By Rev. W. David Strickler
2025 JUNE 17
Introduction
Margaret Thatcher’s neoliberal policies in the 1980s did more than just transform the British economy—they set off a chain reaction that redefined the global political and economic order. Neoliberalism, with its promises of prosperity and individual freedom, has since become the dominant ideology shaping our world. But beneath the rhetoric of free markets and deregulation, a more troubling story has unfolded: the rise of economic inequality, the erosion of democratic institutions, and the emergence of authoritarianism in countries across the globe.
This comprehensive analysis examines the roots and ramifications of neoliberalism, focusing on Thatcher’s role, the perspectives of leading economists, and the profound consequences for society and democracy. It also considers how we might move beyond neoliberalism toward a more equitable and sustainable future.
1. What Is Neoliberalism?
Neoliberalism is an economic and political ideology that gained momentum in the late 20th century, particularly under leaders like Margaret Thatcher in the UK and Ronald Reagan in the US. At its core, neoliberalism champions free markets, deregulation, privatization, and minimal government intervention in the economy. Proponents argue this leads to greater competition, innovation, and prosperity for all.
But critics have long warned that neoliberalism prioritizes profits over people. By transferring economic control from the state to the private sector, neoliberalism weakens labor protections, erodes social safety nets, and deepens income inequality.
As Economist Michael Hudson has described, it’s a philosophy that regards public ownership and regulation as inherently inefficient—pushing for privatization and tax cuts for the wealthy, often at the expense of the broader public.
In this greater context Michael Hudson offers a particularly incisive definition:
“Neoliberalism: The philosophy that public ownership and regulation is inherently less efficient than management by financial operators. The policy conclusion is that the public domain and government enterprises should be privatized, and the sales proceeds used to roll back taxes on the highest wealth and income brackets. Unlike the liberalism of Adam Smith and subsequent free-trade economists, neoliberalism endorses an intrusive role of government to protect property and financial fortunes without regard to long-term tendency for the exponential growth of debt to exceed and indeed undercut the economy’s ability to pay.”
Hudson’s perspective underscores that neoliberalism is not simply about free markets but about using state power to serve private financial interests, often at great social cost.
2. Thatcher’s Role in Promoting Neoliberalism
Margaret Thatcher’s tenure as Prime Minister from 1979 to 1990 was pivotal in mainstreaming neoliberalism. Her government enacted sweeping deregulation, privatized state-owned industries, and curtailed the power of trade unions. Thatcher’s conviction was encapsulated in her famous (and controversial) assertion: “There is no such thing as society. There are individual men and women, and there are families.”
Thatcherism, as her approach came to be known, was predicated on reducing the role of the state and unleashing the supposed efficiencies of the market. The policies she championed—privatization, free trade, and austerity—became the blueprint for other Western governments. But as the decades have passed, the costs of these policies have become increasingly apparent: widening economic inequality, a breakdown in social cohesion, and a dangerous drift toward authoritarian politics.
3. The Social Impact: From Individualism to Eroded Trust
Neoliberalism didn’t just rewrite economic policy—it reshaped society itself. The shift toward individual responsibility and away from collective welfare undermined social bonds, leaving people less inclined to see themselves as part of a larger whole. The result was a decline in social trust and a weakening of the democratic fabric.
Professor Stephanie Kelton notes that the abandonment of Keynesian economics in favor of deficit reduction and inflation control gutted public investment in education, healthcare, and infrastructure. This not only deepened inequality but also weakened democracy by eroding the mechanisms that ensure every citizen’s well-being.
4. The Erosion of Democracy and Democratic Institutions
As neoliberalism took hold, it hollowed out democratic institutions. Governments became more responsive to corporate interests and the wealthy, and less accountable to ordinary citizens. Public services were privatized, campaign finance laws were weakened, and the power of unions was slashed. The state’s capacity to regulate markets and protect workers diminished, while the influence of the financial sector grew.
Professor L. Randall Wray has described how this transformation replaced democracy with plutocracy. Disillusionment with politics soared as citizens realized that the system no longer represented their interests. This disenfranchisement paved the way for populist and authoritarian leaders who promised to restore order and security—even if it meant curtailing civil liberties.
5. Rising Inequality and the Authoritarian Backlash
The economic consequences of neoliberalism have been stark. As industries were privatized—often at bargain prices—public assets were transferred to private hands. The weakening of unions and labor protections drove down wages and increased job insecurity, while the wealthy saw their fortunes soar.
Professor Steve Keen has pointed out that financial deregulation, a hallmark of neoliberalism, further concentrated wealth at the top and widened the gap between rich and poor. The resulting inequality stoked resentment and anger, creating fertile ground for authoritarian leaders who promised to champion the “left behind.”
Political scientist Torben Iversen has observed that this backlash fuels the rise of populism, which threatens to dismantle democratic norms and institutions. Nationalism, xenophobia, and fear become tools for leaders seeking to capitalize on public discontent—often at the expense of democracy itself.
6. Neoliberalism and the Global Financial Crisis
The 2008 global financial crisis starkly revealed the dangers of unfettered markets. Decades of deregulation—initiated in the Thatcher/Reagan era—enabled the creation of complex, opaque financial instruments that hid risk and set the stage for economic disaster. When the housing bubble burst, the interconnectedness of global finance ensured that the consequences were felt worldwide.
As Professor Michael Hudson and others have argued, the neoliberal model effectively created a financial system “too big to fail.” When the collapse came, it was taxpayers—not bankers—who bore the brunt of the bailouts and the subsequent recession. The crisis exposed the fundamental instability of neoliberal capitalism and the dire need for robust government oversight.
7. The Global Spread of Neoliberalism
Neoliberalism’s influence didn’t stop at national borders. International institutions like the IMF and World Bank pushed privatization, deregulation, and capital liberalization on developing countries, often as conditions for financial assistance. This left many nations deeply indebted and widened the global divide between rich and poor.
Michael Hudson has chronicled how these policies entrenched a new form of economic imperialism, undermining democracy both at home and abroad. As global inequality soared, disillusionment with the political and economic status quo only grew.
8. The Backlash: Progressive Movements and New Economic Thinking
The failures of neoliberalism have not gone unchallenged. In recent years, progressive movements have emerged across the world, calling for social justice, economic democracy, and the reinvigoration of public services. Leaders like Bernie Sanders in the US and Jeremy Corbyn in the UK have galvanized support from those long excluded from the benefits of the neoliberal order.
There’s also a renewed interest in alternative economic models. Stephanie Kelton’s advocacy for Modern Monetary Theory (MMT), for example, calls for public investment in social goods and infrastructure without the constraints of deficit orthodoxy. Wray promotes “de-financialization” to reduce the dominance of the financial sector and restore the productive role of government.
Worker-owned cooperatives, community land trusts, and other forms of democratic ownership are gaining traction as practical alternatives to the privatization and concentration of wealth that neoliberalism has produced.
9. The Future of Neoliberalism—And What Comes Next
The debate over neoliberalism’s legacy is far from settled. Its defenders point to economic growth and innovation, while its critics highlight rising inequality, environmental degradation, and the hollowing out of democracy.
What’s clear is that the concentration of wealth and power in the hands of a global elite is unsustainable. The continued erosion of labor protections and the rise of precarious work threaten social cohesion and the legitimacy of democratic institutions. As Francis Fukuyama famously argued, neoliberalism was once seen as the “end of history”—but recent developments have made it clear that history is far from over.
The path forward will require political will, social mobilization, and new models of economic organization that prioritize the well-being of all people, not just the privileged few. As Hudson, Keen, Kelton, and Wray have argued, reclaiming democracy means reimagining our economic paradigm and rebuilding trust in public institutions.
10. Conclusion: Reclaiming Democracy and Building a Just Economy
Thatcher’s neoliberal revolution, for all its promises of freedom and prosperity, has left a legacy of inequality, disenfranchisement, and democratic decay. The time has come to recognize that an economic system built solely for profit cannot sustain a healthy society or a functioning democracy.
Besides, capitalism is not a system of government, capitalism deals with how the economy operates within the rules and structures for society determined by government.
Building a better future means putting people and the planet at the center of our economic decisions. It means strengthening democratic institutions, expanding public goods, and ensuring that prosperity is shared. Above all, it means challenging the narrative that there is “no alternative”—and daring to imagine, and build, a more just, equitable, and sustainable world.
Copyright © 2023 William D. Strickler. All rights reserved.
No part of this document may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.
Endnotes
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“2007–2008 Financial Crisis,” in Wikipedia, June 9, 2023, https://en.wikipedia.org/w/index.php?title=2007%E2%80%932008_financial_crisis&oldid=1159335812
“Financial Crisis of 2007–08 | Definition, Causes, Effects, & Facts | Britannica Money,” May 22, 2023, https://www.britannica.com/money/topic/financial-crisis-of-2007-2008
“Together, We Can Build a More Just and Equitable Society. | United Way of the Greater Capital Region,” https://www.unitedwaygcr.org/news/together-we-can-build-more-just-and-equitable-society
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