What is Neoliberalism?A Brief Definition for Activists

by Elizabeth Martinez and Arnoldo Garcia, National Network for Immigrant and Refugee Rights

“Neo-liberalism” is a set of economic policies that have become widespread during the last 25 years or so. Although the word is rarely heard in the United States, you can clearly see the effects of neo-liberalism here as the rich grow richer and the poor grow poorer.

“Liberalism” can refer to political, economic, or even religious ideas. In the U.S. political liberalism has been a strategy to prevent social conflict. It is presented to poor and working people as progressive compared to conservative or Rightwing. Economic liberalism is different. Conservative politicians who say they hate “liberals” — meaning the political type — have no real problem with economic liberalism, including neoliberalism.

“Neo” means we are talking about a new kind of liberalism. So what was the old kind? The liberal school of economics became famous in Europe when Adam Smith, an Scottish economist, published a book in 1776 called THE WEALTH OF NATIONS. He and others advocated the abolition of government intervention in economic matters. No restrictions on manufacturing, no barriers to commerce, no tariffs, he said; free trade was the best way for a nation’s economy to develop. Such ideas were “liberal” in the sense of no controls. This application of individualism encouraged “free” enterprise,” “free” competition — which came to mean, free for the capitalists to make huge profits as they wished.

Economic liberalism prevailed in the United States through the 1800s and early 1900s. Then the Great Depression of the 1930s led an economist named John Maynard Keynes to a theory that challenged liberalism as the best policy for capitalists. He said, in essence, that full employment is necessary for capitalism to grow and it can be achieved only if governments and central banks intervene to increase employment. These ideas had much influence on President Roosevelt’s New Deal — which did improve life for many people. The belief that government should advance the common good became widely accepted.

But the capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate elite to revive economic liberalism. That’s what makes it “neo” or new. Now, with the rapid globalization of the capitalist economy, we are seeing neo-liberalism on a global scale.

A memorable definition of this process came from Subcomandante Marcos at the Zapatista-sponsored Encuentro Intercontinental por la Humanidad y contra el Neo-liberalismo (Inter-continental Encounter for Humanity and Against Neo-liberalism) of August 1996 in Chiapas when he said: “what the Right offers is to turn the world into one big mall where they can buy Indians here, women there ….” and he might have added, children, immigrants, workers or even a whole country like Mexico.”