Neoliberal

Posted 4 November 1999 to the HAYEK-L list.

I would like to thank all members of this list who responded
to my query on the origin and meaning of the term
'neoliberal'.  I learned much, but the main lesson is that
there is not one, but many origins and meanings for the term.
For this reason, I conclude that 'neoliberal' conveys little
information and intend to avoid all use of the term.
Moreover, I will ignore the term whenever I see it (which is
frequent) unless the author provides a clear indication of the
sense in which he is using it.

In economic theory, the term 'neoclassical' has not suffered
from such ambiguity.  There is consensus that 'classical'
refers to Smith, Ricardo, Mill and their followers and that
'neoclassical' refers to the very different school of Marshall
and his followers.

Why, then, in political philosophy, did the term 'neoliberal'
come to take on so many meanings?

One explanation might be that the adjective 'liberal' in
Europe and, especially, in the United States, came to describe
a political position very different from that of a classical
liberal.  Hayek explains this in some detail in his essay "Why
I am not a conservative".  Mark Brady informs us that Hayek
described himself as a 'neoliberal', influenced apparently by
the German 'Ordoliberals', who were known also as
'neoliberals' (though Frank Maier-Rigaud disputes this).  This
is unfortunate, for Hayek is without doubt  a liberal in the
classical sense.  If Mill had described himself as a
'neoclassical' economist, this would have caused similar
confusion for the term 'neoclassical'.

The term 'neoliberal' is often used, to quote Frank Maier-
Rigaud, "in a pejorative sense for certain political opinions
that are based on a mixture of confused neoclassical economics
and naive laisser faire." This is no doubt the sense in which
C. Raghavan (editor of South-North Development Monitor) used
the term on 25 October when he informed the UNCTAD Trade and
Development Board that "more than two decades of neo-liberal
economics has not delivered to people satisfaction of basic
human needs.  In fact neo-liberal economics has increased the
numbers, absolutely and proportionately, of the world's
population whose basic needs are not satisfied, and has
widened the equity gaps within and among societies."  Just
today, an unpublished note reached my desk that defines
neoliberalism in a similar fashion as "the surge of
inequality, in all its many facets including insecurity and
marginalisation, and the attendant culture of greed and
incivility."

On the other hand, J. Bradford DeLong, a Berkeley economics
professor who is neither confused nor naive, confesses:  "I am
a card-carrying neoliberal: a believer that a bet on increased
international economic integration is our best hope for
rapidly moving to a truly human world, an advocate of NAFTA
and GATT, a former not-very-senior official in the Bentsen and
Rubin Treasury Departments, and a believer that those fighting
to hold back world economic integration are or are the dupes
of  foes of global prosperity and liberty. " ("Globalization"
and "Neoliberalism"
http:
//econ161.berkeley.edu/Econ_Articles/Reviews/alexkafka.html)

Perhaps DeLong is using the term 'neoliberal' in the American
sense, as described by Virginia Postrel in her post.

I would like conclude by mentioning another variety of
neoliberalism, which is discussed by LSE Professor Razeen
Sally in his book Classical Liberalism and International
Economic Order: Studies in Theory and Intellectual History
(New York: Routledge, 1998).  (A member of the Hayek list
recommended Sally's book to me in a private communication.)
Sally refers to a group of political scientists "most of them
occupying positions in US universities" as 'neoliberal
institutionalists.'  They have nothing in common with
'classical liberals', for they favour what Sally calls
"liberalism from above", i.e. "international organisations and
elaborate mechanisms of intergovernmental negotiation and
policy co-ordination" (pp. 6-7), and, to the extent they draw
on economic theory at all, they rely on "neoclassical ...
models of externalities, public goods, social welfare
functions and market failure -- all of which, implicitly or
explicitly, assume the fragility of markets and the robustness
of government intervention" (p. 196).  I think that I
recognise these academics, even though Sally does not provide
names.  They must be the same professors whose research is
published in the pages of  the journal International
Organization.  But don't many of these same scholars
persistently attack  'neoliberal' policies of governments
around the world?  I suspect that members of this group would
never refer to themselves as 'neoliberal'.   Also, they are
not limited to US universities.  See, for example, R. Higgott
and N. Phillips, "The limits of global liberalisation: Lessons
from Asia and Latin America", University of Warwick, Centre
for the Study of Globalisation and Regionalisation, January
1999 (http://www.warwick.ac.uk/fac/soc/CSGR) which addresses
implications of  "the first serious challenges to the hegemony
of neoliberalism" for the "potential management of the global
economic order at the end of the twentieth century."

So, am I more confused than before?  I think not, for at least
I know that the term 'neoliberal' means many things to many
people. Moreover, it is a loaded and often pejorative word  It
is for that reason that I am striking it from my vocabulary
and urge others to do the same.

Again, thanks very much for enlightening and educating me.

Larry Willmore