The A-Z of isms… neoliberalism.
Friedrich Hayek, a tweedy,
Austrian-born economist,
had one of those light bulb moments
in the mid 1930s
and switched on an ideology
that unites its enemies in scorn,
but has inspired governments and
entrepreneurs down the decades -
neoliberalism.
The idea was built on the classical
liberalism of the 18th Century
and a defence
of individual liberty..
protecting private property
and the freedom of markets
from external interference -
taxes, regulations, levies -
as much as possible.
Neoliberalism argued
that the market wasn't just
an absence of interference,
it could produce a philosophy
or a way of thinking all of its own.
That meant looking at the world
and at transactions in daily life
through the eyes of the market.
You can glimpse this, for instance,
when I say, “I’m in the market
for a beer” -
showing that we’ve internalised the
idea of a market for other values.
Nowadays, you probably hear the word
neoliberalism
used more as a term of
abuse -
hurled by opponents at economic
globalisers, nasty bankers
or governments limiting spending
on public works or welfare.
The word neo, or new,
has morphed into a way
of signalling...
It’s the nearest thing economic
terminology has to a rotten tomato.
But neoliberalism
isn’t just a dirty word -
it’s an entire mindset of approaches
to the way state and market
interact with our aspirations -
emphasising privatisation
over state control,
as the best way
to deliver public services.
The advent of neoliberalism
led to one of the great
punch-ups of economists -
between Hayek and his best frenemy
John Maynard Keynes.
Keynes argued that government
should get involved
in increasing demand
to keep productivity up,
and unemployment down.
Hayek dismissed Keynes as “knowing
very little about economics”,
and he wrote a snotty book review
of one of Keynes’s major works.
Despite their bickering though,
their competing ideas -
Keynesianism and neoliberalism -
remain the seesaw of big thinking
in practical economics.
Keynesianism won for a good while
after World War Two,
but by the end of the 1970s,
public sector strikes and worries
about “stagflation” -
an ugly combo of stagnation
and inflation -
persuaded some mould-breakers
to look back to neoliberalism
as a way to perk up
flagging economies.
Ronald Reagan and Margaret Thatcher
led the way in embracing the notion.
And, so did the ruthless dictator
Augusto Pinochet in Chile -
which rather marked down
the democratic scorecard
of neoliberalism.
The financial crash of 2007/8
created a more testing mood
towards de-regulation
and neoliberalism gained a bad rep,
because it was taxpayers
who had to bail out the banks.
But there’s a broader,
cultural reason
neoliberalism gets it
in the neck right now.
Inevitably, it leads
to such fast-paced,
uncontrolled globalisation,
because it does away with barriers
to trade and to financial flows.
It prizes the innovative
above continuities.
So you could say it puts
the corporation above the nation.
But the globalised world we inhabit -
one of start-ups, the ability
to move money and borrow cheaply,
and companies
operating across borders -
owes a lot to the Austrian,
Friedrich Hayek,
and his light bulb moment.
Thanks for watching! :)
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