Just as classical economic theory of liberalism served the interests of the strongest economies in the world that have few concerns about small and weaker competitors, similarly neo-liberalism does the same. Just as in the early 19th century England as the world first industrial nation could proclaim its commitment to free trade because it had no rival, similarly in the early 21st century the strongest economies are steadfastly committed to neo-liberalism not necessarily for themselves but for the other nations whose borders they want open for incoming products and services unfettered by government regulations and other obstacles (tariffs, and taxes) that hinder trade.
Neo-liberalism's market rules include:
a) individual endeavor takes precedence over public welfare;
b) market hegemony over the state;
c) deregulation of the private sector so that enterprises can optimize their operations;
d) cutting public spending in so far as it affects social welfare measures, while raising public corporate welfare measures;
e) Privatization of public enterprises to the maximum degree possible; privatize everything from garbage collection and utilities to health care and education.
There are many articles and books from different ideological perspectives dealing with the similarities between neo-liberalism, and some comparing it to Libertarianism. Although the latter is more a political ideology and the former an economic one, the differences are not nearly as pronounced as they may appear, and those interested will find convergence points. At their root, both oppose the transcendence of public welfare over the individual; both advocate free market hegemony over the state; both argue in favor of privatization of public enterprises and cutting welfare measures; both are committed to the anarchical and hierarchical law of the marketplace.
Neo-liberalism and Libertarianism are hypocritical in what they advocate because they want the state to carry out such policies on behalf of the strongest players in the market economy, and they are not interested in the primacy of the 'individual' across the board, but of the strongest individuals in the marketplace. Therefore, both neo-liberalism and Libertarianism advocate 'managed free market' on behalf of the strongest players. Therein rests the con-game of neo-liberalism as well as Libertarianism that oppose government regulation as a protection for the weakest social segments but have no objection when government provides protections and privileges to capital.
The blatant contradictions in the current world capitalist system may become part of the cause for the next deep recession like the one of 2008-present. The global crisis of finance capitalism proved, among other things, that neo-liberal practices, which included deregulation and loose government monitoring, were among the causes that forced governments to pour about one-third of GDP to save finance capital.
To bail out finance capitalism, the state taxed the middle class and workers, and diluted the social welfare state, as we once knew it. Ironically, the US and EU, with most of the G-20 following suit, are continuing the same neo-liberal policies that led to the current global recession, a recession that came very close to becoming a depression if it were not for the safety net that the social welfare state provides! The IMF with the World Bank's backing was promoting neo-liberal policies throughout Latin America in the last 30 years, the same policies that resulted in the great recession of 2008-present.
The US, EU, Japan and most of the G-20 are determined to proceed with neo-liberal policies and with the dismantling of the social welfare state as a way to strengthen corporate welfare. The assumption is that neo-liberal policies did not fail, but simply did not go far enough. In one form or another, whether under authoritarian or so-called Socialist regime, neo-liberal policies are triumphant. The radical neo-liberal course will continue until there are mass popular uprisings that force political elites to change course.
On a global scale, we currently see the proletarization of the bourgeoisie, widening gap between rich and poor, and Third-World-type conditions prevailing among the bottom 20% of the First World's population.
Does all this mean the repeat of another global recession in 10 to 20 years? Another global recession is inevitable, given that capitalism expands and contracts owing to the perpetual process of capital accumulation. Moreover, given the current push for more orthodox form of neo-liberalism, the collapse of the system and the inevitable government bailout is also inevitable in due course.
But another recession may take place against the background of the current lingering recession from which the world economy, at least most of the countries, may not recover sufficiently to avoid fiscal bankruptcy and depression-like conditions in the next cyclical downturn. Warren Buffet is not worried about the US staggering debt as long as the US keeps printing dollars, but what if the foreign creditors, Chinese among them, raise concerns about the cheap dollar?
The blatant contradiction is that Wall Street firms, giant international banks, and the World Bank agree that as the 21st century unfolds the countries pursuing statism or quasi-statist policies will dominated in the world economy. Besides China following quasi-statist policies, Russia, India, and Brazil are also trying to strengthen the national economy while playing by the rules of international finance capitalism abroad, that is allowing for neo-liberal policies at some level.
Following a combination of national capitalism at home and accommodating foreign capital while trying to strengthen the state's fiscal structure has allowed Brazil, Russia, India and China to become stronger global competitors than countries that pursue neo-liberalism to the detriment of national capitalism and the fiscal structure - Greece, Ireland, Portugal, Spain, and a host of developing nations that the IMF advises. In these countries, there is in direct contradiction between the neo-liberal policies that US and EU are pushing through IFS's like IMF and European Central Bank and the policies that they are reserving for themselves which include strong national capitalism and strong fiscal structure.
After all, Warren Buffet readily admitted what economists already know, that the key to the US falling prey to IMF-style austerity is that the dollar is a reserve currency that Treasury can just keep on printing to pay its bills. There is general acknowledgment in the West by neo-liberal advocates and institutions that global economic hegemony in the 21st century will be exercised by the countries pursuing a form of statism, or managed economies under the guise of 'free enterprise'.
The same advocates and institutions that pursue a quasi-statist policy for their countries, demand that debtor nations throughout the Third World and the EU periphery follow neo-liberalism. I can only explain this contradiction by concluding the immediate pocketbook interests of the neo-liberal advocates are not with the ideology that they embrace, but with those who pay their salaries. They know that immediate suffering and long-term demise is the only result of debtor countries that follow neo-liberalism, but argue that it is necessary to save the market economy resting on credit.
If neo-liberalism is the future only for the countries that the IMF is advising at the urging of the US and EU, how can we explain Goldman-Sachs, a Wall Street firm well-known for its corrupt practices at home and abroad stating that China and countries with strong national capitalism and strong state fiscal structures will lead the world economy in the 21st century?
A recent internal IMF report now criticizes the Fund for its failures to warn governments of the shortcomings of a market system that collapsed and cost trillions to bailout, and in the process millions of people lost their jobs, saw their incomes drop sharply, had their retirement savings eroded, and must also pay for the bubble that the neo-liberal con-game created. As the guardian of finance of capital, where was the IMF to warn governments about the credit bubble that the middle class and workers are now paying and they children will be paying to strengthen finance capital?
If neo-liberalism failed, if the IMF failed to warn governments about the failures of the con-game of neo-liberalism, why are the advanced capitalist countries standing behind the IMF's current push for neo-liberalism to be implemented in even more orthodox manner than it was before the 2008 recession? What will the result be of the current neo-liberalism con game on the world economy and when will governments decide that it is too politically costly to perpetuate such a con game in order to benefit a tiny percentage of capitalists around the world.