Neoliberalism

Neoliberalism holds that competitive markets and the price system are the most reliable means of coordinating a complex society, and that political attempts to direct economic outcomes systematically fail because no planner can hold the dispersed knowledge that prices summarize.

Hayek's case is epistemic before it is economic. His argument about spontaneous order holds that the knowledge a modern economy runs on — who wants what, at what cost, where — is local, tacit, and scattered across millions of minds, never available to any central authority; the price system works because it summarizes that knowledge without anyone possessing it. Planning fails, on this view, not because planners are wicked but because the task is impossible.

Friedman added that economic freedom is a precondition of political freedom, and that market provision outperforms the state even in fields long assumed public. The tradition was incubated in the Mont Pelerin Society from 1947 and moved from the margins to policy in the 'stagflation' crisis of the 1970s, shaping the Thatcher and Reagan governments, the 'Washington Consensus' imposed on developing economies, and the post-communist transitions of the 1990s.

In practice the label covers both a scholarly tradition and a policy programme — deregulation, privatization, monetary discipline, free trade — and adherents and critics often mean different things by it. It is also far more often applied by opponents than claimed by advocates, which makes its boundaries genuinely contested.

Critics argue that its record diverged sharply from its theory: establishing and defending markets required a strong, sometimes coercive state (Pinochet's Chile is the uncomfortable early case), and the deregulated finance it encouraged produced the 2008 crash. Others charge that treating every sphere — health, education, water — as a market corrodes goods that are not well modelled as commodities.

It is often flattened into a synonym for 'capitalism' or 'greed,' which misses its actual and falsifiable claim: that dispersed knowledge makes central direction fail. Whether that claim holds for climate, monopoly, and public goods is exactly where the contemporary argument sits.