What is neoliberalism? Is it a phantom or an actual thing?

Tundra's Tutorial on What is neoliberalism... 

My fully woke Siberian Husky wants to help you understand all the political terms that are thrown around like confetti during election cycles. She is hoping that this will help those who wish to get through this presidential election year with their sanity still intact. We could all use some help in that department.

Like ghosts, phantoms, ouija boards or witchcraft, getting your arms around neoliberalism is like trying to nail jello to the wall. Some say it is so much part of our DNA that we fail to see it hiding in plain sight. Others claim that since it is so hard to pin down that it doesn’t exist. 

So, is neoliberalism but one ingredient in the word salad that pundits and politicians toss around? Is it a catch-all for various versions of trickle-down economics? Or, is it something much more concrete. 

For the record, I am in the camp that feels that neoliberalism is an ideology disguised as an economic theory.  Nevertheless, it is very real and is being practiced worldwide as the dominant economic model. The biggest problem with it is that without strong regulatory constraints, it doesn’t work. At least not for 99% of the population.

What is neoliberalism - the short story...

Depending on you ask, neoliberalism is either economic theory or economic ideology. But all would agree that it has its roots in laissez-faire capitalism. 

Neoliberalism promotes free-trade, globalization, and supply-side economic theory.  Taken to an extreme, neoliberalism promotes draconian market supremacy over social welfare. Efforts to insert elements of social justice to help displaced workers, children, the elderly or disabled are rejected as a slippery slope to a nanny state socialism. Socialism is considered a fast short route to communism and totalitarianism.

So far, this sounds like laissez-faire capitalism. But it is not. Neoliberalism is different. Laissez-faire policy (or non-policy) dominated the robber baron era at the turn of the 20th century. The literal translation of laissez-faire into English is “let do”. The idea is to leave capitalism alone to do its thing without any government intervention - be it positive or negative.  

Neoliberalism departs from laissez-faire capitalism by taking things a step further. According to neoliberals, the government is there to actively promote and support free markets through government-funded changes in infrastructure. These changes are specifically for the benefit of private industry. So the government actively supports, promotes and finances private industry but can not and must not interfere or support the commons. 

Indeed, neoliberalism is pretty much billed as an amoral economic theory. Whatever social injustices are meted out to the less fortunate as a result are simply "just business".   For those who have this misfortune, the onus is on them to pull themselves out of it on their own - or not. In many ways, it is the ultimate in social Darwinism. However, the broad-based prosperity that neoliberalism will produce if the "job creators" are allowed to roam free with their business models and accumulate vast wealth through a favorable tax system is worth that sacrifice. These job creators will rain down well-paying hi-tech jobs on the 99%. It's supposed to be a win-win. 

For a truly scholarly review on neoliberalism, I found this article to be most helpful. For those who prefer a video and really want to take a deep dive, here is the first of an on-going series on neoliberalism. 

If you ask six extremely politically aware people what neoliberalism is, you will probably get six completely different answers.  Why the controversy? This is partly because the term itself invites confusion. 

Terms of confusion - where liberal actually means conservative…

To most Americans, the adjective “liberal” implies left-leaning and progressive ideas. Think Bernie Sanders or (in some respects) Elizabeth Warren. But actually, neoliberalism describes an ideology that most Americans would describe as distinctly “conservative”. Taken to it’s extreme, it can easily under the rubric of right-wing radicalism. 

I can’t think of a single Republican that is not a neoliberal. With respect to the Democrats, the mainstream of the party which includes the leadership think Pelosi and Schumer) and corporate Democrats are all neoliberal. In the current crop of top candidates for POTUS that would include  Biden, Buttigieg, Bloomberg, Hillary (if she decides to run again). In fact, only Bernie Sanders lies completely outside the neoliberal fold. Warren walks right on the line of neoliberalism. 

So, when it comes to neoliberalism left is right, up is down, while the grass is blue and the sky is green.

Misunderstandings - Is a neoconservative the opposite of a neoliberal? 

Neoliberalism is often conflated with neoconservatism. Sensible people will always think that neoconservatism is simply the flip side of neoliberalism. Unfortunately, nothing is that simple.  

Neoliberalism is essentially an economic ideology while neoconservatism is all about international and military policy. Neoconservatism has undergone several incarnations. In today’s context, it’s focussed on maintaining American dominance as the world’s undisputed superpower. The Bush Doctrine of preemptive war following the attack of 9/11 (which has led to nearly 20 years of serial military conflicts abroad) has its origins in neoconservative politics.

Bottom line: Neoconservatism and neoliberalism are two completely different things. One has little to do with the other. 

Tundra's two examples of neoliberalism in action...

A good example is often worth more than 1000 words. Two examples can be even better.

Consumer protection is not supported by neoliberals ... (We don't need no nanny state!)

During the economic meltdown of 2008, it was discovered that many “financial advisors” were promoting financial products that benefitted them, often to the detriment of their paying clients. As part of the Dodd-Frank Wall Street reform, financial advisors would be obligated to act as fiduciaries to their clients seeking advice about their retirement accounts. This was known as the Fiduciary Rule. 

To most people on the consumer side of the equation, this would seem a sane and sensible form of protection for a client paying for a service. In fact, most people assume that there is such a law in place. After all, they are hiring someone to advise them financially. Doesn’t that person automatically have an obligation to protect their interests? After all, that’s what they are being paid to do. 

Not according to neoliberals - particularly on the Republican right. To a neoliberal,  this encumbers markets and puts investment firms and financial advisors in a straitjacket. The “free market” will winnow out those who don’t do a good job for their clients “naturally”.

How many people are driven into bankruptcy by bad advisors before this happens is, of course,  "just business". 

Sure enough, this safeguard (Fiduciary Rule) was subsequently stripped from Dodd-Frank after Trump took office. Even with the amount of spin attached to so much of our political system, the response from the masses was refreshingly clear.

Property rights and eminent domain vs. neoliberalism - Government action neoliberalism supports…

Our nation has a  history of supporting individual homeownership.  Indeed, it is one of the few mechanisms left that can lift a working or middle-class person to the next rung of the economic ladder.  

Therefore, it should be no surprise that one of the biggest hot-button issues in our country revolves around the use of eminent domain. Eminent domain is the taking of property by the nation, state, or municipality for public works dedicated to the needs of the commons. The owner is forced to sell and gets little say in the compensation they receive. With the exception of urban renewal projects (which are often abject failures if not disasters), eminent domain has traditionally been used sparingly. 

However, at the beginning of the 21st century, a new wrinkle on eminent domain reared its head. New London, CT was attempting to take roughly 100 properties by eminent domain for the construction of a vast complex for Pfizer. Now Pfizer is a private pharmaceutical company. So this hardly falls in line with the traditional criteria for eminent domain. 

The case went all the way to the Supreme Court. The argument being that allowing large entities like Pfizer to sweep in and scarf up land by eminent domain would pose a direct threat to working-class and middle-class neighborhoods. After all, using eminent domain to increase your tax base is a very easy and tempting way to increase tax revenues. Since middle-class neighborhoods don’t generate as much in property taxes as a wealthy area, they would be right in the cross-hairs of developers. 

Unfortunately, Susette Kelo lost her battle in the Supreme Court in a 5 to 4 vote. Her home and the homes of nearly 100 other families were demolished to make room for the Pfizer complex.   

In a final twist to the entire tale, Pfizer never built its complex that was to include a conference center, hotel and high-end housing for employees. Today it still sits as an empty lot. Pfizer left New London with a large tract of vacant land. The municipality got NOTHING in the end. The video below tells the story of the little pink house that started a Supreme Court battle.

This is a fairly extreme case of classic neoliberalism run amok. A municipality displaced families to create a real estate deal for a massive corporate interest. This goes to the core of neoliberal ideology. A government clearing the way for economic progress. Amoral as that may be, all is justifiable under that rubric. They provided the means for growth but never bothered to ask what would happen if the construction never happened. Karma can really be a bitch sometimes. 

Democrats, Republicans and Neoliberalism...

The two examples were not picked at random. There was an ulterior motive in the selection process…Ha, ha! Fooled you! Not a random choice at all… One is an example of neoliberal policies favored by Republicans and the other is an example that tends to be favored by Democrats. Can you guess which is which? 

Go on, take a guess….

I’ll just post the answer down-page…

Wait for it...

Is the suspense killing you yet? 

OK - The eminent domain case was decided by a 5 to 4 vote on the Supreme Court. At the time, SCOTUS was evenly divided with one swing vote. It was the Democrats that approved of this use of eminent domain. Indeed, Democrats tend to be far more comfortable with using eminent domain in general than do Republicans. The right to own private property and have control over said property is embedded deeply in Republican DNA. 

The case regarding Fiduciary Rule was decidedly a Republican decision.  Consumer protection is seen as "nanny state" mentality by most Republicans.  Even if it is a simple matter of properly representing clients who are paying a professional for investment advice. Businesses have the right to their model and consumers should take on the personal responsibility of properly researching the business. 

The point here is that no one political party has a premium on this issue. Neoliberalism is an integral part of the body politic of BOTH major parties in the US. How it comes out in the wash depends largely on who is stuffing the money into campaign coffers. Given what corporations are allowed to do for campaigns, this is creating systemic corruption throughout the entire system.

Tundra's final take...

Even if corruption wasn't an issue, neoliberalism has failed in its fundamental mission. Letting the wealthy amass outrageous wealth has not resulted in the promised broad-based prosperity any more than it did in the robber baron days. It has hoovered almost all gains in productivity to the very top of the ladder where it has been hoarded. The promised flood of jobs has turned into unstable, poorly paid gig work for Americans while the well-paying jobs have been stampeding out the US to third-world nations. In these countries which are a world away from minimum wage protections and the humanitarian constraints, abuse and exploitation are rampant. Meanwhile, this set of circumstances has set the stage for similar poor working conditions in the US. 

At the end of the day, a brutal combination of globalization and neoliberal policy has left a few fabulously wealthy, at the expense of everyone else. This was NOT what the economic gurus promised. Today, working conditions in the United States resemble a third world nation far more than a modern meritocracy. It has also created an unstable boom-bust economy because it encourages massive speculation. Neoliberalism should have died in 2008. After all, the entire crisis was built on the excesses created by neoliberal policy. Unfortunately, the powers that be in both political parties went out of their way to ensure it survived.  

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