What is neoliberalism and why do some deny its existence?

But CAST did not explicitly mention neoliberalism.

This is a reversal of a trend that goes beyond the Chilean borders. While the left refers to neoliberalism in a derogatory way, you don’t often hear people claiming it by name, as Friedman did 70 years ago.

Some experts argue that this economic trend, which peaked in the 1980s and 1990s, has been losing momentum since the 2008 global financial crisis.

“Neo-liberalism is on the defensive,” Brazilian economist and philosopher Eduardo Gianetti da Fonseca told BBC News Mundo (BBC Spanish service).

But what exactly is neoliberalism and why is it so controversial?

As its name suggests, neoliberalism emerged in the twentieth century as an attempt to renew classical liberalism. Although there are separate records of the use of the term since the end of the nineteenth century, it is accepted that the official adoption of the term itself dates back to a meeting of liberal thinkers held in Paris in 1938. At the meeting, it was defined that the concept of neoliberalism would embody “the primacy of the price mechanism, entrepreneurship Free, competitive, strong and impartial state.”

Its promoters were opposed to Keynesian economic policies (based on the theories of British economist John Maynard Keynes), which gave the state a major role in preventing crises or recessions.

Austrian economist Friedrich Hayek, another important reference for neo-liberals, argued in his book road Dra ServantsGive (1944) that state planning of the economy leads to totalitarianism.

Hayek and other thinkers founded, in 1947, the Mont Pèlerin Society, a center of economic thought for the defense, after World War II, of liberal values ​​such as a market economy, an open society, or freedom of speech.

Neoliberal ideas gained particular appeal from the 1970s onwards, when stagflation and other economic problems in the West raised doubts about Keynesian policies and many governments searched for alternatives.

The conservative governments of Margaret Thatcher in the United Kingdom (1979-90), and Ronald Reagan in the United States (1981-89) adopted policies advocated by neoliberals, such as state shrinking and strict control of the money supply to reduce inflation.

But neoliberalism is far from being a unifying dogma. It includes many schools, such as the Austrian Hayek and Ludwig von Mises, the Chicago (Friedman) School and the Virginia School of James Buchanan – and there are notable differences between them, for example, in matters of monetary policy.

All this makes defining neoliberalism difficult, which is exacerbated, according to some scholars, by the strong rejection this doctrine usually receives.

“While the term neoliberalism remains popular, its use to include a range of things that people don’t like makes it difficult to define clearly,” said Ross Emmett, director of the Center for the Study of Economic Freedom at Arizona State University, USA. He told BBC News Mundo.

Critics of neo-liberalism claim that placing the market at the center of priorities, liberalizing the economy and dismantling state mechanisms that ensure the well-being of the population, have contributed to the widening of the gap between the richest and the poorest in many countries.

They add that social inequality has brought increasing problems to democracy and to individuals.

Politically, the left has often tried to demonize neoliberalism. Then Venezuelan President Hugo Chávez declared in 2002 that “the road leads to hell”.

But defenders of Hayek and Friedman’s ideas argue that neither Chávez nor the rest of the left have successfully demonstrated an alternative.

Other scholars simply deny the existence of neoliberalism.

Economist Daniel Altman wrote in the New York Times in 2005: “Neoliberalism? It doesn’t exist!” , arguing that rich countries have never opened up to free trade.

Liberal Argentine economist Javier Mili argued in August 2021, before his election as deputy in November, “There are no new or old liberties. Either freedom or there is no. Therefore, the neoliberal concept is meaningless.”

But Argentina, after Chile, was one of the symbols of neoliberalism in the 1990s, when the government of Carlos Menem privatized everything it could, liberalized the economy and adopted a single parity between the peso and the dollar.

These changes were approved by the International Monetary Fund (IMF), which pointed to Argentina as a model until December 2001, when the country entered a very serious financial crisis and halted repayment of foreign debt of 144 billion US dollars (about 815 billion dollars) – the largest debt in the world. Date.

James Boughton worked for the International Monetary Fund and dated it between 1992 and 2012. He denies that the institution has an “extreme view of neoliberalism”, but admits that the institution encouraged privatization and free market policies in the countries of the former Soviet Union and Latin America..

“The IMF pushed all of this forward, and in that sense you could say it encourages neoliberal policies,” Boughton told BBC News Mundo.

On the other hand, Giannetti da Fonseca considers it a “grave mistake” that neoliberals wish to publish recipes from the advanced countries of Latin America, where there are problems of poverty and scarcity of human capital which, according to him, are more sensitive to classical liberals.

He stressed that “it is strange that the only country in Latin America that has carried out a deep and consistent experiment with neoliberal economic policy, which is Chile, has carried out this experiment under a dictatorship,” referring to the military regime led by Augusto Pinochet (1973-90), who advised him Friedman himself handed over control of the Chilean economy to os Chicago Boys.

In recent decades and under a democratic system, Chile has maintained free market policies that have allowed it to achieve per capita GDP similar to European countries and reduce poverty rates. But the Chilean model plunged into crisis with the protest movements that erupted in 2019 against inequality and demanding social reforms.

“With the exception of Chile, the neoliberal governments of Latin America were very inconsistent and ineffective, as there were no neoliberal reforms, for better or worse,” said Giannite da Fonseca.

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