Much, if not all, of what follows is actively debated by scholars, and is presented here in a very simplified form. It’s helpful to have some kind of definition of this term, even when its meaning is so intensely contested, because it is used so widely. I’m offering this post as my own attempt to be as explicit as possible about how I understand and use this word.
- During the Cold War (that is, between the end of the Second World War in 1945 and the 1980s or thereabouts), the economic system that reigned in the US was industrial capitalism, which required a lot of workers to run smoothly. The political system that reigned, which emerged in tandem with the needs of industrial capitalism, was liberalism.
- The consequences of this should not be discounted. Industrial capitalism’s dependence on a lot of labor meant that workers—usually white (this didn’t often extend to people of color, and particularly to African Americans)—had a lot of power, and this was reflected in the strength of the labor unions. It wasn’t unusual for someone not to finish high school, get a job in a factory, and be paid a high wage with good benefits and a lot of job security. Many working-class people could afford to own a house (and possible a second vacation house), a car, and vacations.
- The dominance of liberalism also meant that there was a high degree of public agreement that the government should help subsidize colleges, healthcare, infrastructure maintenance, and all sorts of other activities, including the arts, humanities, and scientific research. Such a big role for government was, in turn, funded by hefty taxes.
- I like to note that the highest top marginal tax rate ever achieved in the US was in 1944 and 1945, when it was 94%, and it stayed in the eighties and nineties until 1964, when Kennedy cut it to 77%. In 1944 and 1945, the marginal tax rate affected all income over $200,000, or roughly $2.7M in today’s dollars; this means if you made $210,000 in 1944, $10,000 would have been taxed at the rate of 94%. This measure was largely symbolic, because not many people ever paid this rate–but what symbolism!
- All of this worked pretty well so long as the economy grew, which it did impressively in the US during the 1950s and 1960s. In addition, all of this was made agreeable to many because the US was engage in a war against communism (which turned very hot in the war in Viet Nam in particular, but the Korean War was also significant), and therefore a big government was necessary to keep the US war machine going.
The Mainstreaming of an Idea
Starting in the 1970s, support for this system faltered. Jobs began to move from industrial places like Michigan and Ohio to places in the South, where labor was less expensive and a lot less organized. Eventually, with the spread of globalization in the 1980s, work could also move overseas and south of the border in search of cheaper labor. More recently, production seems to be moving back to the US but only because improvements in automation is making it profitable and factories tend to be located in states with little organized labor. That is, industrial production might be coming back to the US mainland but it’s not bringing back a lot of jobs and not the kind of jobs that used to exist, especially for people without a college education.
At roughly the same time, impressive advances in civil rights in the US were met with hostility by those who benefited directly from existing systems of overt discrimination. This made it easier to challenge liberal ideas and to dismantle big government programs, often first by attacking taxes as taking money out of the pockets of ordinary Americans. Minorities, for instance, were accused of living off of the public unfairly (i.e. “welfare queens”). The poor, often conflated with people of color and most specifically with African Americans, were increasingly viewed as undeserving (though this view was not new).
It is around this time that neoliberal ideas in economics, which used to be at the margins, began to gain greater traction. “Neo-liberal” means a return to, or a renewed interest in, liberal economic theories of the 18th Century associated with figures such as Adam Smith and David Ricardo.
- Think Smith’s notion of “the invisible hand of capitalism,” which has been interpreted by neoliberal economists as showing that capitalist economies work best when they are unfettered. Capitalism can, according to those who espouse this belief, regulate itself because it has its own checks and balances (such as the law of supply and demand), and government intervention only interferes with these checks and balances, and make economies run more poorly.
- So the primary role for governments should be to get out of the way: they should not regulate or try to guide economic activity. Governments should, instead, focus only on providing security for investments, protecting property, and making sure disruptive forces don’t get in the way of development and growth.
- As some critics have pointed out, neoliberalism doesn’t lead to the shrinking of the state but rather an increase in its size, because security is expensive.
Neoliberalism has since been interpreted to mean that this way of thinking should now organize all aspects of contemporary life, so that activities that were thought to be independent–or autonomous–from economic activities are now conflated with them.
Perhaps the most notable figure to make this argument is the political theorist Wendy Brown.
- So, for instance, we might talk about a “marketplace of ideas” instead of intellectual debate.
- Or, we might be encouraged to think of ourselves as “human capital,” so that the kind of choices we make are all about trying to make good investments for better returns.
- Or, governments (or colleges or schools or nonprofit arts organizations or anything really) would operate more efficiently if they were “run like a business.”
- Or, we might talk about a college education as being purely instrumental in nature, meaning what matters is getting a good “return on investment” – i.e. tuition is an investment, and the return is the future salary you might earn. This is also why forgiving tuition loans is often fought so vociferously, because education is understood as an individual good.
Short List of Readings
David Harvey, A Brief History of Neoliberalism (2005)
Wendy Brown, Undoing the Demos: Neoliberalism’s Stealth Revolution (2015)
Rachel Greenwald Smith, Affect and American Literature in the Age of Neoliberalism (2015)
Patricia Stuelke, The Ruse of Repair: US Neoliberal Empire and the Turn from Critique (2021)
Naomi Klein, This Changes Everything: Capitalism vs The Climate (2014)
Bill Readings, The University in Ruins (1996)
Aihwa Ong, Neoliberalism as Exception: Mutations in Citizenship and Sovereignty (2006)
Philip Mirowski and Dieter Plehwe, eds. The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (2009)
© Min Hyoung Song, 2022