Neoliberalism is a political and economic ideology based on limited government presence in the economy and private control of the means of production. In this article, we shall discuss neoliberalism examples and characteristics. But before we do that, let us define neoliberalism.
Read about: Ordoliberalism definition and characteristics
What is neoliberalism?
Neoliberalism is a broad term that encompasses political and economic ideologies based on the transfer of control of the factors of production from the public sector to the private sector. This is often hinged on the implementation of neoliberal policies such as privatization, deregulation, and fiscal austerity. Hence, neoliberalism is primarily concerned with policies, markets, and measures that influence the economy.
The foundation of the neoliberal ideology of the transfer of control from the government to private individuals or entities is the idea that governments are often inefficient in handling the means of production when compared to private entities or individuals. Therefore, neoliberalism advocates for the limitation of governmental powers and involvement in the economy. It views low government participation in the economy and a high level of private sector participation as more beneficial to society as it brings about more economic stability and growth. It also advocates for a reduction in welfare programs and individual freedom, arguing that it brings about increased social and economic progress for individuals.
Read about: Socialism Characteristics
Characteristics of neoliberalism
- Reduced government influence
- Establishment of free markets
- Disinterest about equality
- Free trade
Reduced government influence
A key characteristic of neoliberalism is a reduction in government involvement and intervention in the economy. This occurs mainly through the privatization of most national assets and a high level of deregulation as regards the establishment of businesses, investments, and other economic activities. Neoliberals posit that government intervention in the economy often encourages laxity and corruption. The privatization of national assets often results in the private sector controlling almost all aspects of the production and distribution of products and services.
As a result of this, there is usually an increased level of production and distribution efficiency. Neoliberalism however consents to the state actions such as the creation of legal frameworks that favor a free market. Furthermore, government spending on social services and welfare programs is kept at a minimum in the bid to cut down on government spending and intervention in society.
Establishment of free markets
The existence of free markets is another distinguishing characteristic of neoliberalism. The existence of free markets according to neoliberals, guarantees the efficient allocation of resources which fosters economic growth. This type of market is usually self-regulating, hence the pricing system is based on exchange value. This means that manufacturers and service providers produce goods and provide services with the aim of making profits. Consumers on the other hand make purchases based on individual choice and preference as a free market allows for the existence of several competing firms who are into the production and provision of similar goods and services.
Furthermore, the deregulation of the market aids in removing the barriers to entry which further encourages entrepreneurship and innovation and consequently, more competition. The existence of competition in the market generally guarantees that consumers have a variety of products and services to choose from and that they also get value for their money. Generally, companies that are able to meet consumer demands grow while those that are unable end up bankrupt or close down.
Disinterest in equality
Neoliberalism accepts social differences that exist in society, it does not agree with the socialist concept of equality in wealth and wages. This is because, in a neoliberal society, individuals get rewarded with either wealth or wages based on their level of contribution to the economy and not the blanket standardized rate that is advocated under socialist governments. Thus, disinterest in equality is one of the characteristics of neoliberalism.
Neoliberalism proposes the free movement of capital, products, services, and people. This feature of neoliberalism ensures that free trade occurs across borders, people can work in whatever company or country they want, firms have adequate access to capital from both domestic and foreign investors, and a wide range of products and services are made available to consumers. This is often achieved through free trade agreements between countries. The move towards globalization leads to the expansion of economies and the creation of more wealth creation and job opportunities for individuals.
Additionally, this increased level of individual freedom means that employers and trade unions will either be nonexistent or have very limited influence on the economy.
Read about: What is a Free Enterprise Economy?
Neoliberalism examples in countries
- United Kingdom
An example of neoliberalism in play can be seen in the United Kingdom since the late 1970s when the country saw a shift towards free market policies, the rolling back of the welfare state, the privatization of government industries, and the deregulation of financial markets. Neoliberalism gained more ground in the UK between 1979 to 1990 when Margaret Thatcher was prime minister. Within that period, she saw the implementation of many neoliberal policies such as the reduction of the influence of trade unions, elimination of government provision of housing, privatization of national industries, reduction in welfare programs, and tax and exchange rate reforms.
The influence of neoliberalism in the United Kingdom can also be seen in the policies of successive governments such as that of Tony Blair which embraced elements of neoliberalism and market-oriented reforms as can be seen in the introduction of private finance initiatives (PFIs) for public services and the expansion of free market principles into the healthcare system. The PFI is a method where the private sector operates, builds, and finances infrastructural development as well as provides facilities management and long-term services through long-term contractual agreements.
America is another country that has witnessed the implementation of neoliberal policies hence it is a good neoliberalism example. The adoption of neoliberal policies has been a gradual process that began in the 1970s and continues to the present day. During the time of Ronald Reagan as president between 1981 to 1989, he implemented similar policies as the ones Margaret Thatcher implemented in the UK.
One of the key components of neoliberalism in the United States has been the promotion of free trade and globalization, which has led to an increase in international trade and investment. The federal government has also pursued policies aimed at reducing the role of the state in the economy and promoting private sector growth. This has included the privatization of public services, tax cuts for businesses and the wealthy, and the reduction of regulations on industries such as finance and telecommunications.
However, the implementation of neoliberal policies in the United States has not been without its challenges and controversies. Critics argue that neoliberalism has contributed to rising income inequality, as the benefits of economic growth have been concentrated among a small group of wealthy individuals and corporations. In addition, some have argued that the reduction of government regulations has led to a decline in public services and an increase in corporate power. Despite these criticisms, neoliberalism continues to shape economic policy in the United States to date.
One neoliberal example in South America is Peru. Neoliberalism first began in Peru between 1973 to 1989 under General Augusto Pinochet who implemented many neoliberal moves such as privatization, deregulation, and liberalization of financial and trade regimes. These combined neoliberal policies aided the stabilization of the economy before the country’s re-democratization in 1990. The re-democratization saw the emergence of Alberto Fujimori as president. He continued on the neoliberalism path but with a mix of socially conservative populism.
Populism describes rhetoric strategically used by politicians to garner support from the country’s majority. This is done by dividing the citizens into two groups; the people and the elite. The people usually comprise the majority who are also the working class while the elite represents the minority who are mostly business owners. This is done by attributing the country’s problems to the elite and promising the people better prospects. Although the implementation of neoliberalism benefited Peru’s economy by improving and stabilizing it, it also resulted in an increased level of inequality as well as a democratic and social imbalance within the country.
One of the key components of neoliberalism in Canada has been the promotion of free trade and globalization, which has led to an increase in international trade and investment. The Canadian government has also pursued policies aimed at reducing the role of the state in the economy and promoting private sector growth. This has included the privatization of public services, tax cuts for businesses and the wealthy, and the reduction of regulations on industries such as finance and telecommunications.
Additionally, the opening up of the country’s borders to foreign investors, companies, and human resources has resulted in a considerable level of job creation, business expansions as well as brain gain. These have contributed to growing the country’s economy, making it a good neoliberalism example.
An example of neoliberalism in Mexico can be attributed to the implementation of the North American Free Trade Agreement (NAFTA) Treaty which was enacted in 1994. The implementation of this free trade agreement brought considerable benefits to the country, especially through the provision of cheaper electronic appliances as well as access to a variety of foodstuffs. These were made possible by the establishment of new and foreign businesses in the region.
This increased competition was however detrimental to the livelihood of local farmers within Chiapas who could not effectively compete with the bigger and better-equipped companies. It led to the rise of the Zapatista Army of National Liberation which is a libertarian socialist guerrilla movement aimed at supporting the rights of local farmers and discouraging the implementation of the free trade agreement.
Chile is one good neoliberalism example in South America. Neoliberal policies were first implemented in the 1970s under the military dictatorship of Augusto Pinochet. He was aided by some US-trained economists, called the ‘Chicago Boys’ because they all came from the University of Chicago. The reforms by Pinochet included privatization, deregulation, and reduced government intervention in education, healthcare, and pensions. This led to fast economic growth and made Chile become one of Latin America’s richest nations.
It however also had some negative effects as public services became poorer and pensions more meager, hence, many poor Chileans continue struggling to survive. This poor state of living led to the 2019 riots and protests that culminated in the election of a Constitutional Convention in 2021 to draft a new constitution for the country.
Read about: Arguments Against Capitalism
Neoliberalism examples in sectors
- Finance and Economy
Neoliberalism examples in education
Neoliberalism examples in the educational sector can be seen in both the United States and the United Kingdom. In the United States, neoliberal policies brought about the establishment of Charter schools as opposed to traditional public schools which operated for free, open to anyone who lived within the locality where they are located, and operated by the local school board. Charter schools on the hand are privately owned and operated and often charged fees although the government in most instances provides education vouchers for free which could be used to pay the fees.
Additionally, students in charter schools often come from a larger area, wrote entrance exams to get in, and could get expelled due to poor grades or bad behavior. These schools came into existence as an alternative to public schools which were performing poorly. Critics of this school system argue that they undermine public schools by directing resources away from them which further weakens teacher unions and poorer wages for public school teachers. Neoliberals, however, argue that the competition will ultimately lead to a better and improved educational system in the United States.
In the United Kingdom, the university system began a gradual deregulation starting in 1992 with the abolishment of the distinction between universities and colleges. Before then, universities were considered more prestigious and hence held in higher esteem than colleges that were considered of lower quality. Furthermore, students had to start paying tuition fees that had been previously free. The tuition fee continued to raise from the initial 1,000 pounds to 3,000 pounds in 2006 and then 9,000 in 2012.
This brought about a lot of criticism pointing out that it discriminates against poorer students and further cements the inequality which is already a cogent part of the UK as poor families might no longer be able to send their children to school. Thus, alienating them from the possibility of living a better life. Neoliberals in the UK however object, stating that the tuition can be paid for using student loans which can be repaid by students once they start working and earning.
On a global scale, access to education has become somewhat more affordable with the availability of various online schooling options and access to various national and international libraries through the internet.
Examples of Neoliberalism in Transportation
In the area of transportation, the privatization of the Australian airline carrier and the public train system of the UK are good neoliberalism examples. The sale of the Australian airline carrier, Qantas took place through gradual privatization between 1993 to 1995 while the public train system of the United Kingdom was privatized in 1993 under John Major. Both transport privatizations were done based on the neoliberal belief that privatization improves efficiency since private companies need to be profitable in order to continue being operational whereas most government-held enterprises are natural monopolies. Thus, they tend not to bother about being profitable or having a competitive advantage over similar companies.
This however continues to be argued between neoliberals and critics of neoliberalism. In the United Kingdom for instance, since the privatization of the railway, the system has been beset by large-scale delays and other operational problems. In Australia, the airline carrier had to cut down their number of employees, the routes they traveled as well as fleet size during the 2020 travel ban in the country. Even though both the railway and the airline carrier continue to be profitable and successful businesses, critics have continued to call for their renationalization stating the high transportation fees and job losses as the main reasons.
Examples of Neoliberalism in Manufacturing
Another area that neoliberalism has influenced is the manufacturing industry. Through neoliberalism’s advocacy for free markets, free trade, and globalization, manufacturers all over the world have turned to outsourcing and establishment of factories in countries with more readily available raw materials, human resources, and capital. Outsourcing refers to a phenomenon where a company in one country carries out the production of its goods in a different company.
Outsourcing has become increasingly common in the United States with a lot of companies outsourcing production to countries such as China, Nigeria, Mexico, and other countries where they can manufacture at comparatively cheaper rates thereby increasing their net income. Although outsourcing is beneficial to the countries where manufacturing is moved to by creating more job opportunities for its citizens, it has the opposite effect of making others jobless in the country where the manufacturing was formally done.
For instance, if a company that produces cheese in the United States decides to outsource the production to China, their employees in the United States will lose their jobs whereas, in China, new jobs will be made available. Hence, critics argue that the neoliberal support of outsourcing is counterproductive. People who lose their jobs may become a problem to society as they are likely to depend on state welfare or even turn to drugs which increases the occurrence of the opioid epidemic.
Neoliberalism examples in media
One positive impact of neoliberalism is the creation of the internet and easy access to information and knowledge that has occurred. People across the world can now share information with each other and also have access to current happenings across the world through the various media available. Prior to this mass globalization, access to information was highly restrictive and tedious. It was restricted to books, letters, and local media. People depended on newspapers, radio, and TV stations to get information about happenings in other parts of their country as well as other countries.
However, the advent of the internet coupled with the establishment of international news agencies across the globe has made the passing of information occur at the speed of light. News and information are now easily accessible by all and sundry. Furthermore, the media has played a significant role in shaping public perceptions and opinions about neoliberalism and its policies. In many countries, the media is dominated by large corporations with interests in maintaining the status quo and promoting neoliberal policies, such as deregulation, and privatization. As a result, media coverage of neoliberalism has often been favorable, portraying it as a panacea for economic progress.
The media has also been a critical platform for those who oppose neoliberalism and its effects, particularly its impact on income inequality, the environment, and social welfare programs. The media has given voice to critics who argue that neoliberalism has increased poverty and inequality, damaged the environment, and weakened the welfare state. Hence, the media plays a crucial role in shaping public perceptions and opinions about neoliberalism by providing a level ground for both its supporters and critics.
Examples of Neoliberalism in Finance and economy
The U.S.-Mexico-Canada Agreement (USMCA) which entered into force on July 1, 2020, replaced the North American Free Trade Agreement (NAFTA) which had set up a free trade area between the North American countries of Mexico, the United States, and Canada. This means the tariffs between the countries were removed. Tariffs refer to taxes paid when transporting goods for sale from one country to another. The removal of tariffs means individuals get access to more variety of both local and foreign goods at comparably cheaper prices since there will generally be more companies competing within the same market and providing similar products. This often leads to more economic prosperity and stability.
Another neoliberalism example associated with the economy is the floating of the American dollar which took effect in 1971 under President Richard Nixon. Prior to this, the value of the US dollar was tied to the value of gold, and other world currencies were tied to the dollar; this was known as the Bretton Woods System. Floating the dollar meant the United States government did not have to keep the dollar supply constant with that of the gold available in its Central bank. This meant the value of the US dollar would be determined by market forces and no longer by the value of gold.
This move towards neoliberalism meant other world currencies were forced to adopt the same market-based value for their currencies. This has led to constantly changing exchange rates between the various world currencies and consequently, more instability in the financial markets. Furthermore, the decreasing corporate tax rates worldwide have encouraged the establishment of more businesses, especially in countries with the lowest corporate tax rates. Countries with higher corporate tax rates have seen a decline in business establishment and even the closure of some companies due to high corporate taxes.
Read about: What is mercantilism?
Based on the neoliberalism examples we have seen above in both countries and various sectors, we can deduce that neoliberalism has been in existence for decades and it has contributed both positively and negatively to various countries in the world. Common positive neoliberalism examples are free speech and easy access to information due to the globalization of the media space occasioned by the raise of the internet and social media. The creation of more jobs within the free trade zones created by the North American Free Trade Agreement (NAFTA) is also another positive example of neoliberalism.
Examples on the negative side include the riots and protests in Peru concerning rising wealth inequality and concerns over the high cost of university education in the United Kingdom. While the move towards privatization of industries, creation of free trade zones, and globalization have yielded positive effects such as creating more job opportunities, ready access to investors and capital, easier access to a variety of products for consumers as well as more economic growth for a lot of countries; it has also resulted in a higher cost for basic amenities such as education, transportation, and housing.
It has also led to growing wealth inequality as well as increasing levels of unemployment especially due to the outsourcing of jobs to cheaper countries.
Neoliberalism’s characteristics of limited government influence, the establishment of free markets, disinterest in equality, and the free movement of capital, products, services, and people. Hence, the debate continues to burn between supporters of neoliberal policies and its critics as to whether neoliberalism is more harmful than beneficial.Last Updated on November 3, 2023 by Nansel Nanzip Bongdap
Blessing's experience lies in business, finance, literature, and marketing. She enjoys writing or editing in these fields, reflecting her experiences and expertise in all the content that she writes.