What do the British mean by neoliberalism?

Neoliberalism - capitalism "freed from state fetters"

Everyone is the maker of his or her happiness - the USA model

"From dishwasher to millionaire", this motto stands for the economic model of the United States of America (USA). What is meant by this is: everyone can work their way up from the bottom to the top if they are hard-working enough.

On the other hand, this also means: If you haven't made the ascent, it's your own fault. Many Americans consider a state-run social network for people who are sick or unemployed to be unnecessary.

There is also hardly any protection against dismissal in the USA. Companies can quickly hire and fire workers as needed - this method is also called "hire and fire".

Especially during the presidency of Ronald Reagan between 1981 and 1989, the US economy was liberalized, that is, "exempted" from state intervention, as it was called at the time. Reagan cut taxes on corporations so they would produce more and hire more workers.

Behind this is the "trickle-down theory" ("leakage theory"). It says that the wealth of the rich upper class automatically seeps through to the lower classes over time.

This American-style capitalism differs considerably from the model of the social market economy that has shaped German history.

British state-owned companies are being privatized

A similar form of capitalism took hold in Great Britain in the 1980s. Prime Minister Margaret Thatcher, who was in office from 1979 to 1990, reacted to months of strikes that threatened to paralyze the entire country.

Thatcher restricted the power of the unions and privatized many state-owned companies - such as telephones, energy companies and drinking water supplies.

A well-known example of a failed privatization of public property is the British railways. It was initiated in 1994 by Thatcher's successor, John Major. At that time the British state railways were divided into more than 100 individual companies.

Today rails, trains and stations are in poor condition, many trains are unpunctual or the connections are completely canceled. Critics claim that companies are only interested in profit and that they neglect safety and driving comfort. Since 2018 the British government has nationalized several railway lines again.

Strong or Lean State?

The theory most commonly associated with such measures is called "neoliberalism".

Originally a model of the social market economy was meant, for example in the writings of the economist Walter Eucken (1891-1950). He called for an economic system that guarantees free competition, but at the same time provides state social security.

The term neoliberalism has undergone a fundamental change in meaning since the 1980s. Today it stands for an economic policy that is characterized by deregulation and privatization of state tasks. The state should largely stay out of the economy so that it can develop freely. Supporters of the neoliberal idea are of the opinion that this stimulates people to shape their lives independently.

But there is also criticism. According to the US linguist and system critic Noam Chomsky, neoliberalism has rather negative consequences: "Massive increase in social and economic inequality, serious setbacks for the poorest nations and peoples of the world, the catastrophic deterioration in global environmental conditions, an unstable world economy - but cheerfully bubbling Sources of Growing Wealth for the Wealthy. "

The "Agenda 2010" - more personal responsibility

In Germany, too, the framework conditions for the economy have changed in recent years. In March 2003, the then Federal Chancellor Gerhard Schröder (SPD) presented his reform program "Agenda 2010" in the German Bundestag: "We will cut government services, demand personal responsibility and have to demand more personal contribution from each individual."

At the same time, the Schröder government massively expanded the low-wage sector, which is now one of the largest in Europe. In 2020, 22 percent of employees in Germany worked at low wages, i.e. for less than 11.40 euros gross per hour.

Proponents of the reforms point out that the lower labor costs have created many jobs.

In 2017 the Federal Ministry of Economics came to the conclusion that 40 percent of Germans in the lower income groups earned less than 20 years earlier. At the same time, high earners and capital owners have become significantly richer in the same period.

Critics of the neoliberal model therefore complain that Agenda 2010 undermined the German welfare state, which for decades was shaped by so-called "Rhenish capitalism", and redistributed a lot of money from bottom to top.