Neoliberalism Unpacked: Ideology, Governance, and Economic Policies

Posted on Sep 8, 2025 in Business Administration and Management (BAM)

Neoliberalism, an influential economic and political philosophy, traces its intellectual origins to 1947, though it rose to prominence in the 1980s. It can be understood through three distinct dimensions:

  1. An ideology
  2. A mode of governance
  3. A policy package

Neoliberalism as an Ideology

Ideologies are systems of ideas that offer a picture of the world and how it ought to be. Neoliberalism, as an ideology, is shaped by its codifiers, who are primarily global power elites (e.g., managers, executives, politicians).

Its ideological claims are closely related to the principles of free-market capitalism, advocating for:

  • Global trade and financial markets
  • Worldwide flows of goods and labor
  • Transnational corporations and financial centers

Ultimately, Neoliberalism is often seen as an economistic ideology, prioritizing economic principles above many other considerations.

Neoliberalism as a Mode of Governance

As a mode of governance, Neoliberalism proposes that:

  • The self-regulating free market serves as the ideal model for proper government.
  • Entrepreneurial values such as competitiveness, self-interest, and decentralization are promoted.
  • Governmental technologies, often borrowed from the business world, tend to replace the traditional ideal of the ‘public good’.
  • This approach leads to what is known as ‘New Public Management’, which often redefines citizens as ‘customers’ rather than active participants.

This shift has significant consequences for political participation and workers’ rights.

Neoliberalism as a Policy Package

Neoliberalism manifests itself as a set of policies often summarized by the D-L-P Formula:

  • Deregulation (of the economy) – The state actively removes regulations, often to protect the interests of large companies.
  • Liberalization (of trade and industry) – Reducing barriers to trade and opening up industries to market forces.
  • Privatization (of state-owned enterprises/public companies) – Transferring public assets and services to private ownership.

Key Policy Measures

  1. Massive Tax Cuts on Businesses and High Incomes: This policy aims to encourage investment, allowing wealthy individuals to reinvest their capital.
  2. Cuts in Public Spending: Achieved through the reduction of social services and welfare programs.
  3. Use of Interest Rates (by independent central banks): Employed to keep inflation in check, even if there’s a risk that unemployment may rise.
  4. The Downsizing of Government: Implemented to foster economic growth, efficiency, and individual freedom.
  5. Tax Havens: Provided for domestic and foreign corporations willing to invest in designated economic zones, aiming to remove controls and lower taxes for large companies to foster investment.
  6. Anti-Union Policies: Designed to enhance productivity and ‘labor flexibility’.
  7. Removal of Controls on Global Financial and Trade Flows.
  8. Creation of New Political Institutions and Think Tanks: Established to actively spread the ideas of neoliberalism.
  9. The Links Between Neoliberals and Conservatives: They often share certain ideas, such as family values, strong law enforcement, and robust armed forces.

Intellectual Roots of Neoliberalism

Neoliberalism’s intellectual origins can be traced back to 1947, when Friedrich August von Hayek, an influential member of the early 20th-century Austrian School of Economics, founded the Mont Pelerin Society. This society attracted like-minded intellectuals who were committed to strengthening the principles and practice of a “free society” by studying the workings and virtues of market-oriented economic systems.

Hayek believed that the rising tide of collectivism, encompassing forms of state-centered planning (e.g., Marxism, communism, fascism), posed a significant threat. He sought to challenge the dominance of Keynesian economic ideas, considering most forms of state intervention in the economy as obstacles on the “road to serfdom” (or “road to liberalism”).

Hayek argued that democracy is impossible without a free economy in which the market regulates itself. This period saw a significant revival of Classical Liberalism, positioned against Marxist Collectivism, social democracy, and Keynesianism.