What is the difference between classical liberal vs neoliberal philosophy? Classical liberalism is a branch of liberalism that advocates laissez-faire economic freedom and the protection of civil liberties by limiting the power of the central government. Neoliberalism, on the other hand, supports fiscal austerity, free trade, deregulation, privatization, and a reduction in government spending.
In essence, neoliberalism is similar to classical liberalism in terms of laissez-faire economics. However, unlike classical liberal ideology which focuses on individual rights, neoliberal ideas focus more on the economic prosperity of the society. In this article, we will be comparing neoliberal vs classical liberal by its differences and similarities.
Classical liberal meaning
Classical liberal proponents advocate laissez-faire economic freedom and the protection of civil liberties by limiting the power of the central government. This is based on a political and economic ideology known as classical liberalism that was developed in the late 18th and early 19th centuries. Classical liberal ideology emerged in response to the vast social changes caused by the Industrial Revolution in Europe and the United States.
Classical liberalism emphasizes individual economic freedom and the protection of civil liberties under the rule of law and is based on a belief that social progress was best achieved through adherence to natural law and individualism. Classical liberal proponents drew on the economic ideas of Adam Smith in his classic 1776 book ‘The Wealth of Nations‘. They also agreed with Thomas Hobbes’ belief that governments were created by the people to minimize conflict between individuals and they felt a welfare state was a threat to a free market economy.
Therefore, economic freedom, limited government, and the protection of basic human rights are tenets of classical liberalism. In essence, classical liberals and neoliberals are similar because they both advocate laissez-faire economic freedom. However, neoliberalism is more like a modern take on classical liberalism that focuses on economic prosperity rather than individual liberty.
To the classical liberal, the primary goal of government is to facilitate an economy in which individuals are free to create and maintain wealth, invent and produce new products and processes and trade freely with others. Based on the ideas of Adam Smith, classical liberal thinkers believe that individuals should have the freedom to pursue and protect their own economic self-interest without unwarranted interference by the central government.
In addition, the politics of the classical liberal values the freedom of individuals over that of central government officials. Hence, it embraces a society in which economic activities are determined by the decisions of individuals rather than by the actions of a government structure.
Neoliberal proponents favor policies that promote free-market capitalism, deregulation, and reduction in government spending. This is based on a political and economic philosophy known as Neoliberalism, a modern philosophy associated with economic ideas in the 19th and 20th centuries proposing laissez-faire economics. Neo-liberal ideology favors private enterprise and aims at transferring the control of economic factors from the government to the private sector.
The characteristics of neoliberalism emphasize free trade, deregulation, globalization, and a reduction in government spending. Hence, many neoliberal policies concern the efficient functioning of free market capitalism, and public ownership; and focus on limiting government spending and regulation. Just like with the classical liberal, neoliberal philosophy is related to laissez-faire economics, a school of thought that opposes government interference in the economic affairs of individuals and society.
Nonetheless, there are many criticisms of neoliberal policies, like their potential danger to democracy, workers’ rights, and sovereign nations’ right to self-determination. Neoliberalism has also been accused of worsening economic inequality and giving corporations too much power.
Furthermore, in terms of laissez-faire economics, neoliberal and classical liberal policies are very similar. Classical liberal philosophy is more of a political philosophy and neoliberal philosophy is based on neoclassical economics. Hence, neoliberalism is a set of ideas for how a free market, as advocated by classical liberalism, can be achieved and maintained. However, neoliberalism focuses more on economic prosperity while classical liberalism focuses more on individual liberty.
The North American Free Trade Agreement (NAFTA) is an example of neoliberalism. By this agreement, Mexico, Canada, and the United States agreed to remove all trade restrictions between their countries to open up trade and increase the economic benefits for each country. Neoliberalism is usually associated with the leadership of Margaret Thatcher in the U.K. and the leadership of Ronald Reagan in the U.S.
Classical liberal vs neoliberal differences
- One of the differences between classical liberal vs neoliberal policies is that classical liberalism is based more on the ideas of individual rights while neoliberalism is based more on economic prosperity.
- Another difference between classical liberal vs neoliberal philosophy is that classical liberalism focuses mainly on individual freedom of thought, religion, protection of civil liberties, property ownership, etc, whereas neoliberalism focuses mainly on free trade and privatization
- Neoliberal is an economic philosophy that turned into a social ideology (where the money comes first), whereas classical liberalism began as a social philosophy and then turned into an economic framework.
Tabular differences between neoliberal vs classical liberal philosophy
|Criteria for comparison
|Classical liberal philosophy
|Classical liberal philosophy advocates laissez-faire economic freedom and the protection of civil liberties by limiting the power of the central government
|Neoliberal philosophy favor policies that promote free-market capitalism, deregulation, and reduction in government spending.
|Classical liberals focus more on autonomy and maximizing individual freedom
|Neoliberals focus more on the economic prosperity of society rather than on individual rights
|When it developed
|Classical liberalism came into being in the late 18th and early 19th centuries
|Neoliberalism came into being in the 19th/20th century
|Key classical liberal advocates are John Locke, Jean-Baptiste Say, Thomas Malthus, David Ricardo, Adam Smith, Friedrich Hayek, Milton Friedman, Ludwig von Mises, Thomas Sowell, George Stigler, Larry Arnhart
|Key neoliberal advocates are Margaret Thatcher and Ronald Reagan
Classical liberal vs neoliberal similarities
The similarities between the classical liberal and neoliberal include an emphasis on self-determination and individual freedom. These two ideologies both favor limited government and free-market exchange, where individuals have autonomy and choice.
Classical liberals and neoliberals both advocate for laissez-faire economics, which proposes that an economy is left to its own devices without government intervention. Neoliberal policies focus on deregulation and privatization, which aligns with the views of classical liberalism that propose that it is the best for government not to intervene in the economic activities of individuals.Last Updated on November 3, 2023 by Nansel Nanzip Bongdap
Obotu has 2+years of professional experience in the business and finance sector. Her expertise lies in marketing, economics, finance, biology, and literature. She enjoys writing in these fields to educate and share her wealth of knowledge and experience.