“Neoliberalism is hard to define. It could refer to intensified resource extraction, financialization, austerity, or something more ephemeral – a way of life – in which collective ideals of citizenship give way to marketized individualism and consumerism.”Greg Grandin
The twentieth century was a complicated time period in the United States. It began with the second half of the Second Industrial Revolution, which led to the economic boom of the 1920s and the subsequent bust that caused the Great Depression that persisted through the 1930s.
In response to the economic fallout of the Great Depression, the federal government opted to embrace a liberalized approach to trade, meaning that trade restrictions were removed. A freer exchange of goods ushered in a new era of economic prosperity, particularly following the Second World War. This period is often referred to as the “Long Boom” or the ‘Golden Age’ of capitalist expansion.
For a time, America’s economy flourished but by the the early 1970s was once again sluggish as economic growth slowed. Stagflation, characterized by a stagnant economy and high inflation, ensued and was highlighted by the recession lasting from 1973 to 1975.
To counteract slow economic growth, a new brand of liberal trade policies, i.e. neoliberalism, was promoted and ultimately adopted. It was believed that this new flavor of liberalism would prevent the problems supposedly caused by the first wave of trade liberalization.
Achieving such results required rejecting socially-liberal policies and embracing political and economic restructuring via privatization, deregulation, and support for globalization.
However, neoliberalism is more than just an approach to politics. Instead, it as an all-encompassing political and economic philosophy that embraces the market, rather than the government, as the mechanism to satisfy all human needs. In turn, the influence of market conditions becomes pervasive not only in communities but also in individual lives by ingraining the importance of individualism, efficiency, and self-help (as opposed to systems, efficacy, and community).
The ultimate objective of this restructuring is to achieve maximum (economic) efficiency enabled via the free flow of capital. It is essential to understand that, despite neoliberalism being considered a narrow subdivision of economics aligned with monetarist and supply-side economics, it is itself a broader political ideology.
For example, neoliberalism has come to embody a cultural model favoring limited government via the admonishment of the central governing body, decision-making by markets, and a general rejection of a collective mentality in favor of an emphasis on the importance of self-responsibility. This change, while masked as a rejection of government intervention, is an attempt to restructure the economy and arguably society to fit a pre-designed model.
Arguments in favor of a neoliberalist appproach argue that this approach reduces transaction costs by changing the principal-agent relationship by enabling vertical integration and a more centralized production process. In reality, market mechanisms are used to funnel capital towards corporate entities. As these entities gain more control, they gain more power over markets and ultimately hold a great deal of influence over the economy.
By the time these entities grow this large, the government institutions designed to regulate them often lack the power or influence to keep the corporations in check. The result of which is the continued concentration of power, influence and financial resources by evermore aggregated corporate entities.
Throughout the integration of neoliberal ideals into the American economy, there has been a latent agreement between the Left and the Right that has enabled this evolution. Both argue, in their own way, that corporate-friendly policy has been and continues to be beneficial not only to the American economy as a whole but also the general welfare of the rest of the world. They accordingly advocate for trade liberalization and promote the widespread adoption of liberalized trade agreements, many of which are forced upon developing countries as a caveat for social or economic help.
However, the reality is that there has been a major decrease in tax revenue, heavy privatization, and a suppression in wages that puts increased pressure on the State. Without the appropriate resources or support, the State often fails in its efforts to offer proactive solutions capable of meeting the demands of a very diverse public. Such shortcomings are often framed as a reason to further embrace privatization.
Overcoming these issues to redevelop a strong central body capable of regulating the private sector in a proactive and forward-thinking manner demands an intellectual and lifestyle revolution. However, the current lack practical yet innovative ideas from both sides of the economic aisle indicate that fresh perspectives from outside the standard arena of politics will be needed to remedy the pervasive effects of neoliberalism in the United States.
- Alkon, A. H., & Mares, T. M. (2012). Food sovereignty in US food movements: radical visions and neoliberal constraints. Agriculture and Human Values, 29(3), pp. 347–359. https://doi.org/10.1007/s10460-012-9356-z
- Hess, D. (2012). The Green Transition, Neoliberalism, and the Technosciences. Neoliberalism and Technoscience: Critical Assessments, pp. 209-230.
- Reynolds, L. & Szerszynski, B. (2012). Neoliberalism and technology: Perpetual innovation or perpetual crisis?. Neoliberalism and Technoscience: Critical Assessments. 27-46.