Defining Neoliberalism: Concepts at Work

My recent post defining neoliberalism has generated a lot of nice commentary, and also some criticism. Much of the criticism has been unproductive, often coming in one two general forms.

  1. “I don’t want to define neoliberalism, I want to see how it’s used.”
  2. “I don’t like your definition, I want to use mine/Unger’s/Harvey’s.”

These are tied for first place as my least favorite objection to a definition. The first is dissatisfying because it undermines our ability to talk meaningfully about the content of neoliberalism. I simply do not know how to say true things about concepts without definitions. Let’s compare an undefined concept of neoliberalism to a Mr. Snuffleupagus:

By the late 1970s, the story lines had the adult characters becoming increasingly frustrated with Big Bird using Snuffleupagus as a scapegoat whenever something went wrong while they were out of the room.

Mr. Snuffleupagus become much more convincing when he was revealed for what he was: a wooly mammoth, without tusks, with a snuffle. The adults could interact with him, and blame him for things that were actually his fault.

The second objection above is at least more substantive, but it fails to provide an argument about why one definition should be better than others. In defending alternative definitions, the trick is to make that argument. OK fine, let’s say that you want to define neoliberalism as not just an ideology, but also a policy: what does that get you? What does it clarify? What might it obscure? My definition was buttressed by a description of the utility of my approach, and critics haven’t said much about these.

So let me further defend my own definition of neoliberalism as “an ideology that rests on the assumption that individualized, arms-length market exchange can serve as a metaphor for all forms of human interaction” by explaining what this definition clarifies: the relationship between ideology and material interests in authoritarian capitalist states. This is, I submit, a unique benefit of my definition over others that conflate neoliberal ideas with the policies that they might recommend. My examples are the Berkeley Mafia in Soeharto’s Indonesia and the Chicago Boys in Pinochet’s Chile.

The Berkeley Mafia

The Berkeley Mafia is the name given to a team of Indonesian technocrats trained in economics at Berkeley in the early 1960s. After returning to Indonesia, they rose to positions of prominence under Soeharto’s New Order regime, where they were responsible for macroeconomic management and economic planning in various sectors. They were responsible for some of the most important adjustment and reform measures taken in the early New Order, containing hyperinflation and rationalizing some of the Sukarno-era food and pricing policies.

Left to right: Widjojo Nitisastro, Ali Wardhana, Sadli, Subroto, Emil Salim. Photo credit: http://www.indonesia-digest.net/3302suharto.htm


So here we have highly trained economists who implemented capitalist reforms under the protection of a brutal dictator. But these are not neoliberals: even long-time critics of the New Order political economy and of neoliberalism like Richard Robison are careful not to label the Berkeley Mafia as neoliberals. Moreover, the policies that they oversaw also cannot be seen as neoliberal, but have to be understood as reflecting tensions between the private interests of powerful actors in the New Order political economy and generally pro-market orientation of the technocrats (see e.g. my recent discussion of financial liberalization in the late 1980s). However, this pro-market orientation did not extend far outside of the domain of economic enterprise and natural resource management, and economic planning was always considered both necessary and beneficial for development purposes.

Defining neoliberalism as an ideology about the market and human interaction rather than the policy choices made by authoritarian capitalists helps to clarify just what the Berkeley Mafia was all about. Also, it allows us to see that to the extent that neoliberalism (as I’ve defined it) has taken hold in Indonesia, it must have come since then, through other channels of influence that may or may not have had much to do with the macroeconomic policy space carved out by the Berkeley Mafia.

The Chicago Boys

The Chicago Boys is the name given to the team of University of Chicago-trained economists who performed a similar role to the Berkeley Mafia in Pinochet’s Chile. Unlike the Berkeley Mafia, the Chicago Boys should be understood as neoliberals by my definition.


However, while Pinochet’s Chile is certainly a prime example of neoliberalism triumphant, my definition focuses on ideologies and not policies. This is critical in the Chilean case because it helps us to make sense of the areas in which the market metaphor did not take hold: in mining, transportation, and other sectors where privatization and liberalization were halting or non-existent. Why? Because Pinochet’s regime depended on the support of these and other sectors.

We see in Chile, as in Indonesia, that policies inspired by neoliberal ideologies could generate sharp resistance from the interests of the most powerful sectors of an authoritarian capitalist society. So the ultimate mix of economic and social policies enacted by the Pinochet regime was a mix of market-oriented reforms and monopolistic-capitalist holdovers. We can even see the ebb and flow of neoliberalism’s ideological power over time, most notably in capital account policy (as I argue elsewhere, liberalization of capital flows was slower than other forms of economic liberalization, and it was reversed abruptly after the debt crisis of 1982, in order to keep the Pinochet regime in power).

If we define neoliberalism as an ideology, we can analyze its interaction with competing (and also complementary) material interests. We can explore how that interaction shapes policies. If we insist that neoliberalism is both an ideology and a policy, this analytical lens is not available to us.

So to conclude, defining neoliberalism as an ideology about the market and human interaction has tangible benefits, providing a conceptual lens through which to understand the conflict between ideology and interests, and guarding against labeling generally capitalist or market-oriented policies as reflecting a particular ideology. Other definitions are available, but they conflate these kinds of conceptual distinctions, and therefore can obscure more than they clarify.

Posted in Economics, Indonesia, Politics, Research
One comment on “Defining Neoliberalism: Concepts at Work
  1. Surya says:

    This fits Paul Treanor’s description of neoliberalism, no?
    http://web.inter.nl.net/users/Paul.Treanor/neoliberalism.html

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