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Neoliberalism is a term used to describe the landmark policies of the governments of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States in the 1980s. Their distinctive feature is the reduction of public spending and, consequently, social obligations of the state. Privatization is becoming the main tool of the neoliberal government. The state is privatizing industries that were previously considered exclusively under state care – for example, education, healthcare, transport infrastructure, even prisons. At the same time, austerity measures are being introduced, the market is being deregulated, and the number of government officials is being reduced.
The Russian economic policy of recent decades can also be described as conditionally neoliberal, so you encounter neoliberalism every day – when hospitals are closed, money is demanded for university tuition, and the state refuses social benefits. All this, in theory, should lead to the fact that market mechanisms will allow you to overcome the inefficiency of state bureaucracy, give you better services based on competition, and make you richer and freer.
The development of these ideas was significantly influenced by the Austrian School of Economics, in particular Milton Friedman and Friedrich Hayek. Neoliberalism differs from classical liberalism by its strong emphasis on the purely economic principles of free trade and market deregulation. However, proponents of reducing the role of the state in society argue that this process should also be linked to the establishment of liberal political institutions, such as democratic elections and freedom of the press.
Criticism of neoliberalism is related to the fact that the result of the activities of neoliberal governments is an increase in property inequality around the world. Critics argue that inequality has reached such proportions that it itself threatens the fundamental institutions of modernity. For example, that democracy is impossible in a society that consists only of poor people and millionaires. Moderate critics call the middle class the victim of neoliberal policies.
Russian reforms of the 1990s (a typical neoliberal measure in addition to mass privatization is, for example, the flat income tax scale introduced in Russia since 2000) are often cited as an example of how economic neoliberalism does not necessarily lead to political freedoms and the creation of a stable democracy.
In the texts of modern leftists (for example, Noam Chomsky, Naomi Klein, and David Harvey), neoliberalism takes on monstrous features – it begins to be identified not only with poverty, but also with the unlimited power of corporations, the destruction of public space in cities, and the commercial and even military aggression of neoliberal leaders under the guise of demands for free trade and the establishment of democratic institutions. It is the left that most often uses this term, and thanks to them, “neoliberalism” has received a rather negative connotation in modern speech.