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THE GREAT NEOLIBERAL MISUNDERSTANDING
Neoliberalism is a political swearword today, but its inventor intended it to mean a ‘Third Way’ ideology much like that of the Labor Government, says a new report released on Thursday.
In the report, Neoliberalism: The genesis of a political swearword, by Dr Oliver Hartwich of the Centre for Independent Studies, tracks the historical roots of neoliberalism and discovers that “neoliberal” could describe the philosophy of Prime Minister Kevin Rudd.
Alexander Rüstow, a German sociologist and economist, coined the term neoliberal in 1932. Today’s critics of ‘neoliberalism’ are probably unaware that one of the defining features of early neoliberalism was to put a check on unfettered markets and market power.
Opponents of liberal reforms started using ‘neoliberalism’ in the 1990s as a tool of political rhetoric, unaware of the real meaning of the word. From religious leaders and globalisation protesters to trade unionists and academics, an alliance has formed to ‘fight’ neoliberalism and unmask it as an inhuman, anti-social, and potentially misanthropic ideology.
But the original neoliberalism of Rüstow was about a strong state setting the rules for the economy. He was committed to greater social equality and the use of high inheritance taxes to finance income redistribution and free education.
In his book The Failure of Economic Liberalism, Rüstow says ‘We [the neoliberals] agree with Marxists and socialists in the conviction that capitalism is untenable and needs to be overcome.’
The founder of neoliberalism saw his philosophy as a middle way between laissez faire and socialism, a “Third Way”.
Ironically, it is the very same logic that makes today’s critics of neoliberalism claim that one no longer had to choose between Hayek and Brezhnev, as Prime Minister Kevin Rudd declared last year.
Criticism of laissez faire markets, plus the recognition of the power of markets combined with scepticism of state power, is the core of the neoliberal project as it was once formulated. This would almost make the Prime Minister a neoliberal in the original meaning of the word. However, Rudd’s policies suggest that he is less aware of the limits of government than he is aware of the limits of markets.
The embargoed report is available at www.cis.org.au/temp/op114_neoliberalism.pdf
Dr Oliver Hartwich is a research fellow at the Centre for Independent Studies.
He is available for comment.
