Neoliberalism refers to government policies that are geared towards favouring the existing market. It also means actions taken to allow the market to operate in a free environment. Neoliberalism is greatly connected with other economic and political ideologies like the free-market economy and laissez-faire liberalism. It is recognized as the most modern economic ideology having originated from Europe in the 19 th century (Larner, 2009) . The philosophy gained prominence in the 1930s during which many countries saw a massive reorganization of their systems of government. Neoliberalism has been lauded by many economists and other scholars as having taken a moderate approach between the government and the market thus bringing middle way solutions to the conflict between the two. While liberalism refers to the total independence of the market to operate without any government interference, neoliberalism advocates for limited freedom and state involvement during certain situations. In the political environment, neoliberalism has borrowed from both communist and socialist ideologies creating an active and more lenient form of government in different countries (Ferguson, 2010) . The ideology tends to lean on the free market principles like deregulation, privatization of government entities, free trade among countries, and globalization. The paper tries to look deep into the origins of neoliberalism, major ideas, and theories, modern application of the ideology, and how it impacts today’s economic, and political environment.
History of Neoliberalism
The concept of neoliberalism can be traced back to Germany and her participation in the two World Wars. This was highly aggravated by the political and intellectual developments that were taking place during that time. Alexander Rustow, a German economist had pointed out the economic liberalism as the primary cause of economic hardships the country was experiencing. He lamented that the little concern exhibited by the government had allowed business enterprises to engage in fraudulent activities contributing to the collapse of the economy. The concept also came as a result of political development and the competition between the left and right-wing with each advocating for different ideologies. After the end of the First World War, Germany experienced one of the most devastating economic crises ever with unemployment peaking in 1932. That year, the country had recorded six million people as having lost their source of income leading to a rise in poverty level across the country (Babb, 2006) . The worsening economic environment led to a revolt against the Weimar government leading to the rise of radical parties like Nazi.
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Germany was not alone in economic downturns as other European nations and the United States had experienced economic crises in the early 1930s. This was greatly blamed on the market crash of 1929 which had happened in the U.S. Franklin Roosevelt rose to the American presidency with a promise of instituting various measures meant to curtail the power the market had and increase government involvement in its operations. In England, the government was relying on the work of John Maynard Keynes who was devising strategies of dealing with instabilities caused by capitalism. Generally, countries around the world blamed capitalism and the liberalization of the markets as the primary cause of economic plight that they were experiencing. They felt that businesses had been given extreme powers leading to possible manipulation and economic collapse.
The political and ideological manoeuvre of Alexander Rustow can still be credited as the appropriate source of invention and promotion of neoliberalism. Having initially served in the First World War, Rustow later joined socialist organizations while advocating for a moderate approach to the conflict between communism and socialism. In 1919, he become a government advisor on economic affairs helping formulate several policies to tackle some of the challenges the country was facing economically (Gane, 2014) . Rustow later changed his mind in the early 1920s joining a group of enterprises in advocating for more market freedom and less government interference. His entire life was marked by a fence-sitting approach and not sticking to one idea in political and economic matters. This moderate approach led him to coin the term ‘neoliberalism’ in 1932.
Major Ideas
Theory of the Society
Neoliberalism has been considered as reasserting the long-standing belief of the need to give more liberty to the political and economic environment of a country. It is also embedded in the individual’s freedom of decision making and taking actions depending on the set form societal guidelines. This ideology came as a result of the conflict that emerged between socialism and communism. Over the years, proponents of neoliberalism have established it as a philosophy based on real facts and bearing similarities to the modern form of economics. However, this might not be the case as the current system of economics has proved not to be a scientific subject but rather a systematic theory of specific social life, having been deep-rooted in the Western ideologies (Flew, 2014) . To understand modern economics, it is always important to revisit Adam Smith’s argument about the subject. He criticized the corruption and extreme powers some states possessed which saw the increase in taxes demanded and showing open favouritism towards monopolies. Smith argued that the government does not get its wealth from lack no regard for her citizenry but rather the application of division of labour. His economic proposals helped introduce neoliberalism and it’s up to date application across the world. He argued that the purpose of every transaction is to provide mutual benefit to every party involved without the feeling of having been short-changed during the process. Smith’s theory was later supported by Milton Friedman who asserted that neoliberalism was an idea that ensured if two sides engaged in an informed and voluntary transaction, they tend to each gain a certain level of benefit. They opposed any government restriction that might be put on free enterprises as likely to reduce the number of transactions individuals carry between themselves and thus denying them an opportunity to improve their conditions.
Adam Smith’s liberal approach theories came under attack for several reasons. According to one side, his ideologies were meant to people in isolated spectrums with each harbouring and trying to fulfil certain goals. The critics argued that Smith ignored the basic human characteristic which encompassed culture, religion, morality, and art. Those were factors that defined human beings and put them apart from other animals (Clarke, 2017) . Another source of criticism came from those who viewed this liberal approach as giving the stronger party an advantage over the other side. As it immensely benefitted the powerful side, it brought untold suffering to the weaker side and left him/her with no source of help. It is, for this reason, many demanded government intervention to ensure that small enterprises are given protection and allowed to operate without exploitation.
Economic Theory
The collision between the state and the market has been a long-lasting conflict that has been taking place in many countries. It is from this rivalry that neoliberalism has emerged and grown to be accepted as legal and natural ideology. There has been an emergence of different scholars advocating for varying policies about how the state and the market should interact. Some feel the economy should be left to operate on their own without any government intervention while others believe that the state should retain supreme power and keenly monitor the markets to avoid exploitation. The government remains as a supreme legal system that is recognized by the constitution of any country as having the sole mandate of overseeing all the operations taking place. On the other hand, a market is a system that undertakes the economic activities taking place within a country following certain guidelines set by the government, constitution, or other related bodies. Therefore, it will be hard to separate the two as they depend on each other in many aspects. Neoliberalism proponents have advocated for certain policies with a view of promoting the economic condition of the state. The first policy they propose is the privatization of some of the state-owned institutions. This will allow those entities to gain competitiveness thus being able to produce better and quality goods and services unlike when they are government-run. The second idea they have proposed is the deregulation of the market. Some of the rules put by the government are likely to prevent businesses from exploiting their full potential hence the need to reduce them. Neoliberalism also proposes free market trade in which prices of goods and services are set by the interplay of demand and supply with no government intervention.
Globalization
Globalization involves cooperation and transaction between individuals, business entities, or governments between one or more countries. As nations’ borders become open and the advancement of technology, countries are seeing an increase in the number of interactions between them. Neoliberalism has always proposed globalization to propel growth around the world. This ideology has been used since the 1930s by most European countries and nations from North America (Heron, 2008) . As neoliberalism is embodied in an unregulated market structure, countries are allowed to access different markets across the world with so much ease, a situation that never existed in the early years. However, various critics view this unregulated market as having contributed to some of the economic crises that have faced the world. A good example of such a crisis is the market crash of 1929 which occurred in the U.S and spread across the Atlantic to affect some European countries.
Use of Neoliberalism in Current Economic and Political Decisions and its Impact
Financial capitalism
Neoliberalism has brought new development in the financial management of different countries. This ideology proposes a global type of capitalism that can be able to self-sustain in terms of the capital and goods flow supported by policies that are geared towards market independence. The proposed finance capital can overcome turbulent times without relying on government support as was the case in the early 20 th century (Madra & Adaman, 2014) . Most governments have put in place complex structures that are meant to offer businesses a friendly working environment depending on the type of market existing. However, this kind of approach has been criticized by some experts as likely to cause economic catastrophe during crises as a failure by the government to intervene will lead to some business entities collapsing.
Market Fundamentalism
Market fundamentalism involves the central concentration of attention on the market as the primary solution of political and economic upheavals. It proposes zero government intervention allowing the market to operate on itself and develop mechanisms meant to correct its mistakes. Neoliberalism involves ideas that are put in place to enhance the existing ideologies with a view of producing efficiency in market performance. In recent times, this ideology has greatly borrowed the ideas of Fredrick Hayek of total market liberalism. Hayek held the views of socialist forms of government allowing individual freedoms allowing people to explore their potential to their level best. However, some experts have questioned this assertion claiming that the market cannot be able to correct its mistakes without the help of the government. They advocate for a careful approach to market fundamentalism to avoid catastrophic market failure.
Disaster Capitalism
A new form of neoliberalism has emerged which is the formulation of friendly policies that are meant for the market and passed through national and international political changes. Those measures are formulated by economic and political experts to deal with various eventualities that may occur during market operations. However, many of them are formed after a disaster has occurred with a view of offering solutions and allow the markets to get back on track. Those policies hold little permanence as most of them are created by temporary experts who do not offer a long-lasting service to the government. Some experts have questioned the validity of such approaches claiming that solution as having little value to the economic problems facing different countries.
Conclusion
Neoliberalism has been described as a moderate form of philosophy that is meant to emphasize the efficiency of the market. This ideology has always favoured free-market operations to allow businesses to maximize their potential. Unlike liberalism which advocates for zero intervention by the government, neoliberalism advocates for a moderate approach requiring little check by the state especially during crises. Neoliberalism has found its great usage in the theory of society, the economic environment, and globalization. In today’s economic and political life, this ideology has helped develop financial capitalism, disaster capitalism, and market fundamentalism.
References
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