Neoliberalism is an ideology that emphasizes the value of free-market competition. It is closely associated with the ideology of Laissez-faire economics with minimal state intervention in economic and social affairs, and its commitment to the freedom of trade and capital. It emerged due to the failure of communist and socialist policies which resulted in high public debt.
Also Read :- Neoliberalism and Socialism
In India, Prime Minister Narendra Modi took office in 2014 with a commitment to implement neoliberal economic policies. This commitment would shape national politics and foreign affairs, and put India in a race with China and Japan for economic supremacy in East Asia. A general characteristic of neoliberalism is the desire to intensify and expand the market which act as a balancing force. Neoliberalism has overcome the problems of socialism by the rightful mix of market and state role in providing efficient and effective goods and services to citizens.
Neoliberalism or neo-liberalism is the 20th-century resurgence of 19th-century ideas associated with economic liberalism and free-market capitalism. It is generally associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society; however, the defining features of neoliberalism in both thought and practice have been the subject of substantial scholarly debate. In policymaking, neoliberalism was part of a paradigm shift that followed the failure of the Keynesian consensus in economics to address the stagflation of the 1970s. English-speakers have used the term neoliberalism since the start of the 20th century with different meanings, but it became more prevalent in its current meaning in the 1970s and 1980s, used by scholars in a wide variety of social sciences as well as by critics. The term is rarely used by proponents of free-market policies. Some scholars have described the term as meaning different things to different people as neoliberalism has “mutated” into geopolitically distinct hybrids as it travelled around the world. Neoliberalism shares many attributes with other concepts that have contested meanings, including representative democracy.
The definition and usage of the term have changed over time. As an economic philosophy, neoliberalism emerged among European liberal scholars in the 1930s as they attempted to revive and renew central ideas from classical liberalism as they saw these ideas diminish in popularity, overtaken by a desire to control markets, following the Great Depression and manifested in policies designed to counter the volatility of free markets, and mitigate their negative social consequences. One impetus for the formulation of policies to mitigate free-market volatility was a desire to avoid repeating the economic failures of the early 1930s, failures sometimes attributed principally to the economic policy of classical liberalism.
When the term entered into common use in the 1980s in connection with Augusto Pinochet’s economic reforms in Chile, it quickly took on negative connotations and was employed principally by critics of market reform and laissez-faire capitalism. Scholars tended to associate it with the theories of Mont Pelerin Society economists Friedrich Hayek, Milton Friedman, and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan and Alan Greenspan. Once the new meaning of neoliberalism became established as a common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy. By 1994, with the passage of NAFTA and with the Zapatistas’ reaction to this development in Chiapas, the term entered global circulation. Scholarship on the phenomenon of neoliberalism has grown over the last few decades.
Characteristics of neoliberalism:
The philosophy of neoliberalism is usually considered as a modern alternate of classical economic liberalism. It is centered on a conviction in the self-regulating capacity of the market and correlatively the need to restrict the scope of action of the state. Its characteristics include
- Liberalization and privatization: Opening up sectors for private participation where government regulations are relaxed and hitherto banned sectors are opened up for the private sector.
- Government as a business enterprise: Government at all scales under neoliberalism is turned into a business and citizens are consumers of public goods.
- Free flow of capital and labour: foreign investment has limited restrictions. labour mobility is relaxed.
- Limited trade barriers facilitating the free flow of goods and services with the least tariff and non-tariff barriers.
- The increasing replacement of the Citizen with the Consumer as the most important and respected identity and mode of communication with both the State and the Market.
- The public has a choice in goods and services due to competition as multiple players are involved in the production.
- Trickle-down philosophy: Under neoliberalism, the belief and rhetoric of “trickle-down” economics run strong and alongside it the belief that everything would be better off if it were a private business.
- personal responsibility doctrine: all emphasis on the individual. Every transaction happens at the individual level.