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For some two decades neoliberalism has dominated economic policymaking in the United States and the U.K. Neoliberalism has strong advocates in continental Western Europe and Japan, but substantial popular resistance there has limited its influence so far, despite continuing U.S. efforts to impose neoliberal policies on them. In much of the Third World and in the transition countries (except China), the United States has been successful in dictating neoliberal policies, acting partly through the International Monetary Fund and World Bank and partly through direct pressure.
Neoliberalism is an updated version of the classical liberal economic thought that was dominant in the United States and United Kingdom prior to the Great Depression of the 1930s. From roughly the mid-1930s to the mid-1970s, a new "interventionist" approach replaced classical liberalism, and it became the accepted belief that capitalism requires significant state regulation in order to be viable. In the 1970s the Old Religion of classical liberalism made a rapid comeback, first in academic economics and then in the realm of public policy.
Neoliberalism is both a body of economic theory and a policy stance. Neoliberal theory claims that a largely unregulated capitalist system (a "free-market economy") not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. The state is assigned a very limited economic role: defining property rights, enforcing contracts, and regulating the money supply. I State intervention to correct market failures is viewed with suspicion on the grounds that such intervention is likely to create more problems than it solves.
The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulationist welfare state. These recommendations include deregulation of business, privatization of public activities and assets, elimination of or cutbacks in social welfare programs, and reduction of taxes on businesses and the investing class. In the international sphere, neoliberalism calls for free movement of goods, services, capital, and money (but not people) across national boundaries. That is, corporations, banks, and individual investors should be free to move their property across national boundaries, and free to acquire property across national boundaries, although free cross-border movement by individuals is not part of the neoliberal program.
How can the reemergence...