Yes, I am a Neoliberal. Now, Convince Me That I'm Wrong!

  Author: Danijal Hadžovic
  Source: Liberalni Forum

This narrative of recognizing neoliberalism as galloping demonic force behind more or less all the evils of the world, from wars in the Middle East over the global financial crisis, climate disasters, to religious extremism in the world's mainstream discourse skillfully imposed by the Left. Thus, the British writer and political activist George Monbiot in a recently published article in the British Guardian newspaper announced that neoliberalism is „the ideology at the root of all our problems“.

 

Because of this demonization of the term "neoliberalism" and its fairly arbitrary use, even many liberals around the world feel the need to distance themselves away from this term, which they do either through a more narrow definition of their ideological points of view (such as: social-liberals), along which they typically use justifications like "we are not neoliberals", "there is a great difference between liberalism and neoliberalism," or they try to completely avoid using the term altogether.

 

Therefore, my aim in this article is to demystify and briefly explain the very notion of "neoliberalism". Liberalism is a political philosophy which I belong and which I follow, and the prefix "neo" (from Greek neos "new") should suggest to me that we are talking about a new kind of liberalism. To be any kind of liberal, and even the "new" liberal in itself is not bad thing, and there is nothing bad in it in the semantic sense, but in the philosophical and political sense there is.

 

Roots of Noeliberalism

The term "neoliberalism" was first used in 1938 by the German sociologist and economist Aleksandar Rustow, which he defined as an economic system of „free pricing, free entrepreneurship, the system of competition and a strong and neutral government“. This, among other things, meant that this new "liberalism" should should have been distinguished from the old laissez-faire model, primarily in that it would give a greater role to the state to prevent a recurrence of major defects of the old models, such as the formation of cartels and monopolies, and exploitation of the most vulnerable individuals. Not through a way of open management and interventionism of the state into the economy, but rather by setting strict and clear rules within which market competition takes place, and whose aim is to prevent market anomalies.

 

In addition, the "neoliberals" had advocated the establishment of a strong and high-quality social network that would support those most vulnerable individuals in society. These ideas had ultimately instead of being called "neo-liberalism" in political and economic theory and practice gone under the names "ordoliberalizam" (taken from an academic journal ORDO) or better known "social market economy". It was precisely in these economic ideas that were developed in the University of Freiburg that German Chancellor Konrad Adenauer and his Minister of Finances Ludwig Erhard conceived the post-war German economy, which would later in the fifties record an enormous growth and become famous under the name „Wirtschaftswunder“ (economic miracle).

 

"Neo-liberalism" will be pulled out of the closet at the end of the 1970s. After World War II the Western capitalist world was built on economic theory of Keynesianism which coincided with many social democratic ideas. Over time, this model generated a cumbersome and sluggish state, too high taxes, excessive regulation and power hungry trade unions, all of which stifled development of innovation and economic growth. Already in the seventies, it was clear that this model does not yield solutions. It was necessary to dissolve "fat" from the overly swollen state, which was going on in the eighties through economic policies that went in the direction of liberalization, the introduction of fiscal discipline, deregulation and privatization. These ideas were directly inspired by the teachings of economists like Milton Friedman and Friedrich Hayek, and their most recognizable political disciples would become Ronald Reagan and Margaret Thatcher. Due to the fact that these policies were against the background of what he represented the "old" laissez-faire liberalism before the Second World War, the opponents of the movement towards free market policies would in a pejorative sense start using the term "neoliberalism".

In other words, it was a revival of the old liberalism. But if this was a return to the ideas and practices of the old classical liberalism, the question that arises is what is it in it that makes it "neo", ie. new? No one, either from the theorists or any politicians who have implemented their ideas into practice had ever declared themselves as neoliberals. That name was given to them by their opponents.
 

Wonderful Triumph of (neo)liberalism

In the era of reforms in the eighties, there would come a fall of the Berlin Wall in 1989 and the collapse of socialism, after which the whole of Eastern Europe would turn to the construction of liberal democracies and market economies in their countries and the entire world will, with greater or lesser discrepancies in the models, turn to capitalism and global trade.

 

And have these changes ultimately been successful? According to the claims of the Laffer Center, those politics had „contributed to the greatest growth in American history“. More wealth has been created between 1982 and 2007 than in the previous 200 years, when inflation is taken into account. If we go to some other part of the world, we will see that the drop in the standard of living that once existed between East and West is slowly closing. The rise of non-Western world, no doubt, is the result of the economic growth driven by abandoning central planning and the integration of many non-Western countries into the world economy. For example, after the economic liberalization in China in 1978, real income in the country has increased thirteen times.  As last year's Nobel laureate in economics and professor Angus Deaton, in his book „The Great Escape“ writes: „The rapid growth of average earnings, particularly in China and India, and especially after 1975, did much to reduce poverty in the world. In China, above all, but also in India, the escape of hundreds of millions of people from traditional and deeply rooted poverty is considered one of the greatest ever escapes from poverty“. So when we look at the progress of just China or India, the two countries that account for about a third of the world's population, which has been achieved in the past few decades, it is clear that the world is today infinitely more prosperous, more developed, and better place to live in than it was before some thirty years ago.

 

On the other side, if we look at almost all of the countries of Eastern Europe, which were once enveloped in dark communism, full of misery and no freedom, have today become a successful part of the European family of democratic nations and established healthy capitalist economies. Look at the opportunities that an individual has in today's world, to study, to learn and improve oneself almost anywhere on the planet, with the ability to communicate whose every corner of the world with just a few mouse clicks. This fact, of course, can be thanked primarily due to the rapid development of technology which we witnessed in the last few decades, but consider whether you would be able to use its blessings without the existence of a system that promotes and protects free enterprise and free trade?

 

Of course, today's world is not without its flaws. It is burdened with innumerable horrors such as terrorism, religious fundamentalism, lack of civil freedom and extreme poverty in many of its parts. But, taken as a whole, all this is on a far smaller scale than it was before only 25 years ago, and people globally are enjoying greater freedoms, greater opportunities are open to them, and have a better standard of living than any previous generation.

And if, despite all indicators and facts, you were to suggest that the world is now incomparably worse place, then you are either uninformed or a malicious ideological fanatic. This world had never been an El Dorado where they were times in its history when brotherhood, welfare and freedom ruled, on the contrary, it was the place of permanent conflict, famine, wars and injustice. So how is it that all the evils of today's world suddenly can be attributed to that cancerous doctrine of neoliberalism?

 

Yes, I am a (neo)liberal

If I am to carry the cross of "neoliberals" as someone who claims that today's world is better than at all previous times, and that things like the destruction of borders, the global free trade and free enterprise lead to greater prosperity and progress for humanity, I will be proud to call myself a neoliberal. You will on the other hand have to prove to me that these policies are generally bad and that without them the world would be a better place today.

If I am a neoliberal in the original Rustow's respect, as someone who advocates free enterprise and market pricing, with the proper regulatory framework of the country and the existence of social networks as well as support for the most vulnerable, then I will again proudly call myself a neoliberal, because such a socio-economic model is probably the closest to my views on the world.

 

And if I am a neoliberal because I am a supporter of small and limited government, free markets, low taxes and individual freedoms, including the right of every individual to the largest part of the income that is earned in a legal market exchange, then I will once again proudly say that I am a neoliberal. Only in this case you will have to explain to me why I'm some kind of a new liberal, but not simply a liberal, because in these ideas there is nothing that is not already advocated by all the leading liberal authors throughout history, from Adam Smith to John Stewart Mill to for the Left especially hated economist Milton Friedman? 

 

The answer may lie in the fact that the word liberalism and liberal have a generally positive tone, and the civilized world widely took into account such things as universal suffrage, social freedom or freedom of speech as the things we owe precisely to liberalism. Therefore, for the modern left, primarily for tactical reasons, is not the good idea to attack liberalism as a whole, because they are themselves, at least in social terms, largely liberal. Neoliberalism has due to the fact that that its name has not been an adornment to anyone, which made it difficult to make intellectual arguments on its behalf, served to the Left as a demonic symbol, available for them to attach to it all the evils of this world, but their sources in the end always find in those, primarily economic achievements of liberalism they despise.

 

Therefore, the word neoliberalism is more like a code that reveals the radical left-wing affiliations of the person who uses it, rather than describes concrete political or economic philosophy. And that is why it is pointless and devastating to distance oneself from it, running away and self-justification of many liberals against manipulative ideological fire coming from the Left, where we are supposed to feel guilty for crimes we did not commit, and which they use as a label to throw in whatever arguments they want.

 

Instead, just say, "Yes, I am a neoliberal. Now, convince me that I'm wrong!"