of neoliberalism indicates that there is something new about it, suggesting that it is an updated version of older ideas about 'liberal economics' which has long argued that markets should be free from intervention by the state. In its simplest version, it reads: markets good, government bad." Additionally, the neoliberal project is oriented towards the establishment of institutions and is inherently political in nature, extending beyond mere economic considerations.
Neoliberalism has become an increasingly prevalent term in recent decades.: "Neoliberalism is easily one of the most powerful concepts to emerge within the social sciences in the last two decades, and the number of scholars who write about this dynamic and unfolding process of socio-spatial transformation is astonishing."; "People rarely call themselves 'neoliberal'." It has been a significant factor in the proliferation of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them. The term is largely absent from economics journals.
Recent critiques argue that neoliberalism has exacerbated income and wealth inequality by promoting policies that prioritize market efficiency over social welfare. Labor deregulation under neoliberal agendas has led to the rise of nonstandard work arrangements, such as zero-hour contracts, which often lack job security, consistent income, and access to benefits. These conditions disproportionately impact low-wage workers and contribute to broader socioeconomic divides. Additionally, neoliberal reforms have encouraged privatization in education and healthcare, intensifying debates about access and affordability. Critics assert that while neoliberalism may aim for economic growth, its implementation often overlooks the structural disadvantages faced by marginalized populations, raising questions about long-term equity and sustainability. These critiques have fueled contemporary policy discussions about balancing market freedom with inclusive economic reforms.
The term is rarely used by proponents of free-market policies.| When the term entered into common academic use during the 1980s in association with Augusto Pinochet's economic reforms in Chile, it quickly acquired negative connotations and was employed principally by critics of market reform and laissez-faire capitalism. Scholars tended to associate it with the theories of economists working with the Mont Pelerin Society, including Friedrich Hayek, Milton Friedman, Ludwig von Mises, and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan, and Alan Greenspan. Once the new meaning of neoliberalism became established as common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy. By 1994, the term entered global circulation and scholarship surrounding the topic has grown over the last few decades.
Neoliberalism originated among European liberal scholars during the 1930s. It emerged as a response to the perceived decline in popularity of classical liberalism, which was seen as giving way to a social liberal desire to control markets. This shift in thinking was shaped by the Great Depression and manifested in policies designed to counter the volatility of free markets. One motivation for the development of policies designed to mitigate the volatility of capitalist free markets was a desire to avoid repeating the economic failures of the early 1930s, which have been attributed, in part, to the economic policy of classical liberalism. In the context of policymaking, neoliberalism is often used to describe a paradigm shift that was said to follow the failure of the post-war consensus and neo-Keynesian economics to address the stagflation of the 1970s, although the 1973 oil crisis, a causal factor, was purely external, and created policy challenges that existing economic frameworks struggled to address.
According to multiple scholars the dissolution of the Soviet Union and the end of the Cold War have facilitated the rise of neoliberalism in the United States, the United Kingdom and around the world.
Terminology
Origins An early use of the term in English was in 1898 by the French economist Charles Gide to describe the economic beliefs of the Italian economist Maffeo Pantaleoni, with the term previously existing in French; the term was later used by others, including the classical liberal economist Milton Friedman in his 1951 essay "Neo-Liberalism and its Prospects". In 1938, at the Colloque Walter Lippmann, neoliberalism was proposed, among other terms, and ultimately chosen to be used to describe a certain set of economic beliefs. The colloquium defined the concept of neoliberalism as involving "the priority of the price mechanism, free enterprise, the system of competition, and a strong and impartial state". According to attendees Louis Rougier and Friedrich Hayek, the competition of neoliberalism would establish an elite structure of successful individuals who would assume power in society, with these elites replacing the existing representative democracy acting on the behalf of the majority. To be neoliberal meant advocating a modern economic policy with state intervention. Neoliberal state interventionism brought a clash with the opposing laissez-faire camp of classical liberals, like Ludwig von Mises. Most scholars in the 1950s and 1960s understood neoliberalism as referring to the social market economy and its principal economic theorists such as Walter Eucken, Wilhelm Röpke, Alexander Rüstow, and Alfred Müller-Armack. Although Hayek had intellectual ties to the German neoliberals, his name was only occasionally mentioned in conjunction with neoliberalism during this period due to his more pro-free market stance.
Under Augusto Pinochet, during the military dictatorship of Chile (1973–90), opposition scholars took up the expression to describe the economic reforms implemented in Chile and their proponents, the Chicago Boys. Once this new meaning was established among Spanish-speaking scholars, it diffused into the English-language study of political economy. According to one study of 148 scholarly articles, neoliberalism is almost never defined but used in several senses to describe ideology, economic theory, development theory, or economic reform policy. It has become used largely as a term of abuse and/or to imply a laissez-faire market fundamentalism virtually identical to that of classical liberalism – rather than the ideas of those who attended the 1938 colloquium. As a result, there is controversy as to the precise meaning of the term and its usefulness as a descriptor in the social sciences, especially as the number of different kinds of market economies have proliferated in recent years.
Current usage Historian Elizabeth Shermer argued that the term gained popularity largely among left-leaning academics in the 1970s to "describe and decry a late twentieth-century effort by policymakers, think-tank experts, and industrialists to condemn social-democratic reforms and unapologetically implement free-market policies"; economic historian Phillip W. Magness notes its reemergence in academic literature in the mid-1980s, after French philosopher Michel Foucault brought attention to it.
Neoliberalism is contemporarily used to refer to market-oriented reform policies such as "eliminating price controls, deregulating capital markets, lowering trade barriers" and reducing, especially through privatization and austerity, state influence in the economy. It is also commonly associated with the economic policies introduced by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States. Some scholars note it has a number of distinct usages in different spheres:
As a development model, it refers to the rejection of structuralist economics in favor of the Washington Consensus. As an ideology, it denotes a conception of freedom as an overarching social value associated with reducing state functions to those of a minimal state. As a public policy, it involves the privatization of public economic sectors or services, the deregulation of private corporations, sharp decrease of government budget deficits and reduction of spending on public works.
This "second wave of neoliberalism" had "roots...firmly planted in Ronald Reagan's neoliberal" policies and previous academic scholarship. Harbingers of the "second wave" revived and reconfigured the ideas of their "predecessors...[into] market globalism. Identifying themselves with a politically moderate position known as the Third Way, US President Bill Clinton and British Prime Minister Tony Blair embraced this neoliberal ideology" as a new variant of centrism. According to political commentator David Brooks, prominent neoliberal politicians included Al Gore and Bill Clinton of the Democratic Party. The neoliberals coalesced around two magazines, The New Republic and the Washington Monthly; they also supported Third Way policies. The "godfather" of this version of neoliberalism was the journalist Charles Peters, who in 1983 published "A Neoliberal's Manifesto".