The best way to understand Neoliberalism is an ideology that came about in response to the economic stagnation and high debt of the 1970s. As a result of this a group of economists, the chiefest amongst which were Milton Friedman and Friedrich Hayek, called for a return to classical liberalism, which helps explain the name, neoliberalism, neo meaning in this case, a revived form of something. But what’s classical Liberalism?

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Classical Liberalism is generally associated with an ideology that became popular in the 19th century, that stressed individual freedom and democracy, that is the right of the people to choose their own government. However in the early 20th century across the world a different type of liberalism began to replace classical liberalism, known as social liberalism or modern liberalism. This kind of liberalism focused more on removing the things that were seen as obstacles to individual freedom, like poverty, wealth inequality, and social injustices, like racism and discrimination. Because of this many aspects of the early welfare state, like government provided healthcare, benefits to the unemployed and elderly, and regulations, or rules, on working conditions, were formulated by social liberals in the early 20th century. Social liberals in the 1930s like Beveridge and Keynes also called for full employment which is where everybody has a job and spending during recessions to curb unemployment,
when these ideas were eventually enacted after the second world war, this became known as the Post-war consensus.

Neoliberals like Hayek and Friedman on the other hand favoured a return to classical liberalism and with the successive elections of right wing governments in the 1980s, they helped lay waste to this social liberal consensus that they saw as being responsible for the economic stagnation and high debt of the 1970s. The neoliberal approach in its emphasis of the values of classical liberalism prides the economic rights of the individual above all else. Because of this, neoliberals believe that government policies such as taxation and regulation reduce the freedom of the individual to do what he or she wants with their own money. Neoliberals also believe that competition improves businesses, and they can only experience the full brunt of this when free of regulation and subsidies which is money that the government gives to businesses.

As a result, neoliberal governments in the USA and UK in the 1980s implemented what is called ‘laissez faire’ economics, coming from the french phrase ‘leave alone’ this means the government stays out of the economy as much as possible. This manifested itself as major deregulation, reduced taxes as well as more free trade and cutting subsidies to manufacturing industries. Also whereas John Maynard Keynes’ economic approach pushed for the government intervening in the economy to make sure everybody had a job and spending lots during recessions to ward off unemployment, neoliberals favoured governments staying out of the economy as much as possible and thus believed the best way to stabilise an economy was to control the money supply as opposed to spending more, this is called monetarism.

However because of Neoliberalism’s emphasis on the economic rights of the individual right to do as he or she pleases with their own money, it means that if they lose money, or lose their job, that’s their own fault. Because of this under a neoliberal system, inequality, or some have more than others is inevitable, even desirable. This approach costs a lot to pay for things like tax cuts, money which often comes from raiding public services that help the weakest in society. Also because of the stress neoliberalism places on individuals over the government, there is less of the emphasis on democracy that classical liberalism and social liberalism share, neoliberals tend to fear the mob rule effect of democracy, that people could vote in governments that could infringe on the economic rights of individuals, like socialist governments. Friedrich Hayek even went as far as to argue that neoliberalism could be brought about under a dictatorship. There is an extent to which this has in fact happened in many countries, what with crony capitalism and the housing crisis in 2008, the government supported the interests of banks and big businesses contrary to what people actually wanted them to do, they effectively subverted democracy

Sources: https://docs.google.com/document/d/e/...