What is Neoliberalism, Anyway?

There are few words in today’s political lexicon as simultaneously popular and misunderstood as neoliberalism. The term has become a rallying cry for the left, used to signal one’s political allegiances as much as to diagnose our current state of affairs. Many progressives use the term to suggest, in a sweeping and vague manner, everything that is wrong with the world at present. Naturally, many on the right have argued in response that neoliberalism is meaningless, nothing more than an epithet—the political equivalent of asshole. But neoliberalism is neither nebulous nor nonsensical. It does not stand for all extant evil, but nor is it merely a “political swearword.” We can do better than these poor formulations. In fact, we must.

Despite current rhetorical trends, it does no good to equate neoliberalism with capitalism, selfishness, greed or personal responsibility. Conflating neoliberalism with these concepts obscures what is distinct about it. And getting clear on what neoliberalism actually means is critical to a proper understanding of the world we inhabit.

A Brief History of Neoliberalism

In A Brief History of Neoliberalism, David Harvey traces the term back to the 1940s Mont Pelerin Society, a group of economists and thinkers united by shared antipathy toward the Keynesian welfare state. Prominent members included Friedrich von Hayek, Milton Friedman and Ludwig von Mises. These economists identified as political liberals on the basis of their commitment to personal freedom, while the neo signalled their adherence to free-market neoclassical economics—thus neoliberalism. Harvey argues that the members of the Mont Pelerin Society were libertarian neoconservatives, who believed that, “human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade.” They therefore advocated for tax cuts for corporations, disestablishment of unions, deregulation and the dissolution of barriers to trade, increased privatization and cuts to social spending.

These self-proclaimed neoliberals based their project on an instinctual rejection of the left-liberalism that inspired the New Deal. While they shared with liberal egalitarians a vocal commitment to personal freedom, they interpreted this in a very different way.

Neoliberal policy proposals failed to gain much traction until around the 1970s, when western economies started suffering from chronic stagflation. However, in the 1980s, the administrations of Ronald Reagan in the US and Margaret Thatcher in the UK wholeheartedly embraced neoliberal thought. Almost overnight, neoliberalism moved from the policy fringes to the centres of power, championed by heads of state as the solution to the west’s economic woes. This is why progressives tend to call the past forty years the era of neoliberalism: since the 80s, we have witnessed a systematic dismantling of the welfare state across liberal democracies, in favour of increased deregulation and privatization.

In one sense, then, this is all neoliberalism stands for: a libertarian-cum-neoconservative political and economic theory, which holds that the sole purpose of the state is to protect private property rights and create conditions conducive to global trade and the flow of capital. But this doesn’t capture the cultural changes that have accompanied these shifts in economic policy.

Neoliberalism can therefore be understood on two different levels. The first is the policy level: neoliberalism as a kind of amped up or unfettered capitalism. The second level is that of culture, or consciousness. It is this level that progressives are more concerned about—and for good reason: we can’t properly make sense of neoliberalism at a policy level, without first coming to grips with neoliberalism at the level of culture.

Capitalism as Cultural Logic: The Market Mentality

Capitalism is not simply an economic system: it is a form of cultural logic. Market institutions assume the existence of rational maximizers, motivated by the desire for profit; markets couldn’t exist without them.

In Twenty-First Century Capitalism, Robert Heilbroner observes that capitalism requires a certain kind of social order and cultural logic to get off the ground. This seems an odd claim to those of us who live in capitalist societies. But this is because we tend to take this cultural logic for granted. As Heilbroner puts it, we “live inside it as fish live in water.” But make no mistake, our experience is not universal. For instance, markets would not fare well in a traditional social order, where all social behaviour is regulated by the whims of a shaman king, or by centuries-old kinship structures—because the social order of capitalism both depends upon and promises constant change. This unending novelty emerges from what Heilbroner calls, “the activity that lies at the heart of the [capitalist] social order—the drive to get ahead, to make money, to accumulate capital.”

So we generally take it as a given that, within the marketplace, rational maximization is the modus operandi. Indeed, economists believe that this is why markets work so well: competition between self-interested producers leads to increased innovation and the production of novel material goods. And, as self-interested consumers, we engage in cost-benefit calculations in order to obtain the best deal.

So, in the simplest terms, capitalism as a cultural logic assumes, and indeed naturalizes, the drive to get ahead, to make (and save) money and to accumulate capital: the market mentality. And this market mentality is fuelled by the profit motive, as it venerates the money-minded values of efficiency, productivity, and economic growth.

Marxists and even certain conservatives have long seen this as one of the worst aspects of capitalism: by encouraging individuals to unreservedly pursue their own self-interest, market institutions legitimate morally repugnant behaviour. But operating in this manner within the marketplace, either as a producer or consumer, makes good sense.

For instance, if I own a business and need to stock my inventory, why shouldn’t I seek out a supplier who charges less? Or, if I am in the market for a new computer, why is it morally repugnant for me to shop for the lowest price? Rational calculation may, in some instances, be wholly called for.

Thus, left-liberals like myself don’t believe that pursuing one’s rational self-interest when in the marketplace is inappropriate. We think that markets can, and indeed have, done great good: producing life-saving medicines, life-enhancing technologies and many material goods. But we also recognize that the market mentality is deeply myopic, often morally questionable and potentially socially deleterious. Thus we advocate counterbalancing social spheres that limit its scope.

The Historically Limited Scope of the Market

It is a sociological truism that what distinguishes modern liberal democratic societies from traditional societies is that they are institutionally differentiated. This means that there exist multiple social spheres, each of which is governed by a different cultural logic.

In the marketplace, we tend to operate as rational maximizers, espousing a market mentality. However, this is not the way we have historically operated in other social spheres. So, in the political sphere, we have operated primarily as citizens with a civic mentality, venerating the values of democratic deliberation, moral equality before the law and social solidarity; in the domestic sphere, we have operated with a domestic mentality, bound by ties of blood and affection, and venerating the values of personal integrity, intimacy and love; and, in the religious sphere, we have operated with a religious mentality, committed to our sacred traditions and venerating the values of tradition and piety. (These are not the only alternative social spheres to the market, but you get the point).

When you are at home, do you think of your family members in the same way as you think of your fellow citizens come election time? You likely have different expectations, which draw on different norms and values. What I believe I owe to my wife is not the same as what I believe I owe to my fellow Canadian citizens. And those of us who are religious tend to expect something different from our religious leaders than we do from our politicians because we believe different norms and values apply.

Perhaps even upon reflection this picture of modern society remains wholly opaque to you. Perhaps you think people—including yourself—simply operate as rational maximizers in all social spheres. If so, you may be in the thralls of neoliberalism. I don’t say this facetiously. I really mean it.

Neoliberalism as the Imperialism of the Market Mentality

Neoliberalism manifests on the level of culture or consciousness as the absolute imperialism of the cultural logic of the market—that is, of the market mentality. Consider the following ways in which, since the 80s, historically non-market areas of life have been overtaken by the market mentality.

In Undoing the Demos, Wendy Brown sheds light on the dramatic shift political norms have undergone over the past fifty years: levels of civic engagement have dropped off, as many no longer perceive voting as a responsibility or obligation, but merely as a personal preference. Even those who do get involved in politics often treat it like an economic transaction: choosing leaders on the basis of naked self-interest, foolishly equating business acumen with political virtue and prioritizing efficiency and private profit over the public good.

Similarly, in A Richer Life, Philip Roscoe charts how the market mentality has made inroads into the domestic sphere, most obviously in the way in which romantic relationships are conducted. It has become the new normal for individuals to select partners as if shopping for a luxury car, concerned exclusively with having their own preferences met, no matter how selfish or shallow.

And even the religious sphere is being slowly but consistently transformed. For, while it was once an axiom of Christian thought that it is easier for a camel to go through the eye of a needle than for a rich man to enter the Kingdom of God, with the recent evangelical embrace of the market mentality, prosperity preachers such as Joel Olsteen now faithfully serve what Harvey Cox aptly calls The Market as God.

In the age of neoliberalism, all competing social spheres are being  gradually colonized by the market mentality.

And this serves to explain neoliberalism at the policy level. Neoliberal thinkers believe that the market mentality—which receives its most sophisticated treatment in the language of economics—should reign supreme. Thus, they talk of a political market, a marriage market and a religious market, for, in their view, these sites of social life are fundamentally identical, insofar as they all feature individuals operating as rational maximizers and espousing the market mentality.

And should you feel the same way, the chances are good that you are one of them.

A Confession

This worldview terrifies me. For I strongly endorse a vision of modern society in which the different social spheres maintain some degree of autonomy and independence of one another.

I aspire to a world where the market mentality is restricted to the limited and relatively narrow area of life where it is appropriate (the marketplace) and where efficiency, productivity, personal profit and economic growth are not the sole criteria by which we deal with either public issues like poverty, social justice and climate change, or private issues like romantic relationships, familial obligations and religious commitments.

The world I want to live in is one where I can publicly appeal to values such as social solidarity, fairness, compassion, sustainability and love, without being interpreted as veiling self-interested motives.

But, in a world where the market mentality—which presumes that we are always and everywhere seeking to maximize our utility—has supplanted all others, I fear I will be met with silence or suspicion.

Conclusion

This cultural definition of neoliberalism—as the colonization of the market mentality—serves to highlight both why the left is correct to worry about neoliberalism and why the term is so often applied haphazardly.

If we accept that what makes neoliberalism distinct is less its content—the market mentality has been a staple of capitalism since its inception—than the degree to which it expands the scope of the cultural logic of capitalism, then identifying precisely what is and isn’t neoliberal can never be an exact science. Yet this should not disguise the fact that sweeping change is already underway.

Signs of neoliberal policy are evident across liberal democracies and have been for some time. But the real transformation is taking place at the level of consciousness. Unless we become aware of and reverse the trend, we will soon wake up to find that the sole language we have to describe our relationships, our dreams and the world around us is that of economics. And, I don’t know about you, but to me that sounds like a nightmare.