2) Neoliberalism is a range of policies and institutions that release markets from restraints that democracy might impose and that reconfigure the state and civil society in the image of the market. Neoliberal policy and institutions give priority to investment and investors.
Neoliberal tenets about financial markets, investment, and investors persist because these beliefs suffuse a century’s worth of economic policy.
Consider, for example, U.S. income tax policy. In the mid-twentieth century, white supremacists in Congress legislated pro-investment tax expenditures that cut away at the mildly redistributive social safety net built during the New Deal. Using tax breaks for investment and investors, Franklin D. Roosevelt’s foes and their successors quietly preserved the racial wealth gap in a manner that appeared race-neutral. Over time, these policies locked into place the asset economy that characterizes the neoliberal order. Today, the hidden welfare state created by tax expenditures, which predominantly benefits wealthy white households, totals $1.7 trillion per year—exceeding spending for any single government program.
Over the last forty years, U.S. households borrowed vast amounts of money to take advantage of these tax breaks to acquire homes, retirement portfolios, insurance policies, and savings accounts for healthcare and higher education. These leveraged, self-managed, individualized safety nets proved flimsy. When the inevitable financial crises hit in 2008 and 2020, the federal government chose to rescue corporations, not citizens. Pandemic-era assistance and income-support programs amounted to a mere fraction of the cost of bailouts and interventions by the Fed. When they expire this fall, Americans will face the full force of the deep, structural problems in our economy.
3) Neoliberalism identifies a specific moment in the history of capitalism. During the period of “financialization” that began in the 1970s, claims over wealth yet to be produced exploded, infiltrated the lives of people across the world, dominated corporate decision-making, and transformed international relations and global governance.
The term neoliberalism references a period since the 1970s in which the financial sector and financial activity have predominated. Mapping the precise contours of financialization helps us to identify points of pressure in our current moment, which is dominated by a specific set of players: asset managers.