Neoliberalism does not exist merely as an abstract economic doctrine or ideological worldview; it manifests itself most visibly as a concrete and coherent set of public policies. These policies are often summarized through what may be called the D–L–P Formula: deregulation, liberalization, and privatization. Together, these three pillars constitute the operational core of neoliberal governance and provide the practical means through which market principles are extended into ever more areas of social life.
First, deregulation refers to the systematic removal or weakening of state controls over economic activity. Regulatory frameworks governing labor markets, finance, environmental protection, and industry are relaxed or dismantled in the belief that free markets are inherently more efficient than state oversight. Deregulation is justified by the claim that excessive rules stifle innovation, discourage investment, and reduce competitiveness, even though its social costs—such as financial instability and environmental degradation—are often externalized.
Second, liberalization involves opening national economies to global markets by reducing barriers to trade, capital flows, and foreign investment. Tariffs, quotas, and restrictions on imports and exports are eliminated, while domestic industries are exposed to international competition. Under neoliberal reasoning, liberalization forces efficiency, lowers prices, and stimulates economic growth. In practice, however, it often privileges transnational corporations and advanced economies while undermining local industries and economic sovereignty in weaker states.
Third, privatization entails the transfer of state-owned enterprises and public services into private hands. Sectors once considered public goods—such as energy, transportation, water, education, and healthcare—are reconceptualized as commodities to be bought and sold in the marketplace. Privatization is defended as a means of reducing government expenditure and increasing efficiency, yet it frequently results in reduced access, higher costs, and the subordination of social needs to profit motives.
Beyond the D–L–P Formula, neoliberalism advances a broader constellation of interrelated policy measures. These include massive tax cuts, particularly for corporations and high-income earners, based on the assumption that wealth accumulation at the top will “trickle down” to the rest of society. At the same time, social services and welfare programs are reduced, reframed as sources of dependency rather than social protection. Welfare states are restructured into systems of “workfare,” in which access to social support is conditional upon labor market participation, regardless of job quality or availability.
Monetary policy is also reshaped under neoliberalism. Independent central banks are tasked with controlling inflation through interest rate adjustments, often prioritizing price stability over full employment. This approach accepts unemployment as an unfortunate but necessary mechanism for disciplining labor and maintaining investor confidence. In parallel, governments pursue the downsizing of the public sector, reducing public employment and limiting the scope of state intervention.
Neoliberal policy further promotes the creation of tax havens and special economic zones to attract domestic and foreign investment, frequently at the expense of labor standards and public revenue. Urban spaces are redesigned as commercial and financial hubs, oriented toward consumption, real estate speculation, and global capital flows rather than social inclusion. Anti-union policies are justified in the name of productivity and “labor flexibility,” weakening collective bargaining and shifting power decisively toward employers.
On a global scale, neoliberalism demands the removal of controls on financial and trade flows, facilitating the rapid movement of capital across borders. National economies are integrated into regional and global markets, often under the governance of international institutions and trade agreements that constrain domestic policy choices. To sustain and legitimize this paradigm, new political institutions, think tanks, academic networks, and policy practices emerge, dedicated to reproducing neoliberal ideas and embedding them in public discourse.
Importantly, neoliberalism has rarely operated in isolation. So-called neoconservative initiatives have frequently supported the neoliberal agenda, sharing commitments to market dominance, state authority, and geopolitical power. In turn, many neoliberals have embraced conservative social values, including appeals to “family values,” strict law enforcement, and strong military institutions. This alliance has given neoliberalism both economic and moral authority, reinforcing its political durability.
The near-universal adoption of at least parts of this policy package during the 1990s reflects not only economic pressures but also the extraordinary ideological power of neoliberalism. Its claims to efficiency, inevitability, and rationality reshaped policy debates across the globe, often marginalizing alternative visions of social and economic organization.
As later analyses will demonstrate, understanding neoliberalism requires careful attention to the relationship between its ideological foundations and its policy applications. Before turning to specific case studies, however, it is necessary to complete this conceptual clarification by examining the major economic theories that fueled the rise of neoliberalism in the late 1970s and provided its intellectual legitimacy.
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