Week 5: Neoliberalism and Privatization

Featured Excerpt: “From the New Right to Neoliberalism: the Threat to Democracy Has Grown” by Jean Hardisty

Neoliberalism can be a difficult concept for most progressives, who may incorrectly understand it as a watered-down version of New Deal liberalism—in other words, part of the platform of the current Democratic Party. But that is not what neoliberalism is. Because neoliberalism best captures the shift we are seeing in the U.S., it is crucial that we understand its actual meaning.

Neoliberalism is the economic, social, and political analysis that best describes the startlingly unequal distribution of wealth and power in the U.S. today. Neoliberalism, and the policies it undergirds, results from the triumph of capitalism and is sometimes called “late-stage capitalism” or “super-capitalism.”

The roots of neoliberalism lie not primarily with the New Deal but in the years immediately after World War II, when a group of U.S. and European economists met to discuss how to prevent another Holocaust. They concluded that the only protection against dictatorship, fascism, or rule by military junta was individual freedom, which only a weak government and unfettered, free-market capitalism could preserve. As pure theory, this describes “classical liberalism,” best formulated by 17^th-century English philosopher John Locke and 19^th-century British philosopher John Stuart Mill. But, in practice, neoliberalism takes this theory to extremes. Unlike neoliberalism, classical liberalism neither explicitly opposes democratic principles nor seeks to replace democracy with oligarchy.

A leading U.S. participant in the post-war economic think tank was University of Chicago economist Milton Friedman, who received intellectual guidance from group members Friedrich von Hayek, of Germany, and Ludwig von Mises, of Austria. They founded the Mont Pélerin Society, which convened neoliberal leaders to discuss strategy and which continues to meet today. Friedman’s ideas became the guiding principles of U.S. neoconservatives, driving the economic “reforms” of the Reagan administration.² These morally conservative former Democrats switched parties and embraced a “new” conservatism that sidelined blatant racism and anti-Semitism, and touted free-market capitalism.

Later in the 20^th century, leftist scholars from emerging countries (and some wealthy ones) adopted the term “neoliberalism” as a pejorative to capture the policies of exploitation, privatization, and inequality imposed on them by the U.S. and other economic superpowers. This was done through trade agreements, and by the policies of the International Monetary Fund and the World Bank. Leftist U.S. scholars – perhaps most prominently, Noam Chomsky – adapted the term to describe the co-optation of economic and political institutions of developing nations.

Neoliberalism became characterized by the use of international loans and other mechanisms to suppress unions, squelch regulation, elevate corporate privilege, privatize public services, and protect the holdings of the wealthy. As U.S.-backed policies and puppet politicians were labelled “neoliberal” by scholars, the term became widely-recognized shorthand for rule by the rich and the imposition of limits on democracy.³

Neoliberalism has now come home to roost, with the people of the U.S. subject to its policies and goals. Here in the United States, we are increasingly not a democracy but a country ruled by an oligarchy. Neoliberals most often exercise power in the U.S. not by working through the International Monetary Fund, the World Trade Organization, or the World Bank, but rather by shifting rule from the people to corporations. Voting rights, reproductive rights, the right to a fair and just legal system, a strong and effective safety net for the poor, and even the right to a secular state are all under attack.

Additional readings:

• Midterm Elections: School Privatization Continues to Advance DeVos/Heritage Foundation Strategy by Rachel Tabachnick
• From the New Right to Neoliberalism: the Threat to Democracy Has Grown by Jean Hardisty
• Privatizing Massachusetts: The Right-Wing’s Blue State Game Plan by Abby Scher
• Globalization and NAFTA Caused Migration from Mexico by David Bacon
• Neoliberalism, Higher Education, and the Rise of Contingent Faculty Labor by Jason Del Gandio
• To Shock the Heart of the Nation: Interview with Rev. Dr. William Barber II by Mariya Strauss