Why Some Are Saying Neoliberalism Has Collapsed

Why Some Are Saying Neoliberalism Has Collapsed

Neoliberalism in public policy has been defined by deregulation, liberalization, privatization, and austerity, but it seems neoliberalism has now collapsed. President Barack Obama accompanied by Economic Recovery Advisory Board Chair Paul Volcker, left, speak in the East Room of the White House in Washington, Friday, Feb. 6, 2009. Image: AP Photo/Ron Edmonds

For more than 40 years, the neoliberal era has been defined in public policy by deregulation, liberalization, privatization, and austerity. Some now argue that the last decade is evidence that the neoliberal consensus has collapsed.

Neoliberal policies created gaping inequality, unleashing the economically powerful to reshape politics, markets, and society to serve their own interests. This, in turn, sapped society of community and solidarity.

For those in the millennial generation, the Great Recession and the wars in Iraq and Afghanistan started a process of reflection on what the neoliberal era had delivered. Some argue that neoliberalism had led to the complete wreckage of economic, social and political life.

In the neoliberal era, the racial wealth gap did not fare much better.

In 1979, the average hourly wage for a Black man in the U.S. was 22 percent lower than that of a white man, and by 2015, the gap had grown to 31 percent.

For Black women, the wage gap was 6 percent in 1979 and by 2015 it was at 19 percent.

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The neoliberal embrace of individualism and opposition to “the collective society,” as Margaret Thatcher put it, also had perverse consequences for social and political life.

But neoliberalism rejects both the medieval approach of having fixed social classes based on wealth and power and the modern approach of having a single, shared civic identity based on participation in a democratic community.

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Defenders of neoliberalism frequently point out that although decades of wage stagnation and wealth concentration have led to ballooning inequality in developed countries, the same time period has seen a dramatic increase in prosperity on a global scale.

More than a billion people, they argue, have been lifted out of extreme poverty owing to technological advances, investments, and prosperity that were made possible by the spread of free markets.