Neoliberalism

Type of economy whose central characteristic is the non-intereference of the state. In Britain, this laissez-faire type of economy is mostly accredited to Margaret Thatcher, who introduced many neoliberal policies during her time in office from 1979 to 1990.

The Neoliberal Dogma

Although there is no unanimous and clear-cut definition of the concept of neoliberalism, David Harvey's following definition of it is a rather neutral one:

Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. (Harvey, qtd. in Barnett 2)

This way of looking at it collides with how scholars from the political left would define the economic order in question. For Noam Chomsky, the guidelines of the neoliberal order are the liberalization of commerce and finances, the fighting of inflation (i.e. “macroeconomic stability”), privatisation and markets regulating the prices (Chomsky 22). Naomi Klein’s understanding of the main guidelines comes very close to that of Chomsky. At the very centre of the doctrine, she sees the recurring pattern of deregulation, privatisation and cuts to social spending – together constituting the holy trinity of the free-market ideology (Klein 29). The most elemental problem of this ideology which may sound reasonable in theory is that when put into practice, it tends to have a beneficial effect only for a rather small elite, mostly in the form of a few multinational corporations (ibid).

Neoliberalism in the UK

What Margaret Thatcher wanted to implement in Britain is a total turn to a laissez-faire economy (Sakowsky 109). As can be seen in her sympathies with the type of economy designed by Friedrich von Hayek, Thatcher had in mind a very radical transformation of the British economy (Klein 185).

At the beginning of Thatcher’s economic restructuring of Britain, she saw herself confronted with the pressing task of fighting the trade unions which she famously called the “enemy within” in the context of the miners’ strike (Milne 23). She rejected the politics of consensus as practiced in the post-war era because she was convinced that in a free market economy there was no place for such organized and powerful advocacy groups as the trade unions. She wanted to get rid of this form of tripartism (i.e. the trade unions and the two political parties) altogether (cp. Sakowsky 109). She therefore deprived the trade unions of some of their vital rights in order to get closer to her vision of an economy driven by market forces alone and not by the interests of unionists (ibid. 111). A drastic deregulation of the economy was thus at the very centre of her party's economic policies, which aimed at healing such British “diseases” as inefficient businesses (e.g. too much personnel) and expensive subsidies for old and technologically obsolete industries (ibid.).

Another central element of her economic policies was the enforcement of privatisations, not least so of key industries such as telecommunications and utilities (ibid. 195). By then, the nationalised industries accounted for more than 10% of the GDP and about 1.5 million people were in employment there (ibid.). Behind the idea of privatisation is the notion that private initiatives are more innovative and efficient than public ones (ibid. 196-197).

Thatcher’s appproach to privatisation was a very gradualist one and it must be added here that it was a process that had been started under Callaghan’s government, who, under IMF pressure, was forced to sell the first shares of British Petroleum (Derbyshire & Derbyshire 232). The gradualist character of the government’s privatisation programme can be seen in the fact that it started in 1979, but was not completed by 1992, when last shares of BP and British Steel were privatised (ibid. 233). As a result of this programme, state industries had come to add no more than 6.5% to the GDP, down from more than 10% (cp. ibid.).

Works Cited

• Barnett, Clive. The Handbook of Social Geography, edited by Susan Smith, Sallie Marston, Rachel Pain, and John Paul Jones III. London and New York: Sage.
• Chomsky, Noam. Profit Over People. War Against People. München: Piper, 2006.
• Derbyshire, K. Denis and Jan Derbyshire. Politics in Britain. From Callaghan to Thatcher. Edinburgh: Chambers, 1990.
• Klein, Naomi. Die Schock-Strategie. Der Aufstieg des Katastrophen-Kapitalismus. Trans. Hartmut Schickert, Michael Bischoff and Karl Heinz Siber. Frankfurt am Main: S. Fischer, 2007.
• Milne, Seumas. The Enemy Within: The Secret War Against the Miners. 3rd ed. London: Verso, 2004.
• Sakowsky, Dagmar. Die Wirtschaftspolitik der Regierung Thatcher. Göttingen: Ernst Oberdieck, 1992.