Explain the difference between liberalism and neoliberalism.

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rrteacher | College Teacher | (Level 2) Educator Emeritus

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Neoliberalism, in an economic sense, is usually used to refer to a belief in the primacy and efficacy of free markets, both domestically and internationally, in generating wealth. Sometimes it is called "neoclassical" economics, in that it argues along the lines first set out by Adam Smith, against regulation of the economy and attempts to artificially alter free markets. As for liberalism, it is actually difficult to know exactly how to answer. It may be referring to the classical liberalism associated with Adam Smith, David Ricardo, and other eighteenth and nineteenth century economists, in which case there is little theoretical difference. However, it seems likely that this question is referring to liberalism as a political or a social stance, in which case it refers, at least in the United States, to the belief that government must play a strong role in bringing about social betterment. The types of government intervention recommended by modern liberals range from enhanced protection for workers' rights to affirmative action initiatives to bring about racial equality. Liberals recognize that these goals involve tighter regulations on businesses, and these regulations are viewed with great suspicion by neoliberals. Many neoliberals, of course, argue along social lines for the reduction of state power as well.