A Brief History

A BRIEF HISTORY OF NEOLIBERALISM

If there is one word that describes the economic ideology of today, it is the word “neoliberal”. We are talking about economics here not about the liberal political party.

The prefix neo means new, and the word liberal means free of controls. The term neo-liberal implies that there was an original economic liberalism to which our present economic ideology has returned.

For the original economic liberalism we go back to the 1800s and early 1900s. This was a time of limited financial regulations. It was a time of exploitation, monopolies and the robber barons. We think of ruthless men like J.P. Morgan, Carnegie, Rockefeller and Vanderbilt, with their great empires. We also think of those who toiled for them such as the Appalachian coal-miners, and of England in the days of Dickens.

The first liberal economic time had small, weak governments that didn’t intervene in the private sector, although in the beginning corporations could have their charters removed. There were very limited social services. There were low taxes, no income taxes until the First World War, great inequality, much poverty, economic bubbles, recessions, market speculation, large unemployment and low wages. It was everyone for themselves and the devil take the hindmost.

Then, in the 1930s, the Great Depression came, followed by the Roosevelt New Deal which killed economic liberalism.

It was replaced by an economy based on the economic theory of John Maynard Keynes that government should advance the common good. The banks, corporations and markets were regulated, full employment was striven for, taxes were used to create equality and bring about protective social programs such as pensions and public health care.

Most of us look at the 50s, 60s and 70s as a golden age when wages were good, and you could work your way through university without building up a debt load. But the elite weren’t happy. They wanted more.

In the early 1970s a trickle down economic theory called neo-liberalism was created by Milton Friedman of the Chicago School of Economics. Lewis Powell began a campaign to rally the business community of the U.S. to bring back their golden age of economic liberalism. The private sector organized, lobbied and strove to set the clock back to the pre-Depression days. Pinochet of Chile was the first to make the neoliberal ideology that of his government, followed by Margaret Thatcher and Ronald Reagan.

With the Harris common-sense-revolution, and the Mulroney, Chretien and Harper governments, we have seen the economic neoliberal ideology at work. Our Canada is a very different country than it was 30 years ago. With the turning of Kevin O’Leary into a celebrity by our own CBC, and the portrayal of financial CEOs as the gods of Olympus in TV’s Dragons’ Den, Canada is truly a neoliberal country.

For 30 years there has been a great transfer of money and power from the 99 percent to the 1 percent, from citizens to corporations, banks, and their CEOs. Financial regulations have been abolished. Manufacturing has been outsourced. Reckless market speculation has flourished. Ordinary citizens have been cheated. Governments have privatized publicly owned enterprises, and favoured big business through “free trade” agreements and corporate tax cuts.  As a result of this economic neoliberalism we have radical inequality, food banks, students and households with huge debts, high unemployment and underemployment, low wages, decreasing services, a greater reliance on charities, the ongoing recession of 2008, financial insecurity, a declining market, the loss of pensions, Europe’s economic crisis, government apathy towards climate change, and a planned decline in democracy.