by ROBERT LONGLEY

Neoliberalism is a political and economic policy model that emphasizes the value of free market capitalism while seeking to transfer control of economic factors from the government to the private sector. Also incorporating the policies of privatization, deregulation, globalization, and free trade, it is commonly—though perhaps incorrectly—associated with laissez-faire or “hands-off” economics. Neoliberalism is considered a 180-degree reversal of the Keynesian phase of capitalism prevalent from 1945 to 1980.

Key Takeaways: Neoliberalism

• Neoliberalism is a model of free market capitalism that favors greatly reduced government spending, deregulation, globalization, free trade, and privatization.
• Since the 1980s, neoliberalism has been associated with the “trickle-down” economic policies of President Ronald Reagan in the United States and Prime Minister Margaret Thatcher in the United Kingdom.
• Neoliberalism has been criticized for limiting social services, overly empowering corporations, and exacerbating economic inequality. 

Origins of Neoliberalism

The term neoliberalism was first coined in 1938 at a conference of noted economists in Paris. The group, which included Walter Lippmann, Friedrich Hayek, and Ludwig von Mises, defined neoliberalism as an emphasis on “the priority of the price mechanism, free enterprise, the system of competition, and a strong and impartial state.”

Having both been exiled from Nazi-controlled Austria, Ludwig von Mises and Friedrich Hayek viewed social democracy, as exemplified by U.S. President Franklin Roosevelt’s heavily government-regulated New Deal programs and the rise of Great Britain’s post World War II welfare state, as manifestations of collective ownership of production and wealth occupying the same socioeconomic spectrum as Nazism and communism.

The Mont Pelerin Society

Largely forgotten during World War II, neoliberalism enjoyed renewed support in 1947 with the founding of the Mont Pelerin Society (MPS). Made up of noted classical and neo liberal economists, philosophers, and historians including Friedrich Hayek Hayek, Ludwig von Mises, and Milton Friedman, the MPS dedicated itself to advancing the ideals of free markets, individual rights, and open society.

Thought Co for more

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