I have often wondered what the neoliberal political philosophy might be, and how it differs from that of classical liberals such as Adam Smith and John Stuart Mill. Neoliberalism is rarely defined, and the term is a source of much confusion. Oliver Marc Hartwich explains.

[T]he most curious characteristic of neoliberalism is the fact that these days hardly anyone self-identifies as a neoliberal. In former times, ideological debates were fought between, say, conservatives and socialists, collectivists and individualists. While there may not have been any other agreement between these opposing groups, at least they would have agreed about their respective identities. A socialist would not have felt offended by a conservative calling him a socialist and vice versa. ….

These are strange debates indeed when the enemy you are fighting claims he does not exist.

Maybe this is not so strange after all. If neoliberalism is hardly ever defined, if it can mean anything you wish to disagree with, then it is understandable that it results not from an attempt to gain theoretical knowledge but from the desire to defame your political opponents … [with] an almost meaningless insult.

It was not always like this. At the beginning of neoliberalism, when the term was invented, it was quite the opposite of what we think of it today. ….

It was … Alexander Rüstow [a German sociologist and economist] who, in 1938, coined the term neoliberalism. ….

In his essay `Between Capitalism and Communism’, Rüstow explicitly argues for a `Third Way’ between the two ideologies. He acknowledged that markets generally worked well under complete competition. However, he accused Adam Smith of holding a polemical grudge against the state ….

He called it [this ‘Third Way’] neoliberalism to differentiate it from earlier liberalism, for which Rüstow frequently used derogatory terms such as `vulgar liberalism,’ `Manchester liberalism,’ or `paleo-liberalism.’ Rüstow wanted to break with this old liberal tradition to put a new liberalism in its place—hence the prefix `neo’. ….

[C]riticism of laissez faire plus the recognition of the power of markets and scepticism of state power is the core of the neoliberal project as it was once formulated. This would almost make [today’s anti-neoliberal] … a neoliberal in the original meaning of the word.

Oliver Marc Hartwich, “Neoliberalism: The Genesis of a Political Swearword”, CIS Occasional Paper 114, May 2009.

German-born lawyer and economist Oliver Marc Hartwich is a Research Fellow at the Centre for Independent Studies in Sydney, Australia.

Recycled from the Thought du Jour archive.

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