Neoliberalism

Neoliberalism is not a single doctrine but a family of related propositions that converged, in the 1970s and 1980s, into a policy program with extraordinary political durability. Its core claims: that markets are more efficient allocators of resources than governments, that inflation is more dangerous than unemployment, that labor market "flexibility" (meaning reduced worker protections) increases employment, that capital mobility benefits all countries, and that social provision crowds out private investment and individual initiative.

The intellectual genealogy runs from Friedrich Hayek's The Road to Serfdom (1944) and Milton Friedman's Capitalism and Freedom (1962) through the Chicago School and the Mont Pelerin Society -- an intellectual network explicitly organized to restore liberal economic doctrine after its wartime discrediting. The political implementation in the United States began with the Carter administration's deregulation of airlines and trucking, accelerated dramatically under Reagan, and continued -- in modified form -- under Clinton, Bush, Obama, and beyond.

Neoliberalism's policy instruments were consistent: privatization of public assets and services, deregulation of financial and product markets, reduction of top marginal tax rates, weakening of labor unions, trade liberalization, and fiscal austerity. Each of these policies had distributional consequences that were systematically favorable to capital over labor and to high-income over low-income households -- consequences that the doctrine's proponents generally did not advertise and its critics spent decades documenting.

There is no such thing as society. There are individual men and women, and there are families.Margaret Thatcher, Woman's Own magazine, 1987

The most consequential neoliberal claim, in terms of practical policy impact, was the proposition that reducing the top marginal income tax rate would increase economic growth sufficiently to raise revenues even while cutting rates -- the Laffer curve argument. The empirical record has been consistently negative on this claim: the Reagan tax cuts of 1981, the Bush tax cuts of 2001 and 2003, and the Trump tax cuts of 2017 all produced larger deficits rather than revenue increases, while failing to generate the promised growth acceleration.

Neoliberalism has shown remarkable resilience in the face of empirical failure. The 2008 financial crisis, which resulted directly from the deregulation of financial markets that neoliberal doctrine had prescribed, produced a brief period of heterodox policymaking (bank bailouts, fiscal stimulus, quantitative easing) followed by a return to austerity -- the same doctrine applied to the consequences of the doctrine's failure. Understanding why a program continues to be implemented despite its failures requires attending not to its economics but to its politics: who benefits, who funds the institutions that produce its intellectual rationale, and whose interests it serves.