West is merely the latest writer to misuse this important concept. The term “neoliberalism” is now abused so routinely that its actual meaning has become all but lost to the general public, and even to many in academia. It has become yet another victim of “conceptual stretching” — a methodological problem we can discuss later.
For now, let’s just define the concept. As used by social scientists, neoliberalism refers to the radical laissez faire ideology that advocates unleashing markets as much as possible from government control. It is associated with a package of policies, including privatization, widespread deregulation, tax and spending cuts, tariff reductions, loosening of competition policy and so on.
In their exploration of the concept’s history, political economists Taylor Boas and Jordan Gans-Morse carefully trace its origin to the late 1970s and early 1980s, when South American academics began using “neoliberalism” to describe the economic ideology and policies of Chile’s military government, noting that University of Chicago economists had advised the junta in Santiago on how to build a radically laissez-faire economy. Since then, observers such as anthropologist David Harvey have correctly used the term to describe the aggressively free-market approach undertaken by Margaret Thatcher and Ronald Reagan, or the “starve the beast” philosophy of some tea party Republicans who want to curb government.
What’s new about neoliberalism?
Neoliberalism is a rejection of the American liberalism that was born in the early 20th century, and which you can see in Franklin Roosevelt’s New Deal or Charles E. Schumer and Nancy Pelosi’s Better Deal. This can be confusing because American liberalism is not truly “liberal.” Although it favors capitalism over socialism, it contemplates a significant role for government in managing markets and redistributing income. American liberalism, as practiced by most Democrats in the United States, strives to rescue capitalism from its own excesses, including the exploitation of workers and consumers, as well as the concentration of wealth. For this reason, American liberalism is left of center — but not as far left as socialism.
Neoliberalism, as used since the 1970s and ’80s, is a return to the British (“classical”) liberalism of the 18th and 19th centuries, when political economists such as David Ricardo and Adam Smith encouraged governments to allow markets to operate with minimal interference — in other words, laissez faire capitalism.
History is not always destiny
Some have tried to connect today’s neoliberalism to two other historical uses. But the word had a completely different meaning in those contexts.
Let’s first consider the concept that emerged in Europe on the eve of World War II. At that time, the classical liberalism of Smith had become discredited by massive unemployment and financial instability. Socialism and fascism were on the rise. A group of intellectuals gathered in Paris in 1938 to seek a middle way between free markets and central planning. Alexander Rüstow, a German sociologist, presented neoliberalism as that path, a usage that quickly disappeared.
Instead, economist Oliver Hartwich notes, this new approach came to be known in Germany as ordoliberalism, or “the social market economy.” It envisioned an activist government providing order and fairness to a capitalism that was otherwise volatile and unbalanced. Austrian economists Friedrich von Hayek and Ludwig von Mises rejected the Paris consensus — and were regarded as paleo-liberals by their neoliberal peers.
The second historical usage came in 1982, when Charles Peters, founder of Washington Monthly, called for a neoliberalism that would redefine the Democratic Party. New liberals such as Gary Hart and Bill Bradley, he wrote, were pragmatists who did not automatically support all of organized labor’s positions or reflexively oppose the U.S. military. But his use of the term was short-lived — and unrelated to today’s ideology of freeing markets from government supervision.
Stretching a concept into an epithet
Some proudly embrace neoliberalism. For example, the Adam Smith Institute in London calls itself “a neoliberal, free market think tank.” More often, far right and far left populists use the term to disparage establishment politicians. In particular, anti-capitalist leftists routinely hurl the term against center-left politicians and pundits. But this conflates pro-government liberals such as President Barack Obama and Hillary Clinton with pro-market neoliberals such as House Speaker Paul D. Ryan (R-Wis.) and Sen. Rand Paul (R-Ky.).
That doesn’t make sense. As president, Obama raised taxes on the rich, used more public funds to subsidize health insurance and imposed new financial, labor and environmental regulations. As a presidential candidate, Clinton called for new taxes on high-income earners, an increased minimum wage and more banking and finance regulation. These are the opposite of neoliberalism.
It’s true that President Bill Clinton advocated neoliberal policies such as financial deregulation and work requirements for welfare recipients. But the 42nd president of the United States was a lousy neoliberal; he raised taxes and enacted the Family and Medical Leave Act.
In his recent critique, West seemed to validate Chait, not Konczal, by using the term sloppily — and as an epithet. For example, he suggested that neoliberals condone the “Israeli occupation of Palestinian lands.” They don’t. Neoliberals focus on economic policy, and — if they were to wander into a security debate over checkpoints — would be expected to oppose restrictions on the free movement of people, just as they would oppose restrictions on the free movement of capital.
More generally, West attacked the wrong target. Coates advocates massive income redistribution through government reparations for black victims of slavery and Jim Crow. This alone is neoliberal heresy.
What happens when you stretch a concept too far?
Giovanni Sartori, a scholar of comparative politics, has written about what he calls “conceptual stretching” — casually applying a concept to new cases and expanding its meaning beyond a previously shared understanding.
Many of the 35,400 books and articles written about neoliberalism over the past three years include some conceptual stretching. Many philosophers, historians, literary critics and anthropologists use neoliberalism as a meta-concept meaning capitalism or market society or commodification. It has been used to describe everything from a “mode of citizenship” in Southeast Asia to a “coming out narrative” in which LGBT individuals accept their identity as sexual minorities.
Anthropologist James Laidlaw has chided his colleagues for turning neoliberalism into an almost meaningless “slur for all seasons.” He wrote, “Any concept or theory that purports to explain everything can only be explaining nothing.”
Walter Hatch (@walterfhatch) is an associate professor of government and director of the Oak Institute for Human Rights at Colby College. He is the author of “Asia’s Flying Geese: How Regionalization Shapes Japan” (Cornell University Press, 2010).