Neoliberal Economics and Its Influence

Better known in the United States as Libertarianism, neoliberal dogma began as simplistic assumptions in old quantitative economic models, before computers; later economists were not as constrained. Moneyed people glommed onto those assumptions that articulated their inclinations, glossing them with a sheen of logic. Ceaselessly promoted, these assumptions became beliefs held by some as deeply as a religion. They fit well with reference frames of endless expansion on the old American frontier, with which Americans identify easily. Here’s a quick list for starters:

Macro beliefs or assumptions:

  1. Everyone can rise to live in luxury (the American Dream). If they don’t, it’s their fault.
  2. Private enterprise is always superior to public enterprise (socialism), which is abhorrent.
  3. Individuals always act in their own best interest (perfect information with perfect logic). Markets convert every individual’s interests into everyone’s best common interest.
  4. Competitive markets are always efficient. Competing to win market share makes the best use of all resources.
  5. Trickle down: rising wealth and incomes for the rich eventually trickle down to everyone. In that way the rising tide of economic growth lifts all boats — and resolves most social problems too.
  6. Taxes support common interests. However, common interests are few because markets satisfy most of them. Therefore, keep government small and taxes low.
  7. The only purpose of a business is monetary profit. Its social mission is satisfying customers — and whatever else maximizes profit.
  8. Economic growth is unending. Gaia exists to supply economic growth. Earth’s capacity to be exploited is unlimited. Therefore, it’s impossible for the system to wreck Gaia.
  9. Freedom is mostly freedom of choice. Freedom of choice in markets, including job markets. Freedom of choice in education. Freedom of choice in the “marketplace of ideas.”
  10. Everything can be monetized. Ergo, most decisions can be reduced to cost-benefit analyses.

Micro-level beliefs as seen by managers:

  1. A company must make a profit, or at least, not go bankrupt. (Even non-profit institutions must live by budgets and avoid running out of cash.)
  1. Ergo, control an organization financially, with budgets, accounting variances, and the like. When pinched, financial guidance trumps all other considerations. This forces top-down control, the bane of all practices that rely on process improvement though employee involvement.
  1. Financial guidance attempts to maximize revenue and minimize costs.
  1. And a company should grow (if you’re not growing; you’re dying).
  2. Therefore, invest in growth, new stuff; minimize cost of existing operations (cash cows). [Leads to deferred maintenance, etc.]
  3. “Externalize” any costs you can; just so they are not recorded on your books. Ignore costs to the environment, especially if they            have not been monetized.
  4. Short-term bias: As a consequence of the above points, making more money faster is how to “win,” and it is built into financial logic used every day. Even compound interest is a growth formula that discourages concern for long-term consequences.


This list can’t be complete. In practice few managers adhere strictly to this doctrine, and many businesses everywhere testify that all the business world is not addicted to neoliberalism, but it has a strong systemic influence.