Neoliberalism can be defined as a policy and ideology model whose emphasis is on the value of competition in a free market. The debate on the features that define the neoliberal practice and thought has been considerable. However, this model has a common association with the laissez-faire economics. Particularly, it is usually characterized by the belief in continued economic growth as a way of achieving human progress, confidence in the free markets as an efficient way of allocating resources, emphasis on minimal intervention by the state in social and economic affairs as well as commitment to capital and trade freedom.

What defines neoliberalism?

This policy is defined by the approach where economic factors’ control shifts to the private sector from the public sector. It draws from the neoclassical economics principles, suggesting that the government should limit subsidies, reduce its deficit spending, reform the tax law to expand tax base and stop fixing exchange rates. It also suggests that the government should open up the markets to more trade through the limitation of private state-run businesses, protectionism and allowing private property as well as back deregulation.

The term liberal is used differently in economics contrary to the way it is used in politics. It refers to the freeing up of the economy through the removal of restrictions and barriers to the activities of actors. This policy aims at creating a laissez-faire atmosphere for the development of the economy.

How it has changed in meaning

The meaning of this term has been changing with time to imply different things to varying groups. Consequently, defining this term is becoming harder. This is because the authoritative sources like Milton Friedman, Noam Chomsky, David Harvey and Friedrich Hayek vary in terms of its meaning. The absence of agreement leads to major problems in the creation of unambiguous and unbiased definition.

Liberalism is the first problem in the definition of this term. Describing liberalism on which this term is based in not easy. The uncertainty in liberalism meaning is reflected in the term itself and this causes confusion. Another problem is that the term has changed from being a theoretical ideology to being an applied and practical one. The 1970s led to a surge in its acceptability with neoliberals sweeping governments all over the world and promising more neoliberal reforms. Nevertheless, the promised reforms were not always carried out by the governments either via circumstances or design. This led to another confusion point because after this point, the policy is not ideologically neoliberal.

Where and when neoliberalism has been practiced

Neoliberal policies and ideology gained increasing influence as indicated by the official abandonment of the commitment to common ownership of the production means by the British Labor Party in 1995. These policies and ideology also became influential following the pragmatic policies of the Democratic Party and Labor Party in the 1990s in the U.S. With national economies becoming increasingly interdependent, the new economic globalization era led to the free-trade policies promotion by neoliberals as well as international capital movement.

The libertarianism however was the new sign of the significance of neoliberal policies and ideology. In the U.S, the Libertarian Party gained increasing prominence and assorted think-tanks emerged in different countries. However, after the Great Recession and financial crisis, Western Europe and the United States, some political leaders and economists rejected the insistence of neoliberals on free markets. Instead, they started calling for more regulation of the banking and financial industries by the government. This is affecting neoliberalism up to now.

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