What is Neoliberalism?
Neoliberalism is a pro-capitalist economic theory which believes that the ‘free market’ in capitalist economies is the best basis for organising society. Free market economies are based upon the choices individuals make when spending their money. The general principle is that if you ‘leave everything to the market’, then businesses will provide what people demand – because businesses want to make a profit and they can’t make a profit if they don’t provide what people want.
Market forces also encourage competition – when people see high demand for a product, they are encouraged to produce and sell that product – and the better product they can make and the cheaper they can sell it for, then the more profit they make.
The advantages of a free market system
According to Neoliberalism – the advantages of a free-market system are:
- Individual Freedom – They are based on the principle of allowing individuals to be free to pursue their own self-interest – this is seen as the best way to pursue the maximum good in society.
- They are efficient – businesses try to be efficient in order to maximise profit.
- Innovation – Competition and the profit motive encourage people to produce new products to stimulate demand – we probably wouldn’t have had the iPad without Capitalism!
- Economic Growth and jobs – The end result of leaving businesses free to do do business is more wealth and more jobs.
Neoliberalism and Social Policy
Neoliberals believe that governments should play a reduced role in managing the economy and in controlling people’s lives. In Neoliberal thought, the free market knows best, and individuals should be allowed as much freedom as possible to go about their businesses should be allowed more freedom to compete with each other in order to make profit.
- Deregulation – Removing restrictions on businesses and employers involved in world trade – In practice this means reducing tax on Corporate Profits, or reducing the amount of ‘red tape’ or formal rules by which companies have to abide – for example reducing health and safety regulations.
- Fewer protections for workers and the environment – For the former this means doing things like scrapping minimum wages, permanent contracts. This also means allowing companies the freedom to increasingly hire ‘flexible workers’ on short-term contracts.
- Privatisation – selling to private companies industries that had been owned and run by the state
- Cutting taxes – so the state plays less of a role in providing welfare – social security, education and health for example.
- IMPORTANTLY – In most neoliberal theory, the state does have a minimal role to play – it needs to protect private property – given that profit is the main motive, the system won’t work if anyone can steal or vandalise anyone else’s property – and so the state needs to maintain control of law and order.
The New Right
The New Right is a political philosophy associated with the Conservative Government (1979-1997 and 2010 to the present day). The New Right adopted and put into practice many of the ideas of Neoliberalism, but there are some differences (indicated below).
The New Right: Five Key Ideas:
- The introduction of free market principles into many areas of life (Like Neoliberalism) – The best example of this is the Marketisation of Education, and we also see it with academies.
- Reduced Spending by the State (Like Neoliberalism) – The 1979 Conservative government cut taxes on the highest income earners and the current conservative government is cutting public services massively.
- An emphasis on individual freedom and responsibility (Like Neoliberalism) – The New Right have cut welfare spending enormously – believing that welfare breeds dependency. Similarly, tax breaks for the rich are seen as promoting self-interest.
- A strong state in terms of upholding law and order – we see this in ‘Right Realist’ ideas of crime control – with Zero Tolerance Policing and increasing use of Prison as a form of punishment – this links with the above idea of holding people responsible for their own actions (rather than blaming their backgrounds like other perspectives might).
- A stress on the importance of traditional institutions and values (unlike neoliberalism). The New Right believe in maintaining some traditions, as they see this as the basis for social order and stability – they strongly support the traditional nuclear family as the backbone of society for example, and still support the idea of a National Curriculum, set by the government, which sets the agenda in education.
Signposting and Related Posts
The distinction between neoliberalism and The New Right is especially important for the social theories aspect of the theory and methods module.
Related posts include…
The Neoliberal Theory of Economic Development (if you’re teacher, you really should be teaching the Global Development module!)
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