What are the differences between classical liberalism and neo-liberalism as political and economic philosophies?
Great question. I will preface this with the qualifier that from a political perspective it means many things to many people. At a basic level Classical Liberalism vs. Modern Liberalism is:
- Philosophy: Individualism vs. Collectivism
- Economics: Free market capitalism vs. Communism/Socialism
- Politics: Libertarianism vs. Socialism
This is not a commentary or valuation on which is better, but the observed "preference" for the two movements. Please correct me if you feel that I am being unfair or accidentally oversaw something.
A little history: Mentioned by Greek Philosophers, although it is much older, the Classical Trivium was a secular method of learning from ancient Greece. It consisted of 7 principles, the first 3 called the Trivium, the final 4 the Quadrivium:
- Grammar: Gather, Ordering, and Systematizing facts
- Logic: How to determine what is true
- Rhetoric: How to communicate the truth
- Numbers as symbolic references (arithmetic),
- Numbers in space (geometry)
- Numbers in time (music)
- Numbers in space safety and time (astronomy)
Using the ideas mentioned above, in the 18th-19th century people in the US / Europe used them and ancient Greek philosophic ideas as the basis of what people usually refer to as Classic Liberalism. Generally these ideas
- Freedom, as long as it doesn't impede on someone else
- Justice, Equality before the law (not equality of outcome)
- Liberty, Voluntary exchange goods and services in free markets
- VERY Limited government, government had no powers except what was explicitly noted. The majority of the power must be
- Free speech
- Freedom of Religion
- Individualism over collectivism
- Individual Property rights
- No taxation without representation
As a modern reference, these are the same principles to a large degree as the current ones voiced by the Libertarian party in the US.
Neo-Liberalism A historical clarification I originally left out to prevent confusion:
In the early 1900's people attempted to institute a middle ground between pure collectivism and individualism which had some aspects of Modern liberalism, such as big government, and some aspects of Classical Liberalism, such as free market economies.
From an Economic perspective these are incompatible beliefs and so Neo-Liberalism lost it's original meaning as it quickly evolved into Modern Liberalism some time around the 1930's. Words change over time for various reasons so to understand what is meant by a concept sometimes you have to ask what it meant for a given period of time. since about 1990, Neo-Liberalism is a synonym or slur for Modern Liberalism.
Modern is the antithesis (or basically the opposite view of) of Classic Liberalism. Many people are inspired by Marx or others, although certainly not all modern liberalism is. It is guided more towards the ideals of the ultimate fairness.
Its guiding principles tend to be:
- Safety, infringe on peoples privacy for the safety of the collective
- Social Justice, Equality of Outcome (vs. Equality before the law)
- Fair Trade, Prevent unfair losses or companies from unfairly making more than others.
- Large government, Government is responsible for the people
- Free speech, as long as it doesn't cause conflict or hurt feelings.
- Beliefs, Everyone's beliefs are to be observed
- Collectivism over Individualism
- Role of the state is to grow and do everything it can to protect people through prevention, experts, laws, regulation, etc.
- Taxation and Regulation to prevent unfairness
Given your reaction to @Dave, I take it that real Classical Liberalism is not what you mean. The current threads of Liberalism that are contending right now in the United States are really Progressivism and neo-Liberalism. Neither is very close to Classical Liberalism, but the former is sometimes called by that name.
We can see stereotypes of these two schools in the postures the two leading Democratic candidates took in opposition to one another. I am obviously omitting the central themes of Liberalism, because they agree on those, and focussing on contrasting tactics and opinions.
(I am aligning opposing trends point-by-point, but I cannot arrange them side-by-side because my MarkDown skills escape me.)
Bernie is a Progressive -- The central approach is direct intervention on things we can thoroughly understand, with clear intentions and transparent execution. Recover the costs through taxation.
- Focus on the currently poor, and on ways out of poverty. (e.g. High minimum wage)
- Keynesian economics: it is always a good idea to give people money, if you think you can get it back in taxes later. (e.g. Free Tuition)
- Actively constrain actions that disparately enable the powerful or disempower the poor (even if the results might be very good on average) (e.g. all about taxing the 1% fairly, against Mandatory-Minimum Sentencing)
- Military actions are a waste of money, and our preparation for war is excessive (e.g. Continual arguments in Congress against war, mostly in economic terms rather than humanitarian ones.)
- We should focus on ourselves, and let others focus on themselves, at least as long as we see ourselves descending (e.g. Strong focus on domestic policy.)
- Favoring corporations is always at the cost of people (e.g. Long history of working against 'Corporate Welfare').
- Direct service solutions are efficient by cutting out middlemen (e.g. Single Payer healthcare, free tuition)
Hillary Clinton is much more of a neo-Liberal, but not as much of one as the two male Presidents with whom she is most strongly associated. The central approach is to intervene indirectly in ways we can back out of or re-tune later. (Since there seems to be so little that we thoroughly understand?) Recover the costs through improving the economy:
- Focussed on the forces that keep people in bad situations (e.g. the Violence Against Women Act, Gay Marriage (though kind of flaky there), credible female candidates.)
- Resist creating cycles of dependency (e.g. changing Aid to Families with Dependent Children to Temporary Assistance to Needy Families, by limiting involvement to 7 years at a time.)
- Wealth spreads in a good economy, so ignore wealth distribution and favor an efficient economy (e.g. "A Rising Tide Lifts All Boats." 'Superpredator' crime policies.)
- American foreign power generally helps the world economy (e.g. voting for War and being/having a hawkish Secretary of State)
- Economic protectionism ultimately fails, stop it before it starts. (e.g. NAFTA, the TPP)
- Large institutions of all kinds maintain wealth and security for everyone, and cannot be allowed to become too generally unstable (e.g. GM Bailout, TARP)
- Market-management solutions are efficient because they introduce fewer perverse incentives and can be modified or scaled during implementation (e.g. ObamaCare, Cap-and-Trade environmental policy, the implementation style of both bailouts.)
Hopefully, you can see the contrast here: the Progressive agenda is seen by its detractors as wide-eyed and oversimplified, the neo-Liberal agenda is seen by its detractors as so indirect in its focus on equality that it is basically Conservative.