Neo/liberal?

The Etymology of a Catch-All Term

If you follow economic policy debates, you’ve probably heard a stream of attacks on something called “neoliberalism.” A purported ideology, neoliberalism is often said to have guided American and Western economic policy since shortly after the end of World War II. It’s also blamed for a long list of economic grievances, ranging from real events such as the 2008 Financial Crisis to exaggerated claims about the “hollowing out” of American manufacturing. Just how neoliberalism gave rise to these episodes seldom finds any coherent elaboration among users of the term. In fact, despite allegedly running the global economy for some 80 years, the ideology has almost no adherents who would willingly describe themselves as “neoliberals.” Instead, it has become a catch-all word for almost every economic complaint, while lacking any semblance of a coherent definition.

Nobody seems to know what neoliberalism even means, except for blanket assertions that it’s blameworthy and bad. That hasn’t stopped academia from constructing an entire field of “neoliberalism studies,” consisting of tens of thousands of articles and books about the subject. Robert Lawson and I recently surveyed this literature in an attempt to understand the meaning of the concept. The results appear in our new book Neoliberal Abstracts, which presents a representative collection of 100 published and ostensibly scholarly articles about neoliberalism.

The contents run the gamut from sweeping Marxist treatises to niche autoethnographies on the personal hobbies of their academic authors, all of which are allegedly beleaguered by the West’s hegemonic neoliberal ethos. A nonzero number of these “studies” are downright incoherent, not to mention crazy. As a small sample, we found an article blaming neoliberalism for an obesity epidemic among pet cats, a study contending that neoliberalism corrupted the fictional economy of the World of Warcraft video game platform, and a “rhetorical ecofeminist analysis” of neoliberalism’s alleged targeting of the vegetarian movement through its “Meatless Monday” dietary campaign. We even came across a published, peer-reviewed article blaming neoliberal standards of hygiene for stigmatizing socialist activists who suffer from body odor conditions. What we did not find: anything even remotely resembling a coherent definition of the term neoliberalism.

This is no accident, because the term’s use is almost entirely the product of pejorative labeling, intended to discredit and dismiss free-market economic thought without having to engage its arguments; even its basic uses lack consistency. Most of the time, neoliberal refers to Austrian economists such as Friedrich Hayek and Ludwig von Mises, as well as politicians such as Margaret Thatcher and Ronald Reagan who, allegedly, translated their ideas into a broader policy paradigm. Other times, it’s used to describe the center-left governing philosophy of Bill Clinton and Tony Blair in the 1990s, which melded the welfare state with technocratic searches for government “efficiency” and nods to free-market policies such as the removal of international trade barriers. One narrative in 2016 even credited the first election of Donald Trump to an alleged neoliberal capture of the Democratic Party. Naomi Klein advanced the headscratching claim that a neoliberal worldview was “fully embodied by Hillary Clinton and her machine.” Meanwhile, other left-leaning academics routinely claim that Trump is also a neoliberal—just with more nationalist language. The result is an all-encompassing word for disliked figures spanning a broad swath of the political spectrum, even though many of these figures hold diametrically opposite beliefs and embrace competing left- and right-wing visions of economic intervention.

Part of the confusion comes from the hostile nature of the term’s origins. According to the most common telling, neoliberalism originated at a 1938 academic gathering in Paris around the works of author Walter Lippmann. Participants in the conference included Mises, Hayek, and several other European classical liberal academics who would go on to found the Mont Pelerin Society in 1947. Transcripts from the conference indicate that one of the participants, German economist Alexander Rüstow, suggested the term neoliberal as a moniker for the group so as to signify their position as a successor to the classical liberalism of the 19th century. But the same conference records reveal that most of the other attendees rejected the designation. After World War II, Rüstow’s followers picked a new label for themselves, Ordoliberals. The neoliberal moniker never even took hold in the Hayek–Mises faction, and, in a 1980s interview, Hayek explicitly disavowed the term.¹

But even more revealing, this 1938 origin story is a complete myth: a product of an academic misreading of French philosopher Michel Foucault’s transcribed lectures about the colloquium from a half-century later. The actual origin of the term neoliberal goes back to the 1920s, when a group of German Marxist academics adopted it as a pejorative label for the Marginalist School in economics.

In 1871, economists Carl Menger in Austria and William Stanley Jevons in Britain came up with almost-simultaneous solutions to the problem of value. For centuries, the question of how a good obtains its value presented a conundrum to economic thinkers. Basic intuition held that a key part of an item’s value comes from the labor performed to improve raw materials or parts into a usable good. This line of reasoning, however, breaks down in certain situations. Why do two bottles of wine, produced using the same labor processes, albeit in different regions of the world, often vary greatly in price? Why is a common bottle of water cheap and abundant in the city, yet more valuable than even diamonds in the middle of the desert? As economists wrestled with these and other paradoxical situations, the Marginalists—Menger, Jevons, and later Leon Walras—came up with a novel solution: value arises from a good’s utility to the parties of an exchange at the margin where it occurs. In doing so, it reflects their subjective preferences and the particular circumstances of the transaction.

Unknown at the time to either Menger or Jevons, their solution to the theory of value presented a stumbling block for the economic system of an obscure, unemployed German theoretician living in political exile. Some four years prior, Karl Marx published the first volume of his treatise Das Kapital. Marx’s framework started from the older labor theory of value and used it to construct an elaborate justification for revolutionary socialism.

In Marx’s system, laborers create the value of a product only to have it snatched away from them by the owners of the factory that employs them. These “capitalists” sell their goods at a higher price, retain a portion of the sale for themselves, and only pay the laborers a fraction of the value they allegedly created. Marx designated the gap between the two “surplus value.” Since the workers had been deprived of their “surplus value” by the capitalists, he theorized, they would eventually rise up against this exploitative system and seize the means of production by socialist revolution.

The Marginalist solution to the problem of value upended the Marxist system in its infancy. If value derives from the individual subjective preferences of parties to an exchange, exercised on the margins, then the labor theory of value is in error. And if the labor theory of value is wrong, the entire Marxist edifice crumbles. There is no “surplus value” to expropriate from the workers, and no mechanism to trigger the revolution.

Marx’s acolytes saw these events quite differently. From their perspective, Marx had succeeded in exposing the internal contradictions of “bourgeois” political economy. Marginalism was not a solution to the theory of value but rather a dying gasp of capitalism—an attempt to resuscitate the capitalist system from the devastating and “scientific” critique offered in Das Kapital, and to rebuild an exploitative economic framework after Marx had demolished the older liberal order by “discovering” surplus value.

The self-perceptions of the Marxists chafe with a well-documented history of economic thought. The Marginalists did not even stumble upon Marx’s writings until 1884, when Jevons’s student Philip Wicksteed published a short rebuttal. By the turn of the century, the Marginalists had conclusively won the academic debate. No less than John Maynard Keynes would describe Das Kapital as “an obsolete textbook which I know to be not only scientifically erroneous but without interest or application for the modern world.”²

Yet geopolitical events breathed new life into Marxist economic theory in 1917, after a fanatical band of Marx’s followers under Vladimir Lenin exploited a moment of instability to stage a violent coup and seize control of the Russian government. Marxists across Europe would interpret the Soviet Union’s founding as a vindication of their doctrines. The term neoliberalism, or Neu-/Neoliberalismus in German, emerged in the wake of these events, a pejorative label for the Marginalist school.

One of the earliest uses of the label appeared in a 1922 book by Marxist philosopher Max Adler. Responding to Mises’s 1919 book Nation, State, and Economy, Adler labeled the Marginalist group at the University of Vienna “the newer and most ardent advocates of Neoliberalism.” The label caught on quickly among German Marxist academics. In 1924, Marxist historian Alfred Meusel published a broadside against “Der Neu-liberalismus” of Mises and the other Viennese Austrian thinkers. To Meusel, this “neoliberalism” aimed “to reassert… the principles of ‘free competition,’ of the ‘free play of economic forces’” against the allegedly inevitable socialist upheaval that Marx had predicted.

As with its uses today, this original version of neoliberalism amounted to little more than a dismissive and derogatory label from the far left. It gained wider adoption over the next decade in German-language academic texts. Although Marxists like Adler and Meusel led the initial push, the label picked up an unexpected boost in 1926. That year, economist Othmar Spann released a revised edition of his popular German-language college textbook on the schools of economic thought, Die Haupttheorien der Volkswirtschaftslehre. This edition contained a new chapter on the “Neoliberal Trend” in the economics discipline, which he associated with Marginalism.

In addition to popularizing the term with a generation of German college students, Spann’s textbook also marked another turn in its use. Unlike its Marxist originators, Spann hailed from the far right of the political spectrum. Like Mises, he taught at the University of Vienna. The two men were bitter and even legendary enemies on the faculty—Mises, the liberal individualist, and Spann, an avowed anti-liberal who advocated the creation of a centralized pan-Germanic Völkisch state. Spann called his philosophical system “universalism,” although it is generally categorized today as a proto-fascist or proto-Nazi ideology. His ideas provided a formative influence on the concept of a collective German Reich, and Adolf Hitler is known to have personally attended his guest lectures at the University of Munich in the 1920s. Indeed, Spann would go on to join the Nazi Party in 1933 (although he fell out of favor with the Nazis after the Austrian Anschluss in 1938 and was briefly imprisoned for offering a competitor version of official Nazi doctrine).

Although an anti-Marxist himself, Spann found common ground with his Marxist contemporaries in the term neoliberalism. The two factions despised the individualistic orientation of Marginalism and classical liberalism, albeit from different extremes on the collectivist far left and collectivist far right. The pejorative term thereby became a microcosm of an authoritarian red–brown coalition, united only by common antipathy of the classical liberal and individualist center.

Tellingly, both extremes identified Mises as the hated leader of this “neoliberal” movement. It is little wonder then that Mises and his followers rejected the term in 1938 when Rüstow proposed it to the Paris gathering.

After World War II, the term neoliberalism went into a prolonged state of dormancy. The interwar German-language academic debates that coined the concept were all but forgotten. The term picked up a few sporadic references in the 1950s in English and French texts, although with greater definitional confusion. American economist Raymond Moley, for example, attempted to coin an independent version of the term in the early 1950s as a label for the New Deal liberalism of Franklin Delano Roosevelt, although it never really caught on. In 1951, Milton Friedman wrote a short article about a “doctrine sometimes called neo-liberalism,” which he defined in line with the Rüstow version from 1938: a balance between limits on “the power of the state to interfere in the detailed activities of individuals” and recognition “that there are important positive functions that must be performed by the state.” Friedman was a prolific writer about economics over the next half-century, but he never again returned to the term in any systematic way, and the article was largely forgotten.

These circumstances began to change in the 1980s and 1990s, largely driven by the discovery and transcription of Foucault’s lectures. Subsequent authors mistook his descriptions of the 1938 conference as an origin story, and projected it forward a decade onto the founding of the Mont Pelerin Society in 1947.

Beginning in the 1990s, left-leaning scholars revived its use in an almost identical fashion as their 1920s forebears. Neoliberalism became a pejorative descriptor for the successors of Marginalism, and for free-market economic thought in general. Though superficial, shallow, and lacking in a definition beyond that, its use became a ubiquitous grievance of the academic left.

As with the 1920s iteration, Marxists took the lead in reviving the term. Henry Giroux’s The Terror of Neoliberalism (2004) and David Harvey’s A Brief History of Neoliberalism (2005) reintroduced its use to broader audiences, albeit without any apparent awareness of the interwar origins. Both simply adopted it as a residual term of derogation for Hayek and Mises, which they “updated” to encompass the Reagan–Thatcher deregulatory initiatives of the 1980s as well.

In the 2010s, this literature exploded with a flurry of adversarial books that purported to fill in the historical gap by projecting the term backwards. Authors such as Philip Mirowski, Quinn Slobodian, and Wendy Brown published anachronistic accounts that depict neoliberalism as a conscious and continually-operating ideology, extending from the 1938 conference through the Mont Pelerin Society and into the present day. Many of these works drift deeply into conspiracism and self-contradiction. Slobodian, for example, published a book in 2017 that blamed Mises, Hayek, and their alleged neoliberalism for the trade-liberalizing “globalism” of the postwar GATT and World Trade Organization, even though these figures had little to do with either institution. In 2025, Slobodian returned with a second book that blamed Mises, Hayek, and their alleged neoliberalism for the rise of the populist far right, culminating in the economic nationalism of Donald Trump. It’s an oddly fluid doctrine—somehow, neoliberalism is to blame for both free trade and tariff protectionism at the same time.

While most versions of the neoliberal label still come from the academic left today, the term has come back into favor within a certain, curious strand of the right. Conservative writers such as Patrick Deneen, Adrian Vermeule, Gladden Pappin, and Sohrab Ahmari pepper their works with complaints about “neoliberalism,” which they blame for a long list of economic and cultural grievances. In doing so, they tapped a growing discontent with the economic wing of the American right, particularly among religious and social conservatives. Rebranding themselves as “Postliberals” in the early 2020s, these thinkers espouse an ultra-traditional and collectivist form of conservatism that explicitly aims to purge free-market thought from the American right on the grounds that it allegedly subverts traditional values and morality with economic consumerism.

There’s not much in the way of sophistication to Postliberal economic theory beyond a visceral distaste for modernity. They aim to resurrect long-discredited economic doctrines such as 18th- and 19th-century tariff protectionism, and map it onto the Trump administration’s own tariff and industrial policy agendas. But that fact itself has given the Postliberals an outsized presence in the political arena. J.D. Vance, for example, considers himself a follower, and has joined in the rhetoric of blaming America’s economic faults on the neoliberal bogeyman.

In an April 2020 essay, Vance bemoaned an alleged donor class on the right who had “gotten rich” off of “neoliberalism and globalization.” Adopting the same conspiracist style that dominates left-wing deployment of the term, he attacked the Covid-era anti-lockdown movement by calling it a political distraction, a sideshow to divert attention from our economic precarity, benefiting those who wanted to keep the “globalization gravy train” flowing. Vance concluded the piece with a call to “thrust more daggers into [the] heart” of the “neoliberal consensus that has dominated the American Right.”

Despite a few passing nods to conservative social issues, Vance’s message was indistinguishable from the incoherent anticapitalist screeds of the academic left that we surveyed in Neoliberal Abstracts. It is difficult not to see history rhyming with itself in this horseshoe-like convergence, a return to the origins of the term as part of a joint assault on economic individualism from the illiberal left and right. And just like its 1920s precursor, today’s attacks on neoliberalism obscure the vacuity of their term of choice by making it a universal scapegoat for everything about the world that they happen to dislike.

Phillip W. Magness is a Senior Fellow at the Independent Institute and the David J. Theroux Chair in Political Economy. He has served as Senior Research Fellow at the American Institute for Economic Research, and as Academic Program Director at the Institute for Humane Studies and Adjunct Professor of Public Policy in the School of Public Policy and Government at George Mason University. He received his Ph.D. from George Mason University’s School of Public Policy. His new book is The 1619 Project Myth.

1. Lucia Santa Cruz, “Interview with Friedrich von Hayek,” El Mercurio (Santiago, Chile), April 18, 1981.

2. John Maynard Keynes, Essays in Persuasion (London: Macmillan, 1931), 258.