We can define neoliberalism as a set of capitalist political and economic ideas that defends the non-participation of the State in the economy, leaving out any government interference, promoting private production with sole capital without government subsidy. According to this definition of neoliberalism, there must be freedom of trade, since it guarantees the economic growth and social development of a country. It emerged in 1970 through Milton Friedman's monetary school as a solution to the crisis that affected the world economy in 1973, caused by the increase in oil prices.
What is Neoliberalism
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The definition of neoliberalism is usually related to policies that lead to support a broad liberalization of the economy, free trade in general, large reductions in taxes and public spending, as well as the minimization of State intervention in the economy and in society, in favor of the private sector, mainly made up of entrepreneurs and consumers; The latter are the ones who can go on to play certain roles, since in some countries the state finances and assumes some expenses with taxes from the taxpayer.
Neoliberalism is the rebirth of ideas connected to classical liberalism or the first liberalism that began in 1970 and 1980, although another concept of neoliberalism dates back to the 1039s.
The expression and meaning of neoliberalism is a neologism created by the word “neo-”, which comes from the Greek νέος (néos) and means “new”, the Latin noun liberālis, and the suffix relative to systems or doctrine “- ism".
The main promoters and ideologues of what is neoliberalism are Milton Friedman and Friedrich August von Hayek, who expose it as an alternative model to protect the economy of the 20th century.
Political leaders in Latin America at the level of Margaret Thatcher, Ronald Reagan or Augusto Pinochet, were the first to apply neoliberal policies in each of their countries. However, it is currently one of the most widespread ideological movements in the West, its example par excellence being the United States.
For other critical sectors, some of the aforementioned measures of neoliberalism and globalization have been those that have prompted the countries to join them, resulting in an average increase of 1.5 points above that of those countries that did not. For these groups, which are largely liberal, it has been shown that the countries that have joined the most in what is called "global neoliberalism" have lower rates of extreme poverty than those that have not.
History of Neoliberalism
The use and definition of neoliberalism has changed over the years and currently there is no single opinion to determine the concept of neoliberalism, which is why it is usually used as a word associated with the right and is used colloquially to encompass a wide variety of very different ideas within the gamut of conservatism, liberalism, fascism, or feudalism.
Initially, it is said that neoliberalism is an economic philosophy that emerged among European liberal scholars in the 1930s, who were trying to find a third way or a way in between, from the discussion that at that time was led between economic planning proposed by socialism and classical liberalism. In the following decades the concept of neoliberalism was inclined to be against the laissez-faire systemFrom liberalism, fostering a market economy protected by a state, this model came to be recognized as the social market economy. However, the meaning of neoliberalism today is known with certain variants for which it has its beginning in the so-called Mont Pélerin society, created in Switzerland in the late 1940s, as an initiative of the economists Ludwig Von Mises and Friedrich von Hayek.
Economic neoliberalism brought with it a series of advantages and consequences after the implementation of this system, among the most outstanding advantages of neoliberalism are:
The Free Market
One of its most important aspects is the preference it has for the free market, for a commercialism without borders, where governments can make way in their countries and businesses can reach more consumers. The authority of the State decreases, so that companies have more freedom to display their products without prices to stop them, in addition to emulating with companies to attract more customers, it is possible to promote new ideas that favor the consumer.
The Competition
When reference is made to the word competition, it is meant that there are more options to choose a certain product or service in the market. For this reason, this model is more oriented towards improving results and all things in general, so that in the end, only the best options remain, be it school, companies or even people.
With the initiation that occurs with the aforementioned point, foreign companies that seek to offer the same, but with their own resources and unique styles, are also allowed to have access to this competition.
On the other hand, this economic system also had negative effects, some of the consequences of neoliberalism are:
1) Interests of a few: with the neoliberalist amendments it is commonly observed how many people become wealthy overnight thanks to the companies in the industrial sector that were administered by the State. With more consumers around the world, your wealth increases and although that can be interpreted from different points of view, it becomes a lot for the benefit of very few.
2) Monopolies: it is related to the previous point, since, by transferring power to a small elite group, monopolies are created that cover all services, leaving the people with few options. In this sense, the development of small companies is also limited because they compete against others much larger and with a greater number of personnel and resources, who choose to work for large firms.
3) Inequality: due to neoliberal reforms, a great difference begins to exist between social classes, where the rich become richer and the poor even richer, it simply has no comparison. There are some localities where health and education are even privatized, but due to the nature of these sectors, there is not much progress with these issues. Even so, just thinking about offering better doctors or teachers to the one who has the possibility to pay more shows the propensity of neoliberalism towards inequality.
4) Economic problems: many of the negative effects are exhibited in the form of doubt, the increase in fuel, the increase in the cost of food, decrease in employment and basic wages.
5) Environmental and rights issues: Entrepreneurs in order to see their businesses grow and make more money, they forget about many other factors that affect other people's lives. On the one hand, the ecosystem is destroyed for the construction of factories, the displacement of animals from their natural habitat is caused, or there is also the contamination of the waters thanks to the chemical waste that is thrown.
At present, different currents and terms are used to refer to the same meaning of neoliberalism, for example: neomercantilism, corporatism, lobbying or cronyism, anarcho-capitalism, neoclassical monetarism, socioliberalism and minarchism.
The neoliberalism in Mexico is an example of this movement, which emerged in this country in the eighties, during an economic crisis, the government of Miguel de la Madrid Hurtado, who begins to implement the system of neoliberalism through a series of neoliberal reforms that were characterized by the privatization of state companies, the reduction of public spending, the contracting of the state, among other things.
Characteristics of neoliberalism
Characteristics of Neoliberalism (basic principles):
- The minimum participation of the State in the configuration of the economy of a country.
- Little government intervention in the labor market.
- Policy of privatization of state companies.
- Free movement of international capital and the emphasis on globalization.
- The economy opens the doors for multinationals to invest.
- Adoption of measures against economic protectionism.
- The operation of economic activities are noticeably more simplified, since the state bureaucracy is summarized in the process.
- Opposition to excess taxes and levies.
- Increase in production, to achieve the basic objective of economic development of the investment circle.
- It is against the control of the prices of products and services by the State, that is, the law of supply and demand is sufficient to regulate prices.
- The economic base must be made up of private companies.
- Based entirely on capitalism.
- Another very relevant characteristic of neoliberalism is privatization. Neoliberalism believes that by privatizing companies they tend to be more effective and productive than if they are public. Likewise, the State should not intervene so that in this way, profit is more effective and the private sector can generate wealth.
Differences between Neoliberalism and other movements
Differences between Neoliberalism and Liberalism
Neoliberals and liberals not only do not have the same principles, but also have conflicting views. On the one hand, liberalism is a philosophical, political and economic method, which promotes civil liberties; it contradicts any form of despotism, promoting republican principles, being the movement on which representative democracy and the division of powers are based.
The word neoliberalism, for its part, refers only to an economic policy that seeks to minimize state mediation in social and economic matters, protecting capitalist free trade as the best guarantee of the institutional balance and the economic development of a country. Although this movement does not have a philosophical or moral component, because it only refers to the economic aspect in the countries where it has evolved with more strength, and has always been connected to a very conservative and quite restrictive moral, usually associated with positions religious.
Differences between Neoliberalism and Socialism
On the one hand, socialism is a method of social and economic organization, whose foundation is that the means of production are part of the collective goods and that it is the inhabitants themselves who administer it, one of the main objectives of a socialist order, is the fair distribution of assets and a rational structure of the economy, which is why they propose the extinction of private property and the elimination of social classes.
For its part, neoliberalism is an economic style that is established within the framework of the doctrine of economic liberalism, but at the same time within the capitalist method. The neoliberals show their full support for liberalization in the matter of economics, which leads to markets being completely open, thus promoting free trade, starting from a deregulation of markets.
Differences between Neoliberalism and Globalization
There is a disparity between what is neoliberalism and globalization; On the one hand, globalization focuses on the development of capitalism. Its current acceleration is due to the fall of socialism as an economy and the incorporation of the countries of the socialist side to the probabilities of the globalizing market. Globalization is essentially a group of capitalist economic processes that have led to the incorporation of regional mega-markets, the mechanism of which involves the promotion of processes of transnationalization and denationalization of the relations between labor and capital.
Unlike globalization, neoliberalism seeks to replace the political class by the business class, taking away from the state its regulatory work of some economic actions, as well as its power to subsidize companies and offer basic services to the population such as housing, health, communication channels, retirement plans, among others, will support globalization with the need to reduce the state and enlarge the employer.
