Neoliberalism began as a call for a strong state, then flipped meaning
When a group of economists adopted the word neoliberalism in Paris in 1938, they meant markets guided by a strong and impartial state, a deliberate break from pure laissez-faire. Half a century later, critics were using the same label for almost the opposite: unrestrained market fundamentalism. Few political words have drifted so far from where they began.
The term predates that meeting. In 1898 the French economist Charles Gide used it in English to describe the views of the Italian Maffeo Pantaleoni. But it was the 1938 Colloque Walter Lippmann that chose it as a banner, defining it as the priority of the price mechanism, free enterprise, competition and a capable state. That interventionist streak put its backers at odds with strict laissez-faire liberals such as Ludwig von Mises.
Through the 1950s and 1960s most scholars linked the word to West Germany's social market economy and thinkers like Walter Eucken and Wilhelm Röpke. Friedrich Hayek, though connected to them, was rarely named alongside them because he leaned further toward free markets. Milton Friedman wrote an essay titled 'Neo-Liberalism and its Prospects' in 1951.
The pivot came in Chile. Under Augusto Pinochet's military regime from 1973, opposition scholars used the word to describe the free-market reforms pushed by economists known as the Chicago Boys. The new sense spread from Spanish-language scholarship into English during the 1980s and reached global circulation by 1994, now attached to Hayek, Friedman, Margaret Thatcher and Ronald Reagan. A later strand, embraced by Bill Clinton and Tony Blair under the Third Way, found a manifesto in a 1983 essay by journalist Charles Peters.
Today the word covers privatisation, deregulation, freer trade, lower taxes and spending cuts. Supporters of those policies almost never use it; it appears mostly in criticism and is largely absent from economics journals. A study of 148 scholarly articles found it was almost never defined. Some scholars argue it never meant a shrinking state at all: building global markets took heavy government action, and states often shifted spending from services toward policing rather than retreating.
Source: Neoliberalism
