184.108.40.206 Neoliberalism and Market Supremacy
Neoliberalism and market supremacy are largely interchangeable terms, meaning an economic policy that is set by what people choose to buy
The term ‘neoliberalism’ has been overused, sometimes as a synonym for capitalism. Kean Birch’s article, Neoliberalism: The Whys and Wherefores … and Future Directions, contextualised and defined the term:
“neoliberalism is usually associated with a number of influential thinkers, politicians, and policymakers from the last century, including Friedrich Hayek, Milton Friedman, James Buchanan, Margaret Thatcher, Ronald Reagan, and Alan Greenspan. These neoliberals claim that the market is the most efficient and moral institution for organizing human life, meaning that it should replace all other institutions (e.g. family, state, community, and society) as the main mechanism for creating, promoting, and maintaining social order – in particular, it should replace socialism and collectivist planning”.
This book uses the above definition. There is also a body of literature on the subject, including a Handbook of neoliberalism. It is an individualist set of values, which assumes that freedom from institutional constraints will benefit everybody.
Neoliberalism asserts that economic growth is maximised by having free markets in goods and services (3.3.2), labour (3.3.3) and finance (3.3.4). It advocates minimum regulation (3.3.1), and it supports globalisation (3.4.2) and free trade (3.5.4). Michael Sandel described it as “market triumphalism”, in his lecture A New Politics of the Common Good, because under neoliberalism market forces reign supreme over any other consideration of what best serves the common good.
Neoliberalism and market supremacy give individuals the freedom to make their own economic decisions, but this is of more benefit to corporations than to the population as a whole. George Monbiot’s article, The Problem with Freedom, pointed out that it might mean cutting regulations that safeguard people’s quality of life to increase corporate profits at the expense of society.
Milton Friedman is credited with giving neoliberalism the traction that it has had since the 1980s, making it an accepted doctrine among many economists and politicians. Scott Sumner, for example, wrote about “The Unacknowledged Success of Neoliberalism”.
That perspective has been robustly challenged, though. Martin Jacques, for example, argues that it has failed and writes of “The death of neoliberalism and the crisis in western politics”. And Martin Wolf’s new book, The Crisis of Democratic Capitalism, claims that:
“….something has gone seriously awry: the growth of prosperity has slowed, and the division of its fruits between the hypersuccessful few and the rest has become more unequal. The plutocrats have retreated to their bastions, where they pour scorn on government’s ability to invest in the public goods needed to foster opportunity and sustainability.”
Globalisation has been beneficial in aggregate, increasing the number of jobs available in both rich and poor countries and enabling many people to be lifted out of poverty. It doesn’t benefit everyone, though. In rich countries, relatively highly-paid manufacturing jobs have been lost and have been replaced by less stable and lower-paid service jobs – and the new jobs are often in different locations (220.127.116.11). This has led to considerable suffering in some areas and, as discussed later, it is essential to have a political response to such problems (6.7.8).
Another serious criticism of neoliberalism as an effective engine of growth is that it has delivered economic instability (3.5.5). Unregulated financial markets led to the great recession in 2007/8, and some regulation is needed to correct that weakness.
As itemised below, many people feel that an economy also needs to be regulated to deliver economic fairness (18.104.22.168) and to protect other aspects of people’s lives (22.214.171.124).
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/3591.htm