Liberal vs Neoliberal

Here’s the basic, conceptual difference between classic “liberalism” and “neoliberalism.” The original liberals just wanted the government to leave them alone and let them do their thing. Neoliberals, on the other hand, believe the state has to take action to organize a free market economy. They recognized that it was a political problem and that “the state must be re-engineered to support the free market on an ongoing basis.” That re-engineering gained traction in the 1980s with Reagan and Thatcher.

This article tells the story of the ascendence of neoliberalism as the post-WWII struggle between the ideas of John Maynard Keynes and Friedrich Hayek… Prior to WWII “even the most rightwing economist thought of the market as a means to a limited end, to the efficient allocation of scarce resources… [but they accepted that] the ultimate ends of society and of life were established in the non-economic sphere.”

In 1936, Friedrich Hayek was “an obscure Austrian technocrat… an academic without a portfolio and with no obvious future.” But he had an idea. For Hayek, “the market didn’t just facilitate trade in goods and services; it revealed truth… He thought he was solving the problem of modernity: the problem of objective knowledge… Hayek’s was a total worldview: a way of structuring all reality on the model of economic competition… Hayek built into neoliberalism the assumption that the market provides all necessary protection against the one real political danger: totalitarianism. To prevent this, the state need only keep the market free.”

“It isn’t only that the free market produces a tiny cadre of winners and an enormous army of losers – and the losers, looking for revenge, have turned to Brexit and Trump. There was, from the beginning, an inevitable relationship between the utopian ideal of the free market and the dystopian present in which we find ourselves; between the market as unique discloser of value and guardian of liberty, and our current descent into post-truth and illiberalism.” Read the article to see how the author supports this claim. And don’t call me a “liberal”!!

(All quotes from the article linked in the first comment, "Neoliberalism: the idea that swallowed the world," by Stephen Metcalf.)