Neoliberal politics
So we've examined some of the key concepts and theorists behind neoliberalism, now let's see what this ideology looks like in action! Neoliberalism can be applied to shape political, economic and social policies, meaning that it has far-reaching impacts on those living in neoliberal nation-states.
We will examine two key policy areas to get a greater picture of how neoliberalism is applied in politics:
Economic
Social/welfare
Neoliberal economic policies
When applied to state economies, neoliberalist economic policies centre on promoting free-market capitalism and placing checks and balances on a government's ability to intervene and influence the economy. Neoliberal economic policies are justified via political arguments such as:
- Economic growth is progressive and beneficial
- Neoliberalists support the view that free, unregulated markets provide the most efficient allocation of resources and materials using the principle of supply and demand
- Government interventions could result in distortions that can lead to market crashes.
Below are a few examples of what neoliberal economic policies look like in action.
Deregulation
Deregulation describes the process of removing government legislation which affects specific parts of an economy. Price deregulation relates to the removal of government protections, for example, controls which make prices for specific goods lower for consumers.
An example of price deregulation occurred in December 1991, following the break up of the communist Soviet Union. Post-communist Russia saw prices, previously influenced by government policy, deregulated and the introduction of a free capitalist market.
Private ownership
Neoliberalism also calls for government-owned businesses to be handed to the private sector. Such an economic approach intends to boost efficiency and lower costs through free-market competition between goods and service providers.
An example of this occurred in 2015 when the final UK government-owned shares of Royal Mail were sold. By October 2015, Royal Mail was owned by private stakeholders. The UK government states that the privatised Royal Mail was designed to "give the company access to private capital and improve its competitiveness".2
Economic competition
Neoliberalism strives to foster economic competition to encourage innovation, entrepreneurialism and efficiency within economies.
In action, international global financial institutions such as IMF (International Monetary Fund), World Bank, and Asian Development Bank are examples of neoliberalism. The aim of these institutions is to assist impoverished states in formulating an economic approach which ensures economic competitiveness to state-level bankruptcy.
Neoliberalism and Conservatism
Throughout history, there have been a number of impactful neoliberal politicians who illustrate the connection between neoliberalism and conservatism. Below we will explore two key examples, Ronald Reagan and Margaret Thatcher.
Margret Thatcher and Ronald Reagan, Wikimedia Commons
Reaganomics (1981-1989)
Through his choice in economic policies, US President Ronald Regan became an important neoliberal figurehead. Reagan's economic policies were so significant, that they left a lasting legacy in US politics often referred to as "Reaganomics".
Ronald Reagan was the 40th President of the United States from 1981 to 1989. Reagan's economic policies were deeply influenced by neoliberal policies, as he sought to privatise state-owned industry, reduce income taxes and minimise government interference in the US economy.
For example, prior to Reagan's presidency in the 1970s, the highest tax rate for US earners was 70% but by the end of Reagan's presidency, the highest tax rate for US earners was just 28%.
Thatcherism (1979-1990)
Another famous neoliberal figurehead includes former UK Prime Minister, Margaret Thatcher. Conservative Prime Minister between 1979-1990, Thatcher's approach also left a lasting legacy often referred to as "Thatcherism".
Thatcher sought to reduce government intervention in the UK economy. Consequently, Thatcher followed neoliberal economic policies which resulted in the privatisation of state-owned industries. This included the UK energy and telecommunications sectors, a decision Thatcher argued would increase efficiency and lower prices for consumers.
Thatcher proposed that her economic politics would create a far-reaching cultural change in the UK. Thatcher advocated for smaller state intervention in the daily lives of British citizens to encourage greater self-reliance and economic stability.
I came to office with one deliberate intent: to change Britain from a dependent to a self-reliant society"
- Thatcher, 1984
Neoliberal social and welfare policies
When applied to a state's social and welfare structures, neoliberalist policies promote minimal state intervention and a reduction in public spending. In practice, neoliberal social and welfare policies support austerity-driven measures and favour the privatisation of essential services, such as areas of public health and care services.
The political logic for such an approach is largely justified by the arguments made by Hayek and Friedman which propose that neoliberal policies provide the most effective allocation of essential resources and competitive, efficient services.
Austerity describes a reduction in government spending. Such an approach is typically taken to benefit a state, by reducing the national debt of the state.
An example of this neoliberal policy in action can be found in the UK, following the 2008 financial crash and subsequent global recession. Between 2010 to 2019, more than £30 billion in government spending was cut, reducing the money and resources available to social welfare services in the UK. Austerity within the UK resulted in the cancellation of educational programmes, cuts in welfare spending and reductions in local government funding.
The notion of 'economy’ in the understanding of identity politics plays a pivotal role in defining a person’s identity. The element of economy is embedded and contributes to a lot of the spheres of an individual life. So in identity politics, people of specific groups of culture, religion, ethnicity, and race try to promote and present their concerning interests/issues, parallel to the interests of a larger political group. These individual interests are often previewed as being misaligned with the interests of the larger political groups.
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