What is neoliberalism?

Neoliberalism is an approach to economics and government that favours free markets, privatisation, deregulation, low taxes and free trade. It rose to dominance from the late 1970s. In Britain it is closely tied to the governments of the 1980s, which sold state industries and curbed trade union power.

The term covers ideas developed by economists such as Friedrich Hayek and Milton Friedman. They argued that markets spread information and reward efficiency better than central planning. After the inflation and strikes of the 1970s, these ideas gained ground in Britain and the US. They also believed inflation came mainly from governments printing too much money, and that unions and price controls distorted markets.

In the UK, neoliberal policies included selling state firms such as British Telecom, British Gas and the water companies. Governments also cut top tax rates, deregulated the City in 1986 and sold council homes. Later governments of both main parties kept much of this framework, and Bank of England independence followed in 1997.

Supporters credit these policies with ending stagflation, boosting productivity and widening home and share ownership. Critics blame them for rising inequality, the decline of industrial towns, weak regulation before the 2008 crash and underinvestment in public services. The word is mostly used by critics. Few politicians describe themselves as neoliberal. Since the 2008 crash and the pandemic, governments of all parties have intervened more. Some see this as a turn away from neoliberal ideas.

Where you've seen it

The UK under the Conservatives in the 1980s, the US in the 1980s, New Zealand's reforms in the 1980s, and the global trade deals of the 1990s.

In the UK today

Debates over privatised water, rail and energy, outsourcing of public services, and whether the economy relies too much on finance are often framed as arguments about neoliberalism.