The Ghost of “Neoliberalism”

The Revenant Word

By Roberto Salinas-León.

It wouldn’t be entirely accurate to say that no one knows what the hell neoliberal means…

– Jesse Walker

In April 1997, at the remarkable gathering of the Mont Pélerin Society on the occasion of its 50th anniversary, the great Spanish economist and intellectual Pedro Schwartz shared a telling view on the persisting systematic opposition to the liberal market order. The source, he argued, was threefold: a misunderstanding in popular discourse of open markets as a negative-sum social arrangement; vested special interests lobbying for protection from competition; and a failure on “our” part to communicate the fundamental ideas of a free economy.

This warning remains as relevant today as it was in the 1990s. In Latin America, “reform fatigue”—and the fear of living without what the celebrated Mexican Nobel Laureate Octavio Paz called the “philanthropic ogre”—led to a deliberate misreading of daily life in an open society. A repudiation of the so-called “neoliberal model” ensued, with a growing chorus of voices condemning this so-called ideology as the source of all social ills. Carlos Monsiváis, a prominent Mexican culture critic in the late 1990s, would notoriously lash out with rhetorical passion: “…neoliberalism, one of the most odious and oppressive realities of the planet.”

Unfortunately, most advocates of economic freedom remained relatively silent, oblivious to the semantic trap laid within popular discourse. As a result, a vast amount of drivel emerged to reinforce the onslaught against “neoliberalism”—from the predictable likes of Naomi Klein and Joe Stiglitz (who knows he knows better) to otherwise powerful thinkers such as Francis Fukuyama. Recently, Phil Magness wrote a detailed and brilliant etymology of the word, which analyzes a host of claims from all corners of the ideological continuum and rightly infers that the term has become a “catch-all word for almost every economic complaint, while lacking any semblance of a coherent definition.”

Indeed, most bog-standard critiques of “neoliberalism” share one salient feature: the characterization of a strawman, and the consequent denunciation that humanity should oppose or abolish it. No reasonable definition is offered, nor are we given an impartial scrutiny of the elements which allegedly embody the “neoliberal canon.” At some point within these jeremiads, the author will inevitably claim that the “neoliberal” agenda of reform is equivalent to the “Washington consensus”—a term coined by John Williamson in the 1990s to describe a framework of mainstream policy prescriptions for emerging markets, which includes items like price stabilization, fiscal consolidation (read: tax hike enforcement), and trade liberalization; and thereafter gratuitously associate this set of ideas with assumed usual suspects such as Milton Friedman, Gary Becker, F.A. Hayek, Ludwig von Mises, or Robert Nozick; and, of course, politicians like Augusto Pinochet, Carlos Salinas de Gortari, Carlos Menem, Margaret Thatcher, and Ronald Reagan. No minimally careful analysis is offered to explain the often stark differences between these figures. All are simply bunched up in a single dubious piñata and thereafter shattered by so-called champions of social justice.

There are countless examples of these crimes against logic. My personal favorite is from Fernando Escalante, an otherwise careful political theorist and commentator. In his essay Historia Mínima del Neo-Liberalismo, Escalante embarks on an angry tirade against the “social costs” of market-oriented reforms and currency crises, citing the peso collapse in 1994 and the Great Recession of 2008, before offering a sobering conclusion: “It is time to recognize that the experiment to create a society of markets was a catastrophic failure.” As Escalante writes:

There is no discussion on the matter. The results are obvious: a dramatic increase in inequality; marked regional imbalances all over the globe, labor insecurity, destruction of the environment, deterioration of public services, erosion of wages and purchasing power, higher unemployment, and a growth rate far below that of previous decades.¹

Perhaps we could add that neoliberalism is responsible for rampant disease, erratic lunar eclipses, and erectile dysfunction. A story has to sell, and across Latin America, the idea that “neoliberalism” is the root of all evil sells a lot. Across the region, self-styled “progressive” politicians, including Andrés Manuel López Obrador (Mexico), Rafael Correa (Ecuador), and Cristina Kirschner (Argentina), were quick to follow suit, blaming all—yes, all!—societal ills on the “long neoliberal nightmares” occasioned by preceding administrations.

The “debate,” if there is one, is rigged by design: the term “neoliberalism” is devoid of meaning, an ad hoc construct that trivializes important issues via slander and pure intellectual default. In logic, this is a classic example of begging the question. No empirical evidence is offered. No detailed analysis is presented of how markets lead, say, to income inequality. The opposition to neoliberalism, therefore, becomes unfalsifiable. If, by definitional fiat, neoliberalism is ugly, brutish, nasty, and short, then the conclusion follows immediately.

No argument, dialogue, or constructive discourse is possible when faced with such nonsense. Nor, I believe, is it even worthwhile engaging in a conversation on the matter. The issue becomes a boring semantic debate. Paco Taibo II, the current head of the Fondo de Cultura Económica in Mexico, once celebrated how “delicious” it felt “to be freed from the cold neoliberal logic of prices.” This is economic illiteracy in the extreme, a reductio ad absurdum in itself. Such trendy rhetoric violates the most elementary principles of logic, begging the question from the very outset by not devoting any attention to the content of liberal ideas on the role of prices, the consequences of rent controls, or the unintended consequences of minimum wage laws. Maybe logic too is, alas, “neoliberal.”

This, in my view, is what attempts to rescue visibility of the term “neoliberal” miss. It will depend on, as Phil Magness suggests, supplying a coherent definition. But this renders the issue a purely semantic debate. Moreover, the opportunity cost of engaging in a dispute on the meaning of “neoliberalism” is simply too high in the face of such wanton abuses of the term as a derogatory label. The legendary Manuel Ayau, founder of Universidad Francisco Marroquín in Guatemala, had a witty way of disarming his opponents when faced with predictable accusations that he was a proponent of neoliberalism. He would counter by saying something akin to: “Look, I am simply too old to be called ‘neo’; if you want to accuse me of something better, I suggest you call me a ‘paleoliberal.’” This humorous tactic was very astute, as it changed the terms of debate to what “paleoliberalism” actually means—which, of course, would lead to Ayau’s discussion of the ideas of liberty: that is, liberalism in the classical sense. To Ayau and his followers (including myself), there is nothing “loud or proud” in seeking to vindicate the term. It is an issue of principles, not of labels.

Robert Lawson and Phil Magness have recently published a wonderful compendium of self-serving crusades against neoliberalism entitled Neoliberal Abstracts. In this collection, the authors present a series of allegedly scholarly works (ab)using the term “neoliberalism” as proof that some version of the statist ideological corpus is correct. It’s reminiscent of a superb pamphlet published in the late 1990s by Alvaro Vargas Llosa, Plinio Apuleyo Mendoza, and Carlos Alberto Montaner, Manual del Perfecto Idiota Latinoamericano, in which the authors satirize ludicrous claims about dependency and anti-gringo martyrdom across the Latin American political spectrum.

We arguably need more works of this kind to confirm a moratorium on the term “neoliberalism.” Do the angry voices opposing “neoliberalism,” whatever that means, ever contemplate minimally viable alternatives? The ideological fashion is actually lazy, relying on a wholly distorted image of the market as a manifestation of an order that merely serves the interests of a powerful few, with no regard for what it is, what it stands for, still less to engage a civil conversation on the aims and claims of an open society. The nonsense of this catch-all term has led to a massive amount of spilled ink and wasted effort.

The honest intellectual concern is whether Latin America’s emerging economies should move in the direction of an open society—a free enterprise system based on well-defined property rights, sound currencies, the rule of law, and an institutional system that fosters productive uses of limited resources. These issues are obviously open to debate and discussion. But the use and abuse of the “neoliberal” slander simply closes the road of inquiry under the guise of serious scholarship, and claims victory.

Montesquieu famously stated that “when the innocence of the citizens is not secure, neither is liberty.” No wonder Magness himself concludes: “[T]oday’s attacks on neoliberalism obscure the vacuity of their term of choice by making it a universal scapegoat for everything about the world they happen to dislike.” Notwithstanding heroic attempts to rescue the notion, all classical liberals, all defenders of liberty, must unite in committing “neoliberalism” to the conceptual dustbin, and denounce the term as an example of foolishness and intellectual hypocrisy.

Roberto Salinas-León (@rsalinasleon) is Director of International Affairs at the Universidad de la Libertad in Mexico City, and Senior Fellow for Latin America in Atlas Network.

1. p. 313, translation mine.