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Paper chains hang on the White House fence in Washington in October 2010 during a demonstration against the IMF and World Bank neoliberal economic policies during their annual meeting. Has the term neoliberalism run its course? (AP Photo/Jose Luis Magana)

What exactly is neoliberalism?

I struggle with neoliberalism – as a problematic economic system we might want to change – and as an analytical term people increasingly use to describe that system.

I’ve been reading and writing about the concept for more than a decade. But the more I read, the more I think that neoliberalism is losing its analytical edge.

As a result of its growing popularity in academia, media and popular discussions, it’s crucial to understand neoliberalism as a concept. We need to know its origins and its definition in order to understand our current political and economic mess, including the rise of nativism that played a part in Brexit and Donald Trump’s election a year ago.

Neoliberalism is regularly used in popular debate around the world to define the last 40 years. It’s used to refer to an economic system in which the “free” market is extended to every part of our public and personal worlds. The transformation of the state from a provider of public welfare to a promoter of markets and competition helps to enable this shift.

Neoliberalism is generally associated with policies like cutting trade tariffs and barriers. Its influence has liberalized the international movement of capital, and limited the power of trade unions. It’s broken up state-owned enterprises, sold off public assets and generally opened up our lives to dominance by market thinking.

As a term, neoliberalism is increasingly used across popular media, including The New York Times, The Times (of London) and The Daily Mail. It’s also used within international institutions like the World Economic Forum, the Organisation for Economic Co-operation and Development and the International Monetary Fund.

Neoliberalism a Trump antidote?

Neoliberalism is criticized for giving markets too much power over our lives. Yet in light of the rise of Donald Trump and other nativist, anti-trade populists, there is a growing chorus of people extolling the virtues of neoliberalism.

What’s most evident from this growing popular debate about neoliberalism – whether from left-leaning critics or right-leaning advocates – is that there are many different views of neoliberalism; not just what it means politically, but just as critically, what it means analytically.

This raises an important question: How do we use a term like “neoliberalism” when so many people have such different understandings of what it means?

I wrestled with this question when writing my book, A Research Agenda for Neoliberalism, in which I examine the intellectual history of neoliberalism. I do so in order to examine the different conceptions of the term and to expose the contradictions underlying our daily use of it.

The term “neoliberalism” has a fascinating intellectual history. It appears as long ago as 1884 in an article by R.A. Armstrong for The Modern Review in which he defined liberals who promoted state intervention in the economy as “neo-liberal” — almost the exact opposite meaning from its popular and academic use today.

Another early appearance is in an 1898 article for The Economic Journal by Charles Gide in which he used the term to refer to an Italian economist, Maffeo Pantaleoni, who argued that we need to promote a “hedonistic world … in which free competition will reign absolutely” — somewhat closer to our current conception.

Adopted by liberal thinkers

As the 20th century dawned and the world moved through one World War and onto the next, the term was appropriated by a range of liberal thinkers who felt sidelined by the ascendance of state planning and socialism.

The conventional narrative is that “neo-liberalism” was first proposed as a term to describe a rebooted liberalism in the 1930s after the so-called Walter Lippman Colloquium held in Paris in 1938.

American writer and journalist Walter Lippmann on the cover of Time Magazine in 1931. Lippmann’s writings were influential on the neo-liberal movement in the first half of the 20th century.

However, its history is not as clear cut as this narrative might imply. According to Arnaud Brennetot, for example, the term was subsequently mainly used to refer to French and other liberals associated with a publishing house called La Libraire de Medicis at least until the early 1950s. By then, the term was increasingly used to refer to German Ordoliberalism, which was a “neoliberal” school based on the idea that markets need a strong state in order to protect competition — ideas that are a major forerunner of the European Union’s framework conditions.

Famously, Milton Friedman even referred to himself as a “neoliberal” in a 1951 article for the Norwegian magazine Farmand, although he subsequently dropped the term.

By the 1970s, Brennetot and others argued that neoliberalism was a term primarily associated with a shifting emphasis in Latin America away from import-substitution policies towards open economies, influenced by Chicago School thinkers like Friedman.

It was around this time that neoliberalism increasingly took on negative overtones, especially after the violent overthrow of Salvador Allende’s government in Chile in 1973. As the 1980s dawned, along with the generally accepted birth of the modern neoliberal era, the term “neoliberalism” became indelibly linked to the Chicago School of Economics (as well as Law and Business).

Neoliberalism has several ‘schools’

When we use the term today, it’s generally with this Chicago inflection, rather than its other previous and alternative histories and associations.

But it’s important to remember that there were and are at least seven schools of neoliberalism. Some of the older schools, like the First Chicago School (of Frank Knight, Henry Simons, Jacob Viner), disappeared or were subsumed in later schools – in this case, the Second Chicago School (of Milton Friedman, Aaron Director, George Stigler).

Other old schools, like the Italian or Bocconi School (of Maffeo Pantaleoni, Luigi Einaudi) faded into academia before being resurrected as the legitimization for current austerity policies. Other more marginal schools, like the Virginia School (of James Buchanan, Gordon Tullock) – itself influenced by the Italian school – have existed under the radar until recent critiques by historians like Nancy MacLean.

As these various schools of neoliberal thought have evolved and mutated over time, so too have our understandings of them and their influence on us. It’s therefore tricky to identify neoliberalism with any one particular school of thought without missing out on a whole lot of the story.

Three contradictions

That’s a major reason why I identify three core contradictions in our current understandings of neoliberalism in my new book.

First, too little has been done analytically to address the contradiction between the supposed extension of “free” markets under neoliberalism and the growth in market power and dominance of corporate entities and monopolies like Google and Microsoft.

Second, there has been too much emphasis on the idea that our lives, identities and subjectivities under neoliberalism are framed by “entrepreneurial” beliefs, attitudes and thinking.

In contrast, my view is that our lives, societies, and economies are dominated by diverse forms of rentiership — for example home ownership, intellectual property monopolies and market control. According to British academic Guy Standing, rentiership can be defined as the extraction of income from the “ownership, possession or control of assets that are scarce or artificially made scarce.”

Finally, there has been little interest in trying to understand the important role of contract and contract law – as opposed to “markets” – in the organization of neoliberal capitalism.

All these areas need addressing in order to better understand our future, but neoliberalism has perhaps run its course in providing us with the necessary analytical tools to do this work. It’s time to find new ways to think about our world.

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