We explain what neoliberalism is and what its characteristics are. Also, the advantages and disadvantages of this current.
What is neoliberalism?
Neoliberalism is an economic and political current associated with capitalism. He argues that the economy should be governed by free trade, deregulated and privatized, that is, with less intervention from state policies.
The term It was promulgated in 1938 by the German economist Alexander Rüstow and gained special popularity from 1980 onwards, after leaders such as Ronald Reagan (USA), Margaret Thatcher (England) and the economist Milton Friedman (USA) stated it in their speeches and in practice, in an attempt to reformulate classical liberalism and to emphasize the capitalist system.
Neoliberalism considers that the intervention of the market State promotes inefficiency through regulations on industries, high taxes and public services that are not subject to market competition.
The neoliberal system aims to capitalize on the actions of the State and generate greater production with less social investment. This premise results in a dilemma because in practice it is not fair or equitable.
See also: Liberals and conservatives
Origin of neoliberalism
Neoliberalism As an economic philosophy it emerged in 1930given the need to rethink classical liberalism that was not successful and the economic exhaustion of the capitalist model.
From the theory, classical liberalism defended individual freedom, the free market, equality before the law, gender equality, capitalism, private property, democracy and the rule of law. But in practice, corruption and lack of morality did not allow this theory to be fully implemented.
The capitalist model defended the circulation of a large amount of capital on a mass level, which implied an increase in inflation and a destruction of the economy. Starting in 1929, strong economic crises took place worldwide.like the Great Depression.
The main defenders of neoliberalism considered that monetary policies based on the model of John Keynes and the classical liberal current were the causes of the world crises. Based on these foundations, The neoliberal conservatives ran for power againalso from the 1980s.
Characteristics of neoliberalism
The neoliberal system demands reducing state intervention with a lower tax burden and less legislative restriction on the market so that, in this way, large companies (which represent a minority capitalist group) can exercise control of businesses, industries, production and internal and external trade.
Among the main characteristics of neoliberalism are:
- Privatization. It consists of services such as education, health, security, banking, among others, being managed by private entities instead of being regulated by the State. That is, access to services is restricted only to those who have enough money. People who do not have access to adequate education will not be able to progress in their work and professional lives. Therefore, the privatization of all services only promotes benefits for a minority and a lack of quality of life for a majority.
- The free market. It consists of the prices of goods and services being regulated based on supply and demand, in a market free of restrictions by the State. It defends the opening of imports and control by the private sector. If this modality is not moderate and regulated, it contributes to a lesser development of the country’s production and only enriches those who can import and sell that merchandise nationally. It does not promote the commercial growth of the rest of the producing sector, which is becoming increasingly less competitive.
- The competition. It consists of promoting competitiveness in all labor relations, both in the productive system and in the supply of services, in order to obtain a greater variety of options in the market. The problem arises from the lack of regulation to establish limits on commercial action, which can lead to unfair competition at the cost of labor exploitation, misleading dissemination, among others.
Advantages and disadvantages of neoliberalism
The main characteristic of the neoliberal system is that only a minority of the population accesses benefitsIn theory, it is presented as an adequate proposal, but when put into practice, the model has shown that it did not work efficiently or fairly for the entire population, especially due to corruption.
The main advantages of the neoliberal model are:
- The free market. It promotes trade without borders and with few restrictions from the State to trade with different governments.
- The competition. It promotes the variety of products and services, which generates a context of continuous improvement to stand out in the market compared to the rest of the offers.
The main disadvantages of the neoliberal model are:
- Inequality. It promotes a set of economic strategies that have social impact and that generate a great class difference. For example, only those who have access to private services, such as education, will be able to achieve better professional development. The majority of those who do not have access to these types of services cannot progress.
- The monopoly. It promotes power to be controlled by an elitist minority that monopolizes productivity and the supply of services. Those who do not have or cannot generate money cannot carry out their own businesses, but they are necessary as labor in the productive system.
- Economic problems. It promotes an uncontrolled increase in prices, subject to the deliberate laws of the market in the hands of monopolies. In addition, it generates a decrease in wages due to the high demand for work, which makes labor cheaper.
- Environmental problems. Promotes obtaining the greatest profit in the shortest possible time. In many cases this implies not respecting the processes and standards established for the care of resources and the environment, the use of non-renewable resources, the quality of life of people or responsible industrial development.
Opponents of neoliberalism
Popular social organizations, left-wing political parties and currents based on socialist and communist ideas, are the main opponents of neoliberal philosophy. Labor unions that see their principles and acquired rights threatened, after so many years of struggle, also oppose neoliberal ideologies.