Neoliberalism ideology claims that a free market economy provides the ultimate free choice and allows for optimum economic growth of state (Kotz, 2002); it focuses on the belief that state intervention in economic development leads to inefficiencies, as their incentives often result in the 'economy's winners' getting punished, and the 'losers', getting rewarded. In simple terms, it believes that the government should have nothing to do with the market, and that free markets should be able to regulate themselves because under state intervention, it caps the rich from getting even richer (Kuttner, 2019).
Neoliberal policies and ideologies began to rise in western Europe and North America in the late 1970s and early 1980s during the time of the election of Margaret Thatcher as the UK prime minister and Ronald Reagan as the president of USA - both of these heads of state thought that the previous policies which involved state intervention led to the deteriorating of the economy in the 1970s (Willis, 2014).
Some have argued that neoliberalism is the leading strategy in governing the world’s economy. In some cases, resulting in the resolution of global-local tensions, and promotion and enforcement by organisations such as the World Bank, showing its global extent. It has also been argued that neoliberalism has provided social regulations and fixes after the collapse of Fordism which focused on mechanical industrialisation (Yeung, 2000).
However, for the most part, this isn't always the case. The use of neoliberal strategies can result in a social and economic breakdown, as according to Yeung, “neoliberalism is simply inadequate for the task of regulating capitalism, let alone solving its crisis” (Yeung, 2000: 137). It can aggravate structural imbalances and deflation whilst ignoring uneven development, ultimately resulting in inequalities and the need for state intervention (Yeung, 2000).
Kotz, D.M., 2002. Globalization and neoliberalism. Rethinking Marxism, 14(2), pp.64-79.
Kuttner, R., Neoliberalism: Political Success, Economic Failure. The American Prospect. Available at: https://prospect.org/economy/neoliberalism-political-success-economic-failure/
Willis, K. 2014. ‘Theories of Development’ in Cloke, P., Crang, P. and Goodwin, M. (eds.) Introducing human geographies, 3rd ed, Abingdon, Routledge, pp 297-311.
Yeung, H.W.C., 2000. State intervention and neoliberalism in the globalizing world economy: lessons from Singapore's regionalization programme. The Pacific Review, 13(1), pp.133-162.
