Neoliberal economics began when a group of economists (Friedrich Hayek, Milton Friedman, Ludwig von Mises, Frank Knight) met at the Swiss resort of Mont Pèlerin to draft what they hoped would become the dominant economic model. Their model was inspired by the pro-market writings of classical economic liberals such as Adam Smith (1723-1790) and David Ricardo (1772-1823). While they said they were pushing back against the state totalitarianism of communism embodied by the increasing influence of the USSR, their neoliberalism morphed into market fundamentalism1.
The Mont Pèlerin Society was formed soon after the resort meeting, and still exists. In taking the long view, and with backing from big business and billionaires, they funded university professorships, scholarships and conferences and ‘think tanks’ to spread their message. Many of these ‘think tanks’ still exist and still spread this neoliberal propaganda1.
The aim of neoliberalism was to prioritise capital accumulation and reduce spending on social services, and was a response by capitalists to the post-war political gains of the middle and working classes. After neoliberalism was implemented politically in the 1980s with the election of Reagan in the US and Thatcher in the UK, there began a decline in economic conditions faced by workers. Under neoliberalism, governments were there to ‘optimise conditions for capital accumulation’ by creating a ‘good business climate’ which was to be achieved by reducing corporate tax rates, decreasing government spending on social services, privatising government functions (e.g. transportation, telecommunications, education, etc.), deregulating industries (e.g. exploration, mining, manufacturing, banking, etc.) and creating competitive markets and free trade2.
The decline in economic conditions experienced by workers was exacerbated by the 2008 Global Financial Crisis (GFC), which forced those enamoured of neoliberal economics to defend existing structures and policies more aggressively. The suppression of public dissent and the implementation of austerity measures are justified by stating there is a ‘crisis’. This led, at the time, to attacks on academic freedom, university governance, and other government functions and institutions3.
The working class has experienced a decline in both size and earnings under neoliberalism. While the working class declined, the professional middle class grew to 32% of the US workforce and experienced steady earnings growth under neoliberalism. However, in the US, this growth was unevenly distributed, favoring whites, Asians, and women over blacks, Hispanics, and men4. Despite this initial growth, there is an increasing sense of uncertainty and distress within the middle class as their way of life becomes less sustainable. In the US, prior to the GFC, the middle class constituted about 61% of the population; in 2016 it had declined to 51%. The middle class has never been a homogeneous entity, because it is linked to different skills, expertise, occupations and status. However, there were features shared by the various parts of it: an income that afforded housing and consumer durables, education, health, and a comfortable life in general. Furthermore, standards and expertise related to the professions and various experts accorded prestige, satisfaction, and autonomy. This basis of middle-class existence was undermined by the advent of neoliberalism, and the liberalisation of the markets and the professions. Institutional guarantees were lifted, protection was dismantled, and insecurity was generated among formerly affluent and satisfied groups. As the skills and the work on offer were commodified and no longer connected to non-material values or to public interest, the existence of a middle class, as distinct from the wealthy and working classes, is in question5.
As a result of the GFC, wealth has become further concentrated in the upper one percent of the population. What is happening is that the basis of a middle class life is disappearing. Globalisation and automation are factors that prevent the creation of well paid jobs associated with middle class living standards. Statistics show that as inequality increases, so does social polarisation5.
Because neoliberalism has led to social polarisation, it has also led to alienation from political processes and democratic institutions. This in turn, has contributed to the rise of right wing populism. In the United States, this has reached its apotheosis in the election of Trump. However, I believe that the election of Trump, or someone like him was inevitable.
Both parties, Republican and Democrat, have adopted neoliberal economics, which has screwed the working and middle classes and has led to the huge inequalities present in the US system, such that in 2024 the 19 richest households control 1.8% ($2.6 trillion) of the US total household wealth, nearly as much wealth as the bottom 50%. In addition, those households saw the largest single-year wealth increase ever, with $1 trillion added to their wealth6.
This was while the price of groceries is rapidly increasing. As a consequence, those who are largely politically disengaged to the extent they have grievances, do not know enough about the system or economics to see where the problem lies. Then, along comes Trump who says “I am your voice” and these disengaged grievance voters were gullible enough to believe him. No wonder Trump stated “I love the poorly educated”6. Neoliberalism must disappear if we want to hold onto democracy. Neoliberalism only makes the wealthy wealthier, and the poor poorer, and wants to make education the province only of the wealthy. And because the wealthy fund politicians election campaigns, it leads to an oligarchy and then, as in the US, to fascism.
Sources
- https://blotreport.com/2021/12/06/approaching-pitchfork-time/
- Hursh, D., 2007. Introduction. Policy Futures in Education 5 (2), 115-118.
- Ramirez, A. & Hyslop-Margison, E., 2015. Neoliberalism, Universities and the Discourse of Crisis. L2 Journal 7 (3), 167-183.
- Ikeler, P. & Limonic, L., 2018. Middle class decline? The growth of Professional-Managers in the Neoliberal Era. The Sociological Quarterly 59 (4), 549-570
- https://www.cambridgescholars.com/resources/pdfs/978-1-5275-0654-1-sample.pdf
- https://www.commondreams.org/news/19-richest-us-families