- What is neoliberalism?
- Characteristics of neoliberalism
- Origin of neoliberalism
- Criticism of neoliberalism
- Liberalism and neoliberalism
- Mexican neoliberalism
We explain what neoliberalism is, its origin, characteristics and why it is criticized. Also, differences with liberalism.
The governments of Ronald Reagan and Margaret Thatcher were neoliberal.What is neoliberalism?
Neoliberalism (also called new liberalism or technocratic liberalism), is a political ideology and a model socio-economic market based on the free competition market as the foundation of all economy capitalist. It proposes policies of laissez-faire (“Let it be done”, in French), that is, minimal intervention by the Condition.
It is generally understood as a resurgence of the precepts of classical liberalism (or first liberalism) that emerged between the seventeenth and eighteenth centuries. His reasoning or philosophy foundation is belief in sustained economic growth, such as the method suitable for the progress of humanity.
However, there have been throughout the history different interpretations of this term, because its associated practices have changed significantly. To cite an example, in the 1930s, this term was associated with a model of conduction of the economy by a strong State, something we know today as the Social Market Economy.
But since the end of the 20th century, this is no longer the case. In fact, governments President Ronald Reagan (1911-2004) in the United States (1981 to 1989) and Prime Minister Margaret Thatcher (1925-2013) in the United Kingdom (1979 to 1990) are considered the most representative of the neoliberalism of that time . In both cases, privatizations and the opening of markets were the norm.
Similarly, the economists Milton Friedman (1912-2006) and Friedrich Hayek (1899-1992) are considered the main theoretical exponents of neoliberalism. However, it often debates what exactly are the theoretical and practical definitions of neoliberalism, as it has many defenders and adversaries today.
Characteristics of neoliberalism
Despite the difficulties that exist in defining it with certainty, neoliberalism at the beginning of the 21st century is usually associated with:
- Propose the reduction of public spending and the reduction of the State, as well as the least possible interference of the latter in the affairs of the economy, leaving the conduct of the economy to private actors and the free market.
- It is associated with restrictive fiscal and monetary policies, deregulation of markets, and privatization of public companies.
- The application of austerity policies as a mechanism for the economic recovery of developing countries or countries in deep crisis, which often translates into much social unrest and increased poverty, as capital is redirected from consumer at Business.
- It defends certain precepts of the old classical liberalism, but through very different political lines, determined by much later ideas.
- Its ideological enemies are the progressive and socialist sectors.
Origin of neoliberalism
The term "neoliberalism" was coined by the German sociologist and economist Alexander Rüstow (1885-1963) at the Walter Lipmann Colloquium in 1938.
Rüstow used this term to group the interventionist economic practices of 20th century insurgent tendencies such as the fascism, communism, nationalism Y socialism, which in his opinion formed a doctrine separated from classical liberalism, the enemy of laissez-faire.
However, in the 1960s the term ceased to be associated with the now called Social Market Economy, and began to designate economic systems guided by the free market, that is, the ideas of economists such as Friedman, von Mises and Hayek.
Perhaps due to this confusion, the term stopped being used for decades. It resurfaced with its current meaning in the 1980s, associated with the profound economic reforms of the dictatorial regime by Augusto Pinochet (1915-2006) in Chile, guided and supervised by the Chicago School economists, known as Chicago Boys. Part of this association is the source of neoliberalism's bad reputation.
Thus, from a moderate capitalist position, the term came to designate a more radical position committed to liberal capitalism. The arrival of neoliberalism in the late 20th century ended decades of Keynesian systems in place since 1930.
It got very uneven results, and it laid the groundwork for the Global economy to come, but at immense social cost, particularly in developing countries such as the Latin America.
Criticism of neoliberalism
Neoliberalism, in its most recent meaning, is harsh and widely criticized from progressive and leftist sectors.
It is accused of having been a particularly cruel system towards vulnerable sectors of the society between the 80s and 90s, since it transfers money and power to large corporations, especially transnational ones. To do this, he submits to the citizens to austerity and impoverishment measures, with the promise of a better future.
On the other hand, his affiliation with ultra-conservative regimes, and with policies that favored the wealthy sectors of society, associated him with the economic right and the destruction of the highly praised Welfare state who reigned in the West after the WWII.
Liberalism and neoliberalism
As we have seen before, liberalism and neoliberalism are not synonyms, although the second revives or updates some ideas associated with the first. Their differences, however, can be summarized as:
| Classical liberalism | Neoliberalism |
|---|---|
| Originated between the seventeenth and eighteenth centuries, it represented the desire of the classes bourgeois to get rid of monarchical absolutism and live in a society with greater economic and individual freedoms. | It emerged in 1930 as a term for doctrines of the 20th century opposed to economic liberalism, and in 1980 it was resignified for a new model of corporatist liberalism. |
| He defended free enterprise, civil and democratic liberties, and republicanism, against the conservative aristocratic classes. | He initially defended a model of State intervention and market regulation, but then went on to mean the opposite: the extreme application of the laissez-faire and the handing over of markets to private actors, as well as the shrinking of the State, contrary to the Keynesian policies applied since 1930 in the West. |
| Its main exhibitors were John Locke, Immanuel Kant, Adam Smith, Montesquieu, among others. | It is associated with the thought of Ludwig von Mises, Frederick von Hayek and Milton Friedman. |
Mexican neoliberalism
In Mexico, import substitution model, “inward” development and the mixed economy prevailed for more than three decades, with relative success in economic growth.
However, neoliberalism made its entrance during the presidency of Miguel de la Madrid (from 1982 to 1988), as a strategy to alleviate the excesses of the predecessor government, which had nationalized the bank three months before leaving the can, in an attempt to alleviate the consequences of two six-year terms of excessive public spending.
Thus, neoliberalism arrived in Mexico at one of its most difficult moments of the 20th century, amid brutal inflationary growth, massive informalization of employment (20% between 1983 and 1985), and drastic falls in production, which resulted in in the 3100% devaluation of the Mexican peso.
From the beginning, the neoliberal strategy consisted of reducing the public sector: the State went from having participation in 45 economic branches to only 22, from 1,155 public companies to 412, all in the same presidential term. This economic philosophy was inherited by the following presidents, Calos Salinas Gortari (from 1988 to 1994) and Ernesto Zedillo (from 1994 to 2000), who deepened it.
Thus, constitutional reforms were carried out that allowed the reprivatization of the bank, reforms to the electoral law and the law of worship. A new profile of agricultural property gave rise to the capital private national and international. The latter was due to the logic that only these sectors could invest in the modernization of Mexican agriculture and its implementation. productivity.
Similarly, the North American Free Trade Agreement (NAFTA) was signed in 1994 between Mexico, the United States and Canada, incorporating the country into the global market together with two powerful partners, but in a notorious situation of commercial inferiority.
The neoliberal governments of Vicente Fox (from 2000 to 2006) and Felipe Calderón Hinojosa (from 2006 to 2012) continued to open the country to transnational investment. Extensive energy, educational, and health privatization policies continued, as the economic crisis demanded more and more capital for the investment.
All of this implied the loss of numerous benefits and social protections for the Mexican people. This in a climate of economic stagnation, with only 2.4% of accumulated growth in both presidential periods.
The economic crisis and social, during the presidency of Enrique Peña Nieto (from 2012 to 2018), it was confronted through a pact with the traditional parties to carry out profound reforms in the energy, financial, educational, finance and telecommunications sectors.
Finally, the rise of Andrés Manuel López Obrador to the presidency of Mexico (from 2018 to 2024), bearer of a nationalist, leftist and popular rhetoric, put an end to the long run of neoliberal governments in Mexico.